Crypto-farm, token, smart contract, bitcoin, ether, hashing. Do you also assume that everyone around you only pretends to understand the essence of trendy concepts? We will help you know what these terms mean and where they are used.
What is the essence of blockchain technology?
There are dozens of definitions of blockchain technology. In simplest terms, it can be considered a large distributed database that records the movement of funds or information from one account to another. This database is stored on millions of computers belonging to different owners worldwide. Its main advantage is that it is decentralized. That is, the “destruction” of one or several computers in the network does not lead to a fatal result because the data remain on other computers. They are organized into chains of blocks. Each successive block contains encrypted information from the previous block. It protects the integrity and authenticity of the data. First, blockchain is suitable for organizing relationships between entities that do not trust each other. The technology ensures that all information flowing between the parties remains unchanged.
Why Bitcoin?
It is a type of decentralized digital currency that allows for the movement of virtual money between strangers with a guarantee that the funds will reach the recipient. Any unique body does not control it, and the currency is issued through the work of millions of computers around the world. The main problem with bitcoin is that it has no guarantees in the real world. The more cryptocurrencies in circulation, the less they can be mined (calculated mathematically and recorded in a registry). Rate fluctuations defy logic. Bitcoin is also called PR currency – any mention of it is reflected in the growth of the rate.
Maybe I should start mining, too?
Mining cryptocurrencies means confirming transactions in the blockchain, recording them in the registry, and getting remuneration. It requires powerful computing equipment. Some experts believe there is still money to be made on this, while other blockchain development company managers believe the time has passed. In any case, when you deal with cryptocurrencies, think about ways of turning cryptocurrency into real money. After all, it’s certainly nice to enjoy your cryptocurrency balance, but you can’t buy food at the nearest store for cryptocurrency yet.
How can we use it in the future?
A classic application of blockchain technology could be a notary public. A notary certifies the transaction, that is, confirms that it is legal. If the contract moves from paper to electronic, it will become a smart contract. It will become a program in which all the basic terms of the agreement will be “written” and will be able to work without human intervention. Blockchain technology guarantees any transaction’s integrity and trustworthiness, so the need for a notary will automatically disappear. But this is just futuristic thinking because the courts do not yet consider smart contracts analogous to a notary’s signature.
A real-life example of usage.
A firm arranges a real estate auction. A special program remembers the bidders’ addresses and the amounts of each bidder’s bids. At the end of the auction, it chooses the maximum bid, announces the winner, and sends back all other bids. The employee in charge of the auction becomes unnecessary. Participants are assured that no one is cheating. They see the program text and understand that everything works as it should. The technical code is not a person: he will not abscond with the money, go bankrupt, and so on.
