Blockchain is defined as a distributed database shared between computer network devices, where each device is called a “node” and information is stored distributed on more than one “node” at the same time.

The “block chain” appeared in 1991 with the purpose of preventing the manipulation of timestamps, and in 1998 it was used for the first time in the digital payments system, and the first digital currency associated with the “block chain” appeared in 2009 as the beginning of the impact of this technology in all technological fields.

The “block chain” is also known as the “distributed ledger” technology, whereby digital trading data is preserved in this record according to its chronological sequence with no possibility of manipulation or deletion by any party.

How does "blockchain" work?

Blockchain works by integrating the roles of 3 elements: encrypted keys, a peer-to-peer (P2P) network and a digital ledger.

To clarify how these elements work, we must know that each "node" contains two encrypted keys, one public and the other private, and through these two keys each node has its own digital signature.

All the executed transfers are digitally signed by authenticating them over the peer-to-peer network by several "nodes", and after this process is validated, they are stored in the "digital ledger".

The "Digital Record" keeps the history of all transfers and allows everyone to view them. What is distinguished here is that the record does not give the ability to modify or destroy the stored information for any party viewing it.

In other words, the "digital record" is all the "nodes" connected to each other through the network, in which the information of transactions that take place between individuals is stored and kept securely.

The "Digital Log" keeps a history of all transfers and allows everyone to see them (Shutterstock)

Types of "block chains"

1- Public “blockchain” networks:

These are the networks from which the various digital currencies originated, and which played an important role in the spread of the “distributed digital ledger” technology. These networks also help in solving specific problems such as security and centralization defects, and with the presence of the “digital record” data is distributed over a “peer-to-peer” network instead of Stored in one place, a collective algorithm is used to verify the origin of the information.

2- Private “blockchain” networks:

This type of blockchain operates on closed networks and works well for businesses and private organizations. Companies can use this private "blockchain" to modify information access procedures, better information authentication methods, network parameters, as well as some important security options.

3- “Blockchain” networks with permissions:

Also known as hybrid "blockchain", they are "blockchain" networks that allow privileged access to some authorized individuals. This type of network combines the advantages of the public and private types and provides a better structure when determining who can participate in the network and in which transfers.

4- Federal “block chains”:

Somewhat similar to "blockchains" with permissions and containing components of both public and private networks, except that they can be managed through a single federated network by several entities or institutions.

Despite the complexity of establishing these networks, they provide better security and federated "block chains" are ideal for the cooperation of several institutions.

Decentralization is the title

The “block chain” is characterized by the “decentralization” feature, that is, the information is not stored in one location, which makes it vulnerable to loss due to hacking or otherwise, but rather it is distributed to more than one device or “node” connected to the computer network to ensure that transfers are not affected in the event someone encounters a problem. Hardware problem.

The information received is matched by several “nodes” to ensure the validity of the transfers as well as their accuracy, thus the “block chain” ensures the security and integrity of the transfers that take place through it and allows the storage of all other types of sensitive information.

Some Uses of Blockchain

1- Transactions and money transfers

The most common use of the “block chain” is trading and financial transfers, and this use has spread widely due to the ease and guarantee provided by the nature of the “block chain” in financial transactions. The first digital currency associated with the “block chain” appeared in 2009, which is “Bitcoin”. (Bitcoin).

Then followed by the emergence of several similar projects, the most famous of which is Ethereum.

The famous IBM company has also developed a banking platform on the basis of "blockchain" and has contracted with several large banks, and thus the use of "blockchain" was not limited to digital currencies only, but also extended to traditional currencies as well.

2-Travel

The use of “blockchain” has extended to the field of travel in several important aspects, the first of which is tracking luggage, during successive flights to the same destination, in order to ensure that luggage is not lost or mixed up, and “blockchain” is used to identify passengers traveling to save time and human effort in that process. .

3- Digital Security

Major companies in the field of digital security use “blockchain” technology to improve the results of their efforts in this field, as this technology allows to keep sensitive and important information safely without fear of losing it or being exposed to sabotage, by taking advantage of the security and reliability advantages that are in the nature of “block chain” technology. It is also possible to dispense with the use of passwords, especially weak and commonly used ones, in order to protect users from being hacked through them. As we mentioned previously, authentication can be done through the public and private digital keys assigned to each device.

One of the main advantages of Blockchain is the high level of security that Shutterstock provides.

Advantages and Disadvantages of Blockchain

Like any type of technology, “blockchain” has many advantages and disadvantages that must be considered…

Advantages

One of the main advantages of the “blockchain” lies in the high level of security that it provides, which means that it can protect and secure sensitive data and online transactions, in addition, it is suitable for everyone who is looking for fast and convenient transactions, because the transactions only take a few minutes until It takes place while other methods take several days to complete, and there is no third party intervention to complete transactions such as banks, financial institutions, and government organizations, and this is what many users see as a real advantage.

Defects

Encryption - on which the "block chain" is based - uses two types of encryption keys, public and private, and according to what was reported, there are some problems with private keys.

In addition to another problem is “expansion constraints” as the number of transactions is limited, and so it may take several hours to complete multiple transactions and other tasks, and it may be difficult to change or add information after recording it, and perhaps the most serious flaw in the “block chain” is its use in activities It is illegal as it is mainly relied on in the dark web and the deep internet, which causes unwanted risks.

Blockchain technology has solved a lot of problems and created others, and it is possible that completely new solutions to the problems facing users will appear, and a new banking system will emerge with new changes based on the digital world in which we began to live.

The question that everyone asks is will the “blockchain” technology overcome the technical challenges and find a place for itself in the current digital environment, and will appropriate solutions be found to the current problems and the “blockchain” will be officially adopted on a large scale?