20 мая 2018г.
How do we understand Blockchain and why we aim for it.
For the last 10-15 years we have been using centralized distributed services. It is connected with progress of computational means. Using of distributed database is reliable, safe, data is stored on many services, and the system is constantly accessible. Centralization solves a great part of our problems, but creates many other.
To be more exact about distributed systems:
- full copy of data for each stakeholder;
- data is identical;
- automatic data synchronization based on protocol of achievements distributed consensus;
- each stakeholder has access to full story of transactions.
Within distributed systems Blockchain’s technology stands out.
Blockchain is a network, where data about transactions cared out is arranged and fixed as chain a of connected blocks of transactions.
It complains with some limitations and rules: data is formed in blocks, blocks in chain, system isn’t changeable, people can check it, this increases its value. Often when people talk about blockchain, they mean payment system Bitcoin, but it isn’t fully true.
Bitcoin implemented on the bases of blockchain’s technology, when consensus is achievement on competitive base and is based on Proof-of-Work (algorithm for protection of networks systems).
Blockchain’s foundations.
- Decentralization is absence of single center of control and emission.
- Distribution means that data and its processing are distributed among calculation knots.
- Confidence. Stakeholders trust the algorithms: with the help of them they safely carry out transactions, check information about other stakeholders. After confirming the information about transactions, it becomes unchanged. The system is “transparent”.
- The general version of the truth is the availability of information to all network stakeholders. For example, it may be required for solution of property issue, payment issues (recovery of events).
Bitcoin payment system.
Bitcoin brings us back to the cash-in-hand flow paradigm. Comparison with the purse of cash isn’t accidental for several reasons. The first is the impossibility of cheating when paying. We can’t pay in cash a second time, because we have already paid it. In the bitcoin system you can’t pay the same cash several times, because constant check is performed by miners, when result of check is confirmation or deletion of blocks with transactions. In order to understand other reasons, you need to know the principle of operations of cryptotice.
Criptotice is a keys pair from cryptography (digital signature): public and private. Public key is your address. You put it on the network and wait for messages. Someone applies it, when writing a message to you; other system participants can’t read it, but you decrypt the message using your private key. Conversely, I can write a message, encrypt it with a private key, and publish a message and a public key so that people can be sure that I wrote it. In the Bitcoin system the public key is the purse number, using your private key you can use your money.
Example of system operation: you come to the coffee house, for payment of coffee’s cup you transfer the cash for its public key. At the same time, in the system is a miner, which adds your transaction to the block. After confirmation by several miners of the validity of the block with your transaction you can calmly pick up your cup of coffee.
Let's return to the reasons why bitcoin is compared to cash. Lost private key can’t be recovered as well as a lost cash purse. If the keys are stolen (it happens when hacking exchanges or mobile applications), then no one can prove your right to this purse.
Key features of Bitcoin are:
- distributed P2P (peer to peer) system (the participant is simultaneously the server and the client);
- distribution;
- cryptographic system;
- losing a key is losing money;
- issue bitcoin is a reward for mining;
- mining is the process of confirming transactions;
- the issue will cease in the 2030s (there are discussions about what will happen after);
- the amount of bitcoin is limited to 21 million;
- long confirmation of transactions, from 10 minutes to an hour (to confirm a small transaction requires a couple of blocks after, for more serious - a maximum of 6; say that 6 blocks confirm the transaction and make it unchanged);
- the ability to automatically arbitrate transactions (transfer after confirmation of receipt of services), third-party confirmation, multiple acknowledgment.
Mining and Issue.
Mining is a process of confirmation of transactions and their inclusion in the global list (Blockchain). Miners compete for the right to confirm transactions by solving a cryptographic puzzle: the more the processing power of the miner, the more likely it is to win. Thus a consensus is reached, that is, the decentralization of the system.
For confirmation of transactions the miner receives commission from transactions and reward from the system. Reward is new bitcoins that the system generates. Generation is performed by formulas, so the number of bitcoins is reduced by half every several years. This is the principle of emission of the system. Over time, the importance of the commission from transactions will increase.
Mining is a system of exploitation of people who want to cash in on it. Bitcoin is robotic system, for Satoshi, the creator of Bitcoin, mining is an excellent attempt to unleash the cryptocurrency. When the Bitcoin system was launched, nothing hindered to generate 1000 000 bitcoins at once, for example. Since Bitcoin is the first crypto currency, this way of implementation would not work. The first years the developers themselves mine the bitcoins, they gradually became liquid. People became interested in the cryptocurrency and the process of its extraction and gradually began to compete in the calculations. This led to the fact that now one bitcoin costs 8000 $. People spend huge amounts of energy for reward, although in the system the calculations can be performed on a farm or on a simple laptop. From the processing power depends only on the speed of creating blocks and the time to confirm blocks, because databases can be filled with extra constantly updated information about the state of the system.
Risks of system.
There are risks for stakeholders of system. The first risk is the separation of the chain into several parallel (example, network gap). The transactions of one of the chains that were spent less computing power will be canceled. The next risk ruins the trust in the network. If one computer will be more than 50% of the total processing power of the system, it can create branch of chain, and since this branch has a more power, in the future the other chain will be removed.
Bitcoin is a vivid implementation of the blockchain platform.
Advantages of the blockchain:
- process speed as a whole;
- transparency, that is the general version of the truth as a whole, privacy remains;
- stability, availability and reliability is a consequence of the distribution;
- cheapness that is simple technology and its support.
Technology can be used in various fields, give examples of projects under development:
- spreading information about fraudsters between organizations;
- factoring (deferred guarantee payment);
- land registers;
- management of equipment and robots.
Список литературы
1. http://ktonanovenkogo.ru/zarabotok_na_saite/dengi/blokchejn-chto-eto-takoe-prostymi-slovami.html
2. https://habr.com/company/bitfury/blog/327468/
3. http://www.invest-rating.ru/investments/bitcoin/
4. https://spb.bc.events/ru/video-2018
