Cryptocurrency cannot exist without blockchain. But it is not the only way to use this promising technology.
Blockchain is a type of database that stores information in a chain of chronologically linked blocks. The main idea is that the information can be recorded and distributed, but not edited. Blockchain can store different types of data but it’s mostly used as a ledger for transactions
Blockchain technology itself was invented in 1991 by two researchers: Stuart Haber and W. Scott Stornetta. They wanted to come up with an archive system where document timestamps could not be changed. It took almost two decades to launch the first cryptocurrency based on this invention. In 2009, Satoshi Nakamoto put into circulation the well-known Bitcoin — now the most popular cryptocurrency that we accept at Exeno. It was the first real and worldwide application of this technology.
How does Blockchain work?
Blockchain consists of blocks. Those blocks are linked and contain information about themselves and the adjacent ones. For example, Bitcoin stores the information regarding the transactions: the payer, the receiver, and the number of coins transferred.
Every block has a hash, its unique number. It identifies the block and the records inside it. This information cannot be deleted or changed. One can only add new records. As the block is filled with data it’s chained to the previous block.
Blockchain does not store its information in a centrally controlled fashion. Rather, it is duplicated and distributed across a network of computers. When a fresh block is added to the chain, the network updates its data and records a new member of the blockchain family. After added to the chain, each block is given a precise timestamp. Anyone in the network can see the full record of the changes.
Is Blockchain secure?
Safety of the stored data is intrinsic to blockchain technology, and one of the main reasons why it’s becoming so popular.
The reasons for trusting blockchain include:
- Decentralization – the bedrock of this technology. It ensures the control over the entire chain is held collectively by its users. Everyone has a full record of data stored in the blocks. Thus, any single misstep or error will have no overall impact. Should one computer fail, the others will still have the original unaffected data. The incorrect information will be overwritten and no harm will be done.
- Consequently, nobody can change the information inside the block unnoticed. As the blocks are interconnected and identifiable by their hash codes, any alteration affects the entire blockchain. Any changes need to be consensually accepted by the majority of users to become valid.
- Invulnerability to hacker attacks is another security aspect stemming from decentralization. Blockchain is extremely difficult to hack. For example, should hackers want to steal a Bitcoin, they would have to control and alter not one but at least 51% of blockchain copies. Only this would result in the new, hacked version becoming valid. Such an attack would require extensive resources and money and, even then, wouldn’t go unnoticed by the other users.
- Cryptocurrencies based on the blockchain technology operate without any intermediaries, the likes of banks or governments. We all know that these institutions can be unstable, making fiat currencies vulnerable to economic forces. Blockchain lets people from politically shaky countries avoid financial loss and conduct domestic and international business autonomously from their governments’ actions.
- Blockchain is secured by the proof-of-work procedure, executed by miners while mining a new Bitcoin. Mining bitcoins is like solving a complicated mathematical puzzle and the proof-of-work algorithm checks whether the puzzle is solved correctly. It prevents users from double-spending and getting coins that they did not earn.
Why will Blockchain change the world?
Blockchain is already used as the foundation of cryptocurrencies and has great potential for other fields, for instance storing and processing personal data and identification, marketing, retail, and computer games.
Business is about accurate data. The faster this data circulates, the better for business. Blockchain speeds up the exchange of information regarding payments, items, deliveries, etc. Plus, this information is always accessible, with every change being trackable.
For instance, Walmart uses this technology in its, now fully digitalized, food supply chain. Thanks to blockchain, Walmart can track down the particulars of any food item within seconds: its origin, location, and condition. It makes the supply chain more transparent and the whole process less costly and more reliable.
Both sellers and customers are protected by blockchain technology because the entire transaction history is recorded and impossible to tamper with. As of 2021, there are over 1000 businesses offering payment in crypto. But Exeno is the first company that accepts payments exclusively with cryptocurrency, without exchanging it for FIAT money.
The blockchain technology can also benefit the banking sector. Consumers can get their transactions completed in 10 minutes regardless of the transaction value, saving on commissions and insurance. Furthermore, the transactions wouldn’t depend on the banks’ working hours and any other external circumstances.
Blockchain may do for business what the Internet did to communication: create innovative ways for working and automate routine operations. As blockchain is safe and convenient, it is only a matter of time until it becomes the main technology for running businesses.