What is Blockchain technology?

Blockchain can be explained as an ever-expanding list of linked records which are, through cryptography, resistant to modification. It is a decentralized public ledger of transactions across P2P networks, where access to data is distributed among all the participants in the networks. Consequently, it is impossible for stakeholders and outside agents to hack and manipulate the chains.

Blockchain was developed for cryptocurrency and mainly used as a function of currency for e-commerce. Various technologies were applied as the foundation for Blockchain technology. Therefore I categorized six different standpoints of blockchain-technology functions: Record, P2P, Currency-wise, Decentralizing technology, Data management, e-commerce.

1. Record
From murals to paper documents, letterpress, and flash drives such as CDs, HDDs, and SSDs, humans have developed various media for storing data. Recently, various cloud services have enabled data storage with relatively little time and space constraints. Blockchain is a technology that makes it possible for anyone to read the results of changes by accessing the managed data in a distributed data storage environment called ‘blocks’, formed by the connection of  small-scale data in a chain form based on the P2P method. The block records all the transaction details that were propagated to users before the block was established, and is sent to all users so that the transaction details cannot be arbitrarily modified or missed.

2. P2P
P2P(Peer-to-peer) is the sharing of files with individuals directly connected on the Internet. It is a form through which all participants become suppliers and consumers by connecting and searching personal computers directly. It is a technology that makes it possible for anyone to read the results of changes by storing the managed data in a distributed data storage environment called ‘blocks’, formed by connecting small data in a chain form based on the P2P method.

3. Currency-wise
Cryptocurrency is electronic information that can be used as money in certain networks encrypted with blockchain technology. Unlike traditional currency—also known as fiat currency—cryptocurrency is not issued by the central bank, but the financial value is digitally displayed. The cryptocurrency was originally designed as a medium for exchange of goods, i.e., as a means of payment, but unlike government issued notes, it has no face value, and for the purpose of investment, it is traded at a price formed through market exchanges which can result in gains or losses.

4. Decentralizing technology
In distributed storage, one of the core principles of Blockchain, data is distributed across numerous network nodes (such as personal PCs) around the world to store originals and numerous copies. Therefore, even if an attempt is made to change data on one node randomly, the data does not match the copies stored on the other nodes, so other network participants can easily identify that the data has been corrupted. It is controlled by an algorithm called PoW(Proof of Work). In other words, in order to manipulate the distributed data stored on the network for malicious purposes, it would be necessary to modify all identical copies of the data stored in every node at the same time. Decentralized systems are much more resistant to errors and cyber attacks because they do not rely on a single data center such as in traditional centralized systems.

5. Data management
Data management software based on Blockchain technology provides an environment for easily managing a database for the purpose of data sharing and usage by multiple people. The format, structure, and conditions for the data must be defined, stored on a server, and so forth. The program will support the decentralization of the data so that anybody can access it, while also protecting against unauthorized access. The database management system (DBMS) through Blockchain is a decentralized system that ensures transparency for all parties through shared transaction books. This has the disadvantage that existing central servers or a large-scale infrastructure must be built, and centralized data can be forged or modulated. But through blockchain technology, data can be stored and managed more safely without going through a centralized infrastructure.

6. E-commerce
E-commerce is a transaction system that enables the buying and selling of services on a network such as the Internet through computers.That blockchain functions as a currency means transactions on such networks are possible. This allows direct network transactions between buyers and sellers. Nevertheless, since these ledgers are distributed and stored and managed within the Blockchain, there is no need to worry about cancellations and double payments, and these distributed ledgers are automatically encrypted to enable secure transactions. This means fewer transaction fees and faster and more secure crypto transactions on the network such as origin management and authenticity checks.

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