ᐅ what is blockchain? ⚡ simple explanation and use cases

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Blockchain - What Is It?

Blockchain - What Is It?

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Distributed computing and decentralized finance technologies emerged over 30 years ago. However, blockchain gained worldwide fame after the release of the first cryptocurrency, which was called Bitcoin. Almost everyone has heard the word blockchain, but not everyone is familiar with the meaning of the term. So what does blockchain mean?

Blockchain — concept in simple terms

Blockchain is a chain of blocks that is built according to certain rules. Each block contains information about transactions, has a unique number, and contains a hash sum. Blocks are stored on different servers, which is why the technology is called decentralized. Information included in the blocks cannot be deleted or modified. Each mined block brings a reward, which is distributed among miners.

What are miners needed for?

The queue of transactions in the blockchain must be continuously processed, and information about this process is recorded in blocks. Miners provide a mathematical solution that allows a block to be declared valid. If the majority of network participants accept the solution, the block is considered correct and miners move on to subsequent blocks.

In which areas is blockchain used?

It is applicable to almost all spheres of human life:

crypto industry and banking sector;
cybersecurity and identity verification;
smart contracts;
medicine;
tracking supply chains of goods;
organizing voting processes.

Criticism of blockchain technologies

Despite the fact that blockchain makes information transfer decentralized and transparent, there is some criticism of blockchain technologies:

limit on the number of transactions and scalability issues;
high energy consumption — miners consume huge amounts of energy due to the Proof-of-Work algorithm;
users lose some tokens due to fraud or their own inattention;
cryptocurrencies can be used to finance crime and other illegal activities.