Blockchain for dummies
Blockchain gives cryptocurrency another property - anonymity. In the case of a bank transfer, the bank knows exactly who, to whom and how much money was transferred. If they wish, they can block the transfer, or share this information with the state.
The Ethereum blockchain, which powers the Ethereum cryptocurrency, is currently the most open to experimentation. But this openness does not always play into the hands. New blockchain schemes are created every day, including by the largest tech corporations. Microsoft offers its customers tools to experiment with cryptocurrencies in its Azure cloud.
I'm far from the hype about bitcoin fees and exchanges, for me blockchain is a technology. New, strange, incomprehensible, but it seems to change the world, unlike your stories. Apparently she's been with us for a long time. I wrote this post as if I were talking about blockchain with my parents. I can even send it to my friends in the humanities and I'm sure they will understand.
Blockchain was described in Satoshi Nakamoto's article "Bitcoin: A Peer-to-Peer Electronic Cash System". There, in just eight pages, the author described the basics of the Bitcoin cryptocurrency, which was based on the blockchain algorithm. Blockchain appeared together with Bitcoin, but can be used independently and even modified. Anyone can create their own blockchain, even on their laptop.
Our friends liked the idea of keeping a tamper-proof list of “who borrowed whom”. They also don't want to remember who paid for whom at the bar and how much they still owe - it's all written on the wall. You discussed the idea and decided that you now needed one list for everyone.
But who should you entrust with such important accounting? When it comes to money, trust comes first. We will not entrust custody of our money to an unknown person. Our ancestors invented
banks for this, which they have come to trust over time, as they are backed by Central Bank license, laws and insurance.
In a circle of friends, everyone trusts each other, and you can simply choose the most responsible person for this role. But what if the question is about strangers? An entire city, a country or the whole world, as is the case with bitcoin? You can't trust anyone there.
Decentralization: no one trusts anyone
So they came up with an alternative approach: keep a copy of the list for everyone. So the attacker will not only have to rewrite a list, but also go into each house and rewrite the lists there. And then it turns out that someone kept several lists at home, which no one knew about. This is called decentralization - see Bitcoin Fortress platform for a detailed description.
The downside to this approach is that in order to make new entries you will have to call all the other participants and inform each of them of the latest changes. But if these participants are soulless machines, that is at least no problem at all.
In such a system, there is no single point of trust and therefore the possibility of corruption and fraud. All participants in the system act according to one rule: no one trusts anyone. Everyone believes the information they have. This is the main law of any decentralized network.
Blockchain uses the mechanism of public and private keys for this, computer scientists have long been using them for authorization in the same SSH. Briefly about how this complex but beautiful math works: you generate on your computer a pair of long prime numbers - a public key and a private key. The private key is considered top secret because it can decrypt what is encrypted with the public key. But the opposite also works. If you share the public key with all your friends, they can encrypt any message with it, so only you can read it, since you have the private key. But besides this, the public key has a useful effect - with its help you can verify that the data was encrypted with your private key, without decrypting the data itself.