How does blockchain differ from previous systems

How does blockchain differ from previous systems


Many Internet users do not get out of the network, trying to comprehend all the subtleties of cryptocurrencies. But without knowing what blockchain is, this knowledge will be incomplete. And that’s why Google searches on this topic are breaking records. And this is certainly a reasonable decision. You can’t write off the technology that has taken over the whole world.

Of course, blockchain has its advantages. On hundreds of blockchain projects are listed, and it is no exaggeration to say that with proper use, blockchain can create a world completely different from the traditional banking financial system. Blockchain can be used in a variety of fields, not just in the financial system.

Therefore, in this article we would like to focus your attention on the topic “What are the advantages of blockchain? To make it easier, we will explain the advantages of public blockchains such as Bitcoin and Ethereum.

And so, let’s get started

The main difference between the blockchain and the traditional data management system is that it is decentralized. It is this decentralized nature that is responsible for most of the benefits of blockchain.

Resistance to attacks from the central authority

When you play a mobile game, you can get strong characters or items. You can also spend a lot of time and money on developing your character. You want to keep these characters and items for yourself forever. However, playing on a smartphone is not forever. If the game operator stops controlling the application, no matter how many strong characters you have or how much money you have spent, they will all turn into “nothing”.

From the player’s point of view, such a situation should be avoided. However, we, the players, do not have the ability to control the management. The only thing we can do is complain to the management, on Twitter, for example.

The operator’s refusal of the service, deterioration of the quality of the service, weakening of the characters, etc — all this can be considered as “attacks from the central administration.” The fact that service users have no way to prevent these attacks means that smartphone games are vulnerable to attacks by central administrators.

On the other hand, blockchain is more resistant to centralized attacks. This is due to the fact that in the case of a completely public chain, there is no central authority to manage it. Decisions are made by all the people who make up the blockchain network. In the case of a smartphone game, decisions about changes to the service are made by a majority of users’ votes.

All traditional data management systems have a central administrator. This means that all traditional data management systems are at risk of being attacked by a central administrator. However, we are still constantly using different systems. We are not always aware of this, but we “trust” the companies and countries that provide these systems. We trust them to entrust our data to them, and we also pay for it.

This means that in a system with an unequal balance of power, such as a traditional service, you will have to pay for “trust in the person (or organization) with the strongest power”.

In the case of blockchain, however, there is no need for such trust, since everyone who manages the blockchain and everyone who uses it have equal power. Since the blockchain can be used without trusting anyone, it is well suited for use as an infrastructure for all services.

Such resistance to attacks by a central authority is often described as “highly decentralized”.

No system downtime

The blockchain does not have a single point of failure, because the data is also distributed.

A single point of failure is a “weak point” when an attack on one part of the system can cause significant damage to it. In a traditional data management system, all data is written to the server, and the server manages the system. This means that an attack on the server can cause significant damage to the entire system.

On the other hand, the blockchain does not have a single point of failure, so there is no risk of such an attack. Even if one of the blockchain computers is attacked, the blockchain will not be affected, since all other computers will have the correct data.

The absence of a single point of failure means that the blockchain is more resistant to third-party attacks, which in turn means a lower probability of system failure. The blockchain system can fail only if everyone decides that the blockchain is useless, and there will be no one left on the planet who could manage it. Well, or if all the computers in the blockchain are hacked.

The data cannot be tampered with

Blockchain is very resistant to data falsification. This means that the recorded data is difficult to rewrite. Once a transaction has been recorded in the blockchain as “correct”, it cannot be changed. This does not mean that it is impossible to change, but it is very difficult.

In other words, it is very difficult to get a computer that has the same or better characteristics than all the computers in the blockchain network combined. In other words, as the number of computers in the blockchain increases, so does the complexity.

The key to blockchain is that it’s not enough to just rewrite the part you want to change. We will talk about this in more detail next time, in the topic of the consensus algorithm.

Blockchain is very resistant to falsification, which makes it ideal for storing data that should not be forged, such as contracts and official documents.

Resistance to third-party attacks and resistance to hacking are often combined, describing the system as “highly secure”.

Can be used for private transactions

Due to the lack of a central authority and a high degree of security, the blockchain is ideal for transactions between individuals. This is not a problem when you are dealing with people you trust. And what to do when you’re dealing with people you’ve never met before? But when you want to make a deal with a stranger, you need an intermediary, and he must receive a fee for the transaction in order for the business to work.

However, as blockchain penetrates the world and makes it easier for people to trade with each other, the intermediary business model will cease to be viable. We will move towards an economy in which transactions are carried out at a fair price, with the shortest path from the producer to the consumer.

High degree of traceability

All transactions and data movement are recorded in the blockchain in chronological order, starting from the beginning of the chain and up to today. This means that you can consistently track the evolution of the data.

For example, in the case of a blockchain for money management, it is possible to track how the money ended up in the hands of its current owner. Such traceability is used in many cases to visualize the supply chain from the manufacturer to the consumer.

Blockchain will be introduced into society by us, and not by someone else

As you can see, blockchain has all the advantages that we have described.

Blockchain is also a system that, if used correctly, can create an economy closer to the social optimum than the existing system. It may take some time before it is introduced into society (if it is). I want to believe that we will see how this technology can lead to significant changes in society.

Its introduction into society will be the work of many people, not just a few brilliant engineers. Of course, you don’t need to know the basics of cryptography, but it’s very important to understand how it works.