Blockchain - what is it in clear language. What is blockchain system, mining and cryptocurrency

Blockchain is a continuous sequential chain of blocks containing information built according to certain rules. Blockchain as an eternal digital distributed log of economic transactions, which can be programmed to record not only financial transactions in quality, but practically everything that has value.

But such a definition does not give a sufficient understanding of what it is and how it works. Let's consider the blockchain in more detail and try to simply and clearly explain what kind of technology it is.

Blockchain is a versatile tool for building various databases, which has the following advantages:

• Decentralization. Missing main server data storage. All records are kept by each member of the system.
• Complete transparency. Any participant can track all transactions that took place in the system.
• Confidentiality. All data is stored encrypted. The user can track all transactions, but cannot identify the recipient or sender of the information if he does not know the wallet number. A unique access key is required for transactions.
• Reliability. Any attempt to make unauthorized changes will be rejected due to inconsistency with previous copies. To change the data legally, a special unique code is required, issued and confirmed by the system.
• Compromise. The data that is added to the system is verified by other participants. In smart words, they recalculate the hash. (There is a separate article devoted to hashing, but they essentially count apples using complex mathematical formulas.)

Allowing digital information distributed but not copied, blockchain technology has created the basis for a new kind of internet. The technology was originally developed for the digital currency, bitcoin, but the tech community is currently looking for other potential use cases for the technology.

The bitcoin cryptocurrency is called "", and for good reason. Today, the total value of the currency is about $ 68 billion. Blockchain can create other types of digital value as well. It is not necessary to know how the blockchain works to use it, like, for example, the Internet or the car. However, having a basic knowledge of this new technology will help you understand why it is considered revolutionary.

Material navigation:

Blockchain technology in simple words

Blockchain (blockchain) is a distributed database with no storage devices connected to a shared server. This database stores an ever-growing list of ordered records called blocks. Each block contains a timestamp and a link to the previous block.

To explain it on the fingers, the blockchain is often compared to a standard diary or file cabinet, where records are made in chronological order about what has been done - sleeping, eating, washing, walking, borrowing, paying $ 100 for dinner, etc. So that no outsider can make changes to the diary at his own discretion, all information is encrypted in a special way, and the cipher is well thought out. If the diary is in one copy, anything can happen to it - the house burned down and he, along with it, was stolen, deciphered with a great desire and corrections were made.

Therefore, for reliability, the diary has many copies that are stored in different places. Moreover, when new information is entered into the diary, it is updated on all copies after verification.

The use of encryption ensures that users can only modify the parts of the blockchain that they "own" in the sense that they have the private keys without which they cannot write to the file. In addition, encryption ensures that copies of the distributed blockchain are synchronized for all users.

Blockchain technology is built from the ground up to be secure at the database level. The blockchain concept was proposed in 2008 by Satoshi Nakamoto. It was first implemented in 2009 as a component of the digital currency - bitcoin, where the blockchain plays the role of the main common ledger for all operations with bitcoins. Thanks to blockchain technology, Bitcoin became the first digital currency to solve the problem of double spending (as opposed to physical coins or tokens, electronic files can be duplicated and spent twice) without the use of any authoritative body or central server.

Security in blockchain technology is ensured through a decentralized timestamping server and peer-to-peer network connections... As a result, a database is formed, which is managed autonomously, without a single center. This makes blockchains very useful for event logging (e.g., medical records) and data manipulation, identity management, and source authentication.

How does the blockchain system work?

Blockchain technology is sometimes referred to as the "Internet of Value" and we think this is a good metaphor.

Everyone can post information on the Internet, and then other people can access it from anywhere in the world. Blockchains allow you to send any value anywhere in the world where the blockchain file will be available. But you must have a software-generated private key to only allow you access to the blocks that you "own".

By giving someone your private key, you are essentially giving that person a sum of money that is stored in the corresponding section of the blockchain.

In the case of bitcoins, such keys are used to access the addresses at which certain amounts in currencies of direct financial value are stored. This implements the function of registering the transfer of funds, usually banks perform this role.

In addition, another important function is implemented: establishing trust relationships and verifying the identity of the person, because no one can change the blockchain without the corresponding keys. Changes not confirmed by these keys are rejected. Of course, keys (like physical currency) can theoretically be stolen, but protecting multiple lines computer code usually not expensive. (Compare, for example, with the cost of storing gold reserves in the notorious Fort Knox).

This means that the main functions performed by banks - identity verification (to prevent fraud) and subsequent registration of transactions (after which they become legal) - can be performed by the blockchain faster and more accurately.

What is a Distributed Database?

Imagine a table that is duplicated thousands of times in computer network... Then imagine that this network is designed in such a way that it regularly updates this table - and you already have a basic understanding of the blockchain.

The information stored on the blockchain exists as a common and constantly checked database. This way of using the network has obvious advantages. The blockchain database is not stored in any single location, which means that it stores records really publicly and they are easily verified. There is no centralized version of this information that could be corrupted by a hacker. Copies are stored on millions of computers simultaneously, and its data is available to anyone on the Internet.

To get down to the analogy with Google spreadsheets, I suggest reading the following opinion from a blockchain expert.

Blockchain types - private and public

Since this technology can be used to build different types services and applications, then separate the private and public blockchain.

Private blockchain

Such blockchains are considered exclusive and are created for the development of private business. They are closed and centralized, maintained and controlled by their creators, and subject to corporate goals. To become a member of a private Blockchain, certain conditions must be met, and only certain certified users can mine new blocks.

Public blockchain

Anyone can join public blockchain systems, since the community itself is in charge of administering them.

What is the reliability and longevity of the blockchain?

Blockchain technology, like the Internet, has built-in error resilience. By storing blocks of information that are identical throughout the entire network, the blockchain cannot:

1. Controlled by one person;
2. Has no single point of failure.

Bitcoin was invented in 2008. Since then, the Bitcoin blockchain has been operating without significant disruptions. (As of today, the problems with Bitcoin have been due to a hack services built on top of it, or lack of control. In other words, these problems arise from bad intent and human error, not from flaws in the protocol architecture.)

For almost 30 years, the Internet has proven its reliability. This achievement bodes well for blockchain technology that continues to evolve.

As revolutionary as it sounds, blockchain really is a mechanism that provides the highest degree of accounting and identification. There will be no more missed transactions, human or machine errors, or even changes made without the consent of the parties involved. Most importantly, blockchain helps ensure the legitimacy of a transaction by recording it not only in the main ledger, but in a distributed system of ledgers linked through a secure verification mechanism.

Areas of blockchain application

The essence of the "blockchain" as a publicly available, distributed and 100% reliable database makes blockchain applications very attractive for companies operating in different fields.

Currently, there are already a number of extensions for developing business applications on the blockchain, providing:

• secure network administration, eliminating hacker attacks MIM ("man in the middle") and removes the problem of "single administrator";
• storing digital certificates, making user access to sites completely secure (in particular, excluding interception of passwords);
• secure bilateral transactions without the involvement of a guaranteeing third party (law firm, notary, bank, etc.);
• fixing the time of placement of documents, which allows solving the issues of patenting, copyright, etc .;
• confirmation of the authenticity of the product (goods) using a reliably secured certificate;
• confirmation of rights to any property;
• creation of public electronic business cards, information on which is automatically updated even after "distribution" on Internet resources;
• DNS system, invulnerable to DDOS attacks,
• and other.

Implementation of blockchain technology in Russia and Ukraine

In the Russian Federation, the technology is going to officially legalize and begin to implement in 2019, having adopted by that time the necessary regulatory and legal acts. So far, the country's large banks, together with the Central Bank, have created the Masterchain platform in order to improve the efficiency of the financial system.

An interesting blockchain project operates in Moscow. The platform is called "Active Citizen", and with its help all kinds of votes are held to improve life in the capital.

In Ukraine, today the State Land Registry has been partially transferred to the blockchain. In particular, the process of checking the statement is based on this technology. At the second and third stages of blockchain cadastre, the existing database will be transferred to a distributed ledger, and then they will start hashing all ongoing transactions. The next step is also State Register property rights to real estate.

Pros and cons of technology

As you can see, blockchain is a universal technology applicable in different spheres of life, which is its definite plus. In addition to the openness, security and safety already discussed above, the blockchain also:

• Reduces transaction costs.
• Reduces the time of transactions from several days, or even weeks, required for data verification and exchange of documents, to several hours.
• Allows organizations, institutions to get rid of extra articles expenses.

The disadvantages include scalability. Today, the blockchain is unable to provide a huge number of transactions in a short time. For example, MasterCard or Visa payment systems process about 45 thousand transactions per second, while Bitcoin has only 7. The weight of the database, which is stored on the computers of the network, also grows daily.

Do not forget about the load on Electricity of the net, when it comes about networks operating on the basis of the POW algorithm. All these complex calculations make computers consume large amounts of power.

Speaking about the invulnerability of the blockchain, experts also point to the probability of the so-called "51% attack". In other words, if a group of network participants concentrate 51% of the computing power in their hands, they can start acting in their own interests, confirming only transactions that are beneficial to themselves. However, this will require such powerful resources that it is extremely difficult to put this idea into practice.

Blockchain wallet

One of the wallets for storing bitcoins, which was founded in 2011, got its name from the name of the innovative database. This is just one of the many blockchain wallets, it is given here as an example, you can familiarize yourself with all their types in ours.

We also separately analyzed the most popular blockchain wallets Bitcoin (BTC) and Ethereum (ETH):

The blockchain wallet offers us not only to store our coins, but also is a block explorer, that is, it is here that you can view which transaction, where it was sent, and also trace the chain of transfer of coins from the moment of their occurrence (if inadvertently or sell, then you can issue data about yourself, which will be available to everyone).

The wallet has long enjoyed a good reputation as a reliable and convenient service, and if it were not for the high commissions, then the site could indeed be called the best. But, lately, Blockchain requires too much for making a transaction, and with small fees (they are set by the user himself), the transaction can wander somewhere for a long time, and then return to its owner unconfirmed. Despite this, many users are loyal to the service - you can also create an account on it.

If you have decided to register an online bitcoin wallet, why not do it right now? I offer a short user guide that will make you a happy owner of a Blockchain account in a few steps.

1. Go to the official website of the online wallet and select the "Wallet" section.
2. Next, select one of the buttons for creating a wallet - at the top of the screen or in the center, select "Sign Up".
3. We enter a minimum of data about ourselves: mail, password and accept the terms of use of the service.
4. Registration is complete, I advise you to immediately verify your mail, because this will allow you to access the wallet at various unfavorable moments.

To enter the system, select the “Login in” function in the “Wallet” section, and then specify the data that were specified during registration. Already from personal account you can customize the account security level that suits you best.

It is also very important to keep the password to access the wallet, because its loss threatens to lose money. In order to have a chance to restore access, I advise you to immediately request the mnemonic code and store it in a safe place.

Blockchain transactions

Blockchain is a digital ledger protected from unauthorized access common use that keeps track of transactions on a public or closed peer-to-peer network. Distributed among all network nodes, the ledger continuously records the history of asset transactions between peer (of the same order) network nodes in the form of blocks of information.

All approved blocks of transactions are connected into a chain - from the initial block to the last added one, hence the name of the technology - blockchain. Thus, the blockchain acts as a single source of reliable data, and the participants in the blockchain see only those transactions that relate specifically to them.

Instead of turning to third parties, such as financial institutions, as intermediaries in transactions, the nodes of the blockchain network use a special consensus protocol to agree on the contents of the ledger, as well as cryptographic hashing algorithms and digital signatures to ensure the integrity of the transaction and passing its parameters.

The consensus mechanism ensures that distributed ledgers are exact copies, which reduces the risk of fraudulent transactions occurring, since outside interference can occur in many places at the same time. Cryptographic hashing algorithms such as the SHA256 calculation algorithm ensure that any change in the input to a transaction, even the smallest, will result in a different hash value in the calculation results, indicating that the input to the transaction is likely to be compromised. Electronic digital signatures ensure that transactions are made by legitimate senders (signed with private keys) and not by attackers.

A decentralized peer-to-peer blockchain network deprives individual participants or groups of participants of the ability to control the underlying infrastructure or destabilize the entire system. All network members are equal and connect to it using the same protocols. Participants can be individuals, state structures, organizations or associations of all the listed types of participants.

In essence, the system records the chronological order of transactions with all nodes in the network that have recognized the validity of transactions through the chosen consensus model. The result is non-cancellable transactions that are decentralized by all participants in the network.

Blockchain now and in the future

It is quite possible that now is exactly the time when the technology is being tested live at a very significant areas public life, and soon we will see more and more more projects and platforms using blockchain. Already now, banks are trying to actively implement this in themselves (including to reduce operating costs), more and more new players are appearing on the market, striving to popularize the use of technology.

New projects on the blockchain will be based on its main advantages - openness, security, security.

Therefore, the blockchain will be a good help for any services where users could worry about possible fraud or data safety:

• micropayments
• Bank operations
• logistics
• jurisprudence
• the medicine

In just a few years, the blockchain has already gone from a novelty in the technological world to a tool that large banks, corporations and states are beginning to use.

This only strengthens the confidence that the technology will reveal its potential even more in the future.

Examples of the most popular blockchain projects

There are a lot of such projects and new ones are constantly appearing, here we will consider only a few of them.

The advantages of using blockchain are revealed when solving wide range challenges arising in real life: sending currency, workflow, file storage and decentralized trading. At the same time, anyone can invest in startups that use the blockchain as a base platform for development. Blockchain is at an early stage of its development, so the profit for investors in the future may turn out to be even more impressive than Bitcoin's growth over the past six years.

We present to your attention the most promising blockchain projects, which in just a few years can radically change our lives.

Ethereum

Ethereum(Ethereum) is the second largest project by capitalization among all public cryptocurrencies. The main idea of ​​Ethereum is the use of smart contracts - records containing conditions for performing certain actions. Any action can be a condition - for example, the transfer of goods to the customer or the appearance of a record of the shipment of a new batch of chocolates. The developer using can program the necessary triggers and actions using the built-in scripting language. In this case, each record can be verified by all interested parties: the data register remains open and decentralized.

Due to the high flexibility of smart contracts, Ethereum has become one of the most popular platforms for creating new blockchain projects. Developers no longer need to invent own implementation block chains: you just need to create the desired add-on over the existing system.

The main drawback is the lack of intelligible models of interaction with some real processes: for example, using the program code it is impossible to track the physical transfer of goods from the supplier to the buyer. The next project tries to solve this problem.

Aragon

Aragon became one of the most successful blockchain startups in 2017: its creators raised more than $ 25 million to develop their project within 15 minutes, after which the capitalization smoothly increased 3 times within a week.

The idea proposed by the developers of Aragon may seem overly ambitious to someone: the project implements the concept of decentralized organizations that exist exclusively within the blockchain: no paperwork and bureaucratic procedures, only digital data. Meanwhile, even a cursory assessment of the project shows that there is nothing utopian in these declarations. The alpha version of the software is already available on the Aragon website, which successfully copes with the tasks that arise when creating startups and other private online projects:

• management of the shares of the owners of the company;
• voting procedure implemented on the basis of smart contracts;
• fundraising (functionality for raising funds for business development);
• distribution of staff positions.

According to the Aragon roadmap, it is small innovative businesses that will become the first users of the project. In the coming months, it is planned to significantly expand the functionality and introduce a dispute resolution system, which will link the execution of smart contracts to real business processes. Thus, Aragon lays the foundations for a new decentralized economy and can significantly reduce the costs of companies.

NEM

Created by a large development team from Japan, it is in many ways similar to the Ethereum we have already reviewed and is a platform for the development of various blockchain projects. However, unlike Ethereum, this startup focuses on the speed of transaction processing: confirmation of an action in the system takes a matter of seconds. This advantage allows NEM to compete with bitcoin, which has recently been experiencing big problems with the speed and cost of remittances.

Unlike Bitcoin, which is focused on making transfers between individuals, NEM offers a platform that allows billions of transactions in the interbank market. The project developers are actively working to further increase network bandwidth and reduce fees. Due to the high speed of sending funds, NEM is an attractive cryptocurrency for banks and other large financial institutions.

Ripple

The main competitor of the NEM project. The use of the Ripple blockchain allows banks to significantly reduce transaction costs and reduce the time it takes for money transfers around the world.

It is noteworthy that Ripple is already being tested by several large financial corporations, which indirectly indicates the good potential of the project. Such powerful structures as Mitsubishi UFG, UniCredit and the National Bank of Abu Dhabi announced their participation in the project.

The disadvantage of Ripple is considered to be a not very transparent asset allocation system: more than 50% of the capital is under the control of developers. Thus, when drawing up an investment portfolio, the most reasonable choice would be an equal distribution of funds between competing projects NEM and Ripple.

Sia

Decentralized cloud storage project. Unlike traditional services like Google drive or Amazon S3 storing user data on own servers Sia offers a mechanism for distributing encrypted information on multiple independent computers.
Let's take a closer look at how Sia works.

1. Computer and server owners around the world provide some of their disk space for rent, creating a so-called node. At the same time, the income of the node owner directly depends on the stability of its channel and the safety of files.
2. The user purchases a paid subscription and uploads a file from his computer to a distributed network. In this case, the file is securely encrypted and divided into blocks, which are downloaded to the computers of the "landlords". The information is repeatedly duplicated in case of disconnection of one or more network segments.
3. The smart contract automatically pays a reward to the owners of the nodes after a certain period of time. The profit is accrued using the project's own currency - Siacoin.

What is Sia's advantage over traditional cloud services? It's all about the cost of the subscription: the cost of storing files in decentralized storage is 10-15 times lower than that of traditional file hosting. In addition, encrypted files cannot be opened at the request of the police and other government agencies.
Another project that is almost identical to Sia is Storj distributed storage. When investing, the wisest thing to do is to distribute funds between both projects.

DASH

It is digital cash with improved privacy and anonymity features. The key advantage of Bitcoin was a reliable decentralized system of exchange of value between people who had every reason not to trust each other.

This is the nature of the “Dark Markets” (Darknet). The infamous Silk Road was shut down by the US authorities for trafficking in drugs, fake passports and other illegal goods. The people who used this system in many countries obviously worked outside the law - it can be safely assumed that most of the users of this system were criminals. How can two criminals, who have every reason not to trust each other, securely complete a transaction over the Internet? This is where the primary “killer” use for Bitcoin was found (although the actual cases of payment for contract killings through this trading platform are not known).

Unfortunately, the flashy headlines of those years captured the attention and imagination of the public in such a way that crime and cryptocurrencies are still closely associated with each other. Everyone "forgot" that the criminals were also the first users of mobile communications, pagers, radio communications, cars, Email and all other advanced technologies. One gets the impression that the police are always in the role of catch-up.

Today, with a high degree of probability, we can say that any Bitcoin transaction can be tracked, and several criminals from the Darknet have already experienced this firsthand. So Bitcoin's seeming privacy quickly disappears when the authorities really need to find someone.

DASH brings us back to those early times intact privacy, operating on the principles of cash. Cash, like any instrument, in itself has no moral - it cannot be “bad” or “good”. It is simply a vehicle for conveying value. And it's only natural that people want to keep their finances private. Laws in different countries may be very different, and an attempt to buy a Bible in North Korea may end imprisonment... or something worse ...

DASH provides anonymization of transactions at the level of the network protocol, which allows maintaining the uncertainty of the source and recipient of money transfers. And if governments have expressed complaints even in relation to Bitcoin, then they will definitely not like the possibilities of DASH. This functionality is quite interesting, and most importantly, it is in demand in modern world total surveillance. In addition, DASH implements a mechanism for instant confirmation of transactions, as well as a unique management and self-financing model - Bitcoin has a lot to learn here.

Bitshares

Positions itself as a 3rd generation blockchain. Its tokens can be used as proof of ownership of objects. Even property in the physical world can be linked to these tokens to recognize and identify it. This allows you to trade and track changes in ownership in a decentralized network.

Bitshares also acts as a decentralized marketplace for exchanging property. Moreover, their current price can be fixed by expressing it in more stable units, such as the dollar or gold.

It is argued that trading can be conducted on a global scale. Bitshares could very well be something of a next generation ecommerce platform for any kind of property.

The use of cryptocurrencies and other decentralized technologies is still at the stage of comprehension. It is rather difficult to predict which of the existing projects will be able to make their way into big life. At the same time, the blockchain is used not only by real developers, but also by creators financial pyramids who want to capitalize on the growing interest in this technology.

Before making a decision to invest in a specific blockchain startup, we advise you to study in detail the available information about the project:

• read the Whitepaper (a document explaining the development concept);
• highlight the unique features inherent in this startup;
• understand the technical features;
• make sure that information about the development progress regularly appears on social networks and on the project website;
• read the list of developers;
• note technical specifications: age, capitalization, the nature of the rise or fall of the exchange rate.

There are hundreds more interesting and promising blockchain projects, follow the news about them on our website.

B lockchain, cryptocurrencies, mining ... why are these incomprehensible words constantly flashing in the headlines? Why so much attention to them? Do you follow the news about them? And in vain, because we are talking about earnings, which you may like. Making money with the help of these tricky words (more precisely, what they mean) does not require active participation, only material investments.

So, let's figure out what blockchain technology is, what cryptocurrency mining is, how promising it is, and whether it's worth getting involved in this business at all.

What is blockchain and how does it work. What is cryptocurrency and mining

B lockchain- this is a chain of blocks lined up in a certain order, but not any, but consisting of transactions - records of transactions on the transfer of something from one owner to another. For example, about money transfers from account to account.

In other words, the blockchain is a kind of database. But again, not ordinary, but distributed, that is, stored simultaneously by all its users. This database contains, as you may have guessed, information about the transactions of the participants in the system - the owners of the "money" accounts.

Blockchain is an open access database

Each user of the system sees in real time all changes in this database, namely, the addition of new transactions. And of course, information about all previous operations from the beginning of the blockchain's existence is open to him. This means that financial transactions in such a system are absolutely transparent for everyone.

Changes in the blockchain database are the same for everyone

A transaction in the blockchain, as in payment system bank, requires confirmation so that no participant can spend the funds that he spent earlier. That is, so that the next operation is impossible until the previous one is confirmed. For this, the system keeps track of the order of transactions.

To maintain such records, the system groups the transactions of the participants by the time of completion. One group is one block of the blockchain. Each block contains the parameters of the operation, the digital signature of the initiator of the transaction, a link to the block of the previous transaction, and a special number. Until this number is available, the transaction is considered unconfirmed.

The special number is the result mathematical calculations, where the input is the contents of the current and previous blocks. Computations are performed by the computers of the participants in the system. The participant who first finds the number receives a reward from the system, that is, earns a unit of "money". The process of such calculations is called mining, and "money" is called cryptocurrency. The more the computing power of the computer, the higher the participant's earnings.

Cryptocurrency mining is transaction verification

The essence of computing is transaction authentication, which maintains the viability of the entire blockchain. An attempt to deceive the system by substituting false values ​​closes the ability to correctly determine the number, because when calculating it, the data of other previously confirmed transactions are taken into account.

If someone tries to cheat the system, the transaction will not be confirmed

This is the principle of the platform - the first cryptocurrency in the world.

Is cryptocurrency money?

With the mining of digital currencies, we probably figured it out. Now it is important to find out what is it? Money or not? My answer is this: cryptocurrencies are not money, but "money". In quotes. Settlement units. They function as money and are tied to real currencies. They can be exchanged for banknotes and used to pay for goods and services. But in order to receive the status of real money, cryptocurrencies must be recognized as such by the global financial system.

What can you exchange bitcoin for?

Money has value when it is backed by tangible assets (gold, oil, etc.). What are cryptocurrencies backed by? Nothing but the time and energy spent on getting them. What, then, determines and maintains their course? Here's what. The longer the system has existed and the more participants it has, the more transactions are concluded within it. The more transactions, the more difficult and time-consuming the mathematical calculations and the higher the energy costs. This, coupled with the agreement of the participants, determines the course of the cryptocurrency. And its stability is given by the trust of users. The more people are included in the settlement systems in this currency, the more reliable it is.

Isn't blockchain a pyramid scheme?

The bottom line of financial pyramids is the transfer of money from one pocket to another without providing material assets. The viability of the pyramid provides only a constant influx of new investors, and when it dries up, the pyramid collapses.

Cryptocurrency blockchains also function due to the support of the system participants, but they do not need a constant flow of fresh blood. Then, their product has attractive properties in itself, and this is not only "free" earnings. For many users of such systems, it is important anonymity of settlements(the participants know only each other's account numbers), practically zero probability of fraud, non-exposure to inflation, transparency, minimum fees, decentralization and lack of an owner (unlike banks, which have recently often "burst" with depositors' money). In general, the whole world has recognized great prospects for such technologies.

Draw your own conclusions.

Is it profitable to make money by mining today?

Your earning potential depends on how much you are willing to invest in it. More precisely, to spend on the purchase of equipment and maintenance of its work. It is also important not to be mistaken in choosing a cryptocurrency, having correctly predicted the change in its course.

To calculate the profitability of mining, there are special calculators that rely on the following data:

• Hash rate- the computing power of the equipment.
• Coins per block- how many units of currency are created when calculating 1 block. This number is determined by the system and changes over long periods of time. For the oldest and most popular cryptocurrency in the world - Bitcoin, this number v this moment is equal to 12.5.
• Coin Difficulty- the difficulty of mining. Determined by the system. The more participants, the higher the complexity of the mathematical operations.
• Electricity Rate- the cost of a kilowatt-hour of electricity.
• Power consumption- how much energy is consumed by mining equipment. It is determined in total by the power of all devices from which it is assembled.
• Pool fees- commissions that will have to be paid for connecting to a pool - a group of miners who unite to increase the efficiency of mining.
• Time frame- the time for which the calculation is made. By pointing here different meanings, you can determine in what period your investment will pay off.
• Profitabilitydeclineperyear- predicted decrease in mining profitability in a year. Depends on the complexity of the mining. The higher the latter, the greater the expected decline.
• Conversion rate- the exchange rate of the cryptocurrency against the US dollar.

An example of such a calculator for Bitcoin is found. Besides him, there are many others.

Despite the calculations and forecasts, the miner's path is thorny. What dangers and risks lie in wait for him on the path to the coveted $ million:

• Decrease in the exchange rate to a level where mining revenues are equal to expenses.
• Equipment failure. For mining, they usually use - from 6 pieces per farm. The failure of at least one will result in significant losses. For mining bitcoins, not video cards are usually used, but ASICs (ASIC - an abbreviation from the English application-specific integrated circuit, "special purpose integrated circuit"). And yes, ASICs also fail regularly. Don't forget that mining hardware is forced to run 24/7 at maximum load.
• Significant rise in electricity prices. It will be your main expense anyway. Move to Irkutsk.
• Legal prohibition of mining and circulation of cryptocurrencies in your country. Perhaps this is the most unpleasant and in our reality - very likely - risk.

What is the optimal investment amount to enter the blockchain? To have an income equal to average salary, specialists in mining Bitcoin it is advised to start with 300,000-500,000 rubles. These are funds for the purchase of equipment. However, due to the high degree of risk, you should not invest in this business all your savings and money borrowed under high interest... Still, in terms of the amount of risks, mining is no less a gamble than financial pyramids.

What cryptocurrencies are the most promising today

Whatever one may say, but the most liquid and predictable digital currency was and remains bitcoin. It has the largest network of users in the world, which means that there is no need to fear its fall, let alone a complete withdrawal from the market in the foreseeable future. On the other hand, having invested not very much (and “a lot” today amounts to billions), one should not count on significant earnings. As for the competitors of bitcoin, not everyone trusts them, considering their rapid growth to be an artificially inflated “bubble” that will surely burst.

Someone, on the contrary, prefers to invest in certain types of altcoins, such as Ethereum (ether), calling it a new generation cryptocurrency. Ethereum is based on a more advanced, and therefore stable platform that will not allow it to drop significantly in value. There are thousands of other currencies, but you need to be very confused to figure out which of them are worth at least some attention, and which are not. For example, there are also promising Z-Cash coins that are based on the latest technology Equicash.

How to start earning

First of all, based on your financial capabilities and expectations, decide on the choice of cryptocurrency. Explore all the available materials about her.

Purchase and install equipment. For different cryptocurrencies, different mining methods are used (on integrated circuits, on processors, on video cards of different models and brands). In reference materials about a specific digital currency, there are always recommendations for choosing a technique. In addition, one of the new articles on F1comp will be devoted to this. What you need in all cases is a fast and stable Internet connection.

Select the pool in which you will mine (platforms that provide such services take a commission, so look at it first). Install and configure the miner program (you will find instructions in the reference books) and connect to the pool.

Market share of Bitcoin pools according to blockchain.info

Start a wallet where the coins you earn will fall. Or find suitable exchanges and services through which you will exchange cryptocurrencies for real money.

Everything is ready. Start mining and get rich, but do not lose your head from success, because virtual currency, she is - today is, tomorrow is not.

More on the site:

Just about the incomprehensible: what is blockchain, mining and how to make money on cryptocurrencies updated: March 5, 2018 by the author: Johnny mnemonic

In the last month and a half, due to rapid growth the rate of some cryptocurrencies, it became profitable to mine on video cards, which, by the way, led to their sharp rise in price. But not everyone knows what mining is and how it works, and we will talk about this in this article.

Let's start with the definition:

Mining (mining, extraction of minerals) - activities to maintaindistributed platformand the creation of new blocks with the ability to receive rewards in the form of new units and commissions in variouscryptocurrencies.

It is clear that nothing is clear. A distributed platform is a way to solve problems at once on many devices connected in parallel. That is, roughly speaking, in the process of mining, a mathematical problem is solved, as a result of which you can get money for it. In other words, PC performance is converted into money, and you only pay for electricity and the Internet.

Hash and blockchain are the pillars of mining

But what is this task? In order to answer this question, let's first figure out what a hash is. A hash, or hash function, is an algorithm that converts any source data, be it a file, picture or text, into a sequence of letters and numbers of a certain length. Moreover, it does this in such a way that different initial data give different results (otherwise, if different initial data give the same hash, this is called collision - collision, and this is, generally speaking, a vulnerability).

What do we need a hash for? We need it in order to know whether they are the same or not without having files on hand. Why do we need it? To understand this, consider the second important component of mining - blockchain.

Blockchain (blockchain, block chain) is a continuous sequential chain of cryptographically related blocks that contain information, built according to certain rules.

Let's look at an example of how the blockchain works. Create a file and write the phrase "Hello world-1" into it. We calculate its hash sum using any algorithm - the most common is sha256. Suppose we got line A (in fact, it is 64 times longer and more varied in some way, but for clarity, we will simplify the situation). Now we create a second file, write the phrase "Hello world-2" into it and write the next line A. We save the file and read its hash - it turns out, for example, B. Now we create a third file, write "Hello world-3" into it and B, save, calculate the hash - it turns out to be C, create new file, etc. Congratulations to ourselves on the creation of the simplest blockchain - all previous files are tied to the very first one, that is, all blocks are elements of the same chain. In this case, the very first block is called the Genesis Block (primary block), it is considered separately, since it does not have a parent block.

Of course, the question arises - how to check the integrity of the network, maybe 10001 blocks were received not from 10000, but from the head? It's very simple - each subsequent file contains a cache of the previous one. And so you can recursively "go down" up to the very first block. If somewhere the cache does not match, then changes have been made to the network.

Now we can finally move on to the description of mining.

How mining works

Let's imagine that not only “Hello world-1” is written inside the very first file, but also 00000. We calculate its hash, and it, for example, starts with 3f5da ... Joyful, we send this cache and find out that it does not fit. But why? Yes, everything is simple - the hash must start from zero, and the number of zeros at the beginning is selected so that each bitcoin block appears once every approximately 10 minutes. Hmm, you say, well, let's write to the file not 00000, but 00001 (yes, the simplest brute force, because we cannot predict what hash will turn out. And if you can, you will get a Nobel Prize, seriously). We calculate its hash - and it starts with 7b3fa8 ... Hmm, and again there are no zeros at the beginning. Okay, let's write 00002 in the file. Not zeros again? We put 00003, and so on. And like this, iterating over, we finally get a hash starting with the required number of zeros, using this hash we generate a new block, and we get money for it. This is how mining works.

What then is the difference between mining different cryptocurrencies? Yes, only in the amount of data in the block, the current complexity, the set of rules for the hash and the hashing algorithm itself.

The question immediately arises - is it possible to somehow forge this block chain and get a lot of bitcoins at once? Of course you can, for this you just need to re-mine ALL blocks from the very beginning of the chain formation according to your algorithm - as soon as you have one more block than all other miners, the network will automatically accept your conditions. This is the so-called "51% attack", and it is possible only in theory: firstly, in order to mine almost 500,000 bitcoin blocks, it will take just gigantic computing power and money, and secondly, even becoming the "king of bitcoins", the most you can do is stop transactions on the network, which will definitely not bring you money (but it will be possible to crash the exchange rate, or, conversely, to raise and play on it. But it is unlikely that a person who has enough money to create such a network) , will do this - most likely he will invest them in something more profitable).

Regulation in the Bitcoin network

Of course, there is regulation in the bitcoin network: firstly, it is complexity: that is, how many zeros should there be at the beginning of the hash. It is selected so that 2016 blocks appear per week - that is, 10 minutes per block. Accordingly, the more computing power is involved in mining - the more complexity must be in order to keep the pace - which means that it is more difficult for everyone to find the required hash sum. The second limiting factor is the cost of the reward. In 2009, 50 BTC was given for one block, then 25, and now - only 12.5.

Therefore, we get two problems at once for the miner: if the very first blocks of bitcoins were calculated without problems on a piece of paper with a calculator (it was necessary to find a hash with only one zero at the beginning), in the early 2010s this required a computer with a powerful processor, now, even having a good server, it is almost impossible to find the required hash alone (in a reasonable time, of course). The second problem is that even if you find such a block, you will receive 4 times less bitcoins than 8 years ago. And their cost may not recoup (or rather, does not recoup for a long time) the cost of electricity - and hardly anyone will work at a loss. But there is also a plus - if at the beginning bitcoins cost literally a dozen cents, now their rate exceeds $ 2,000 - however, all the same, the greatly increased complexity has led to the fact that it is unprofitable to mine bitcoins on a home PC.

However, special devices - ASICs - have long been created. These are integrated circuits special purpose, which are sharpened for certain actions (in in this case- for mining), but they consume relatively little energy. And in order to mine on them it was profitable, huge farms are created from them in China, in places with cheap electricity - this is the only way to get significant profits.

The current state of cryptocurrency mining

The question arises - why did people suddenly rush to buy video cards and make farms about a month ago? It's simple - the rate can always grow so much that it becomes profitable to mine even on video cards (processors are worse for this - mining is perfectly parallelized, and here a GPU with several thousand simple computing units turns out to be better than a CPU with 4-8 powerful cores). But here it is important to understand that not only is the rate of a certain cryptocurrency high now - it needs to be high for the duration of the at least the time until you "take away" the costs of the farm. And in the best case for Ethereum, this is 3-4 months, and usually it is more than half a year. Alas - no one can predict the course for such a long period of time, so home mining was and is a risky undertaking.

And the very last question - what to do for those who wanted to buy a video card for themselves, but now, looking at the prices, they understand that they cannot afford them? Just monitor Avito and other platforms for selling used components: time works for you, the more miners and capacities, the less profitable and difficult mining becomes, and therefore those who had small farms working on the brink of profit have already begun to sell them , and you can already grab the 1080 Ti at the old prices. Yes, it will be a used video card, but you should understand that it worked for 1-2 months at most under conditions that were comfortable for it. And given that the warranty for them is usually 2-3 years, there is nothing to worry about.

Options for both professionals and non-professionals.

To bookmarks

Everyone is talking about blockchain now. Primarily in the context of cryptocurrency. It would seem that the easiest way to earn it is to mine. But it's getting harder and harder to do that because video cards are expensive. For example, the MSI GeForce GTX 1080, according to Yandex.Market estimates, can be bought for 39,790 rubles. It becomes more difficult to get cryptocurrency over time.

If you do expect to mine, you have two options:

1. Buy a specialized farm (from 180 thousand to 2.95 million rubles for Avito) for mining bitcoins.
2. Mining altcoins are other types of cryptocurrencies, the future of which is not so obvious. You can spend several months, but the cryptocurrency you mined will depreciate.

If mining is no longer interesting to you, I have prepared a few more branches of the blockchain that will help you become a little richer.

Participation in ICO

There is a lot of talk about ICOs now. There is no point in repeating what it is - there is already an excellent one on this topic. Let's better figure out how it can help you make money.

1. Sale and purchase of tokens

At an IPO, people buy shares in a company, at an ICO, they buy project tokens. A token is a cryptocurrency that can be used to pay for future services or receive privileges after the start.

You buy tokens of a stable and honest company, wait for the next positive news from it and sell. You can track the profitability of tokens on the ICOStats website. As of the beginning of October, Komodo project wins the top monthly, which raised the price of tokens by 56%.

Choose a company from which you will buy tokens, as if you work for it. Pay attention to the site: it should contain agreements, rules, white paper (presentation of the advantages and principles of the company).

Trust only those startups that are developing something new. For example, Humaniq is a startup that creates banking for people who don't have access to traditional banks. Stay tuned for news: if a company is doing well and fulfilling its goals after each stage of the placement, its tokens grow in value.

2. Submitting your project to ICO

Those who are working on their projects are looking for investments among funds and private venture capital investors. ICO allows you to raise money for the development of a project using crowdfunding. You announce the collection, place on the site and receive money.

The main plus is money. Successful projects raise huge sums in a short time frame. The Bancor project is so far the record holder in terms of the ratio of the amount collected and the time: in three hours the project received 396 720 ETH. A few more examples of successful placement:

• Brave - $ 35 million in 30 seconds
• Storj - $ 30 million in six days.
• Aragon - $ 30 million in 15 minutes.
• mobileGo - $ 53 million for the entire ICO period.

Everything sounds very smooth. In fact, there are many obstacles. Not all countries allow ICOs, so you have to choose a jurisdiction for your project and fiddle with the registration. Everyone who has invested needs to provide thoughtful bonuses. The company must always have a good information background, otherwise the value of tokens will fall.

Blockchain training and work in a new specialty

I agree that the word "earn" may not be associated with office work. But learning how to work with blockchain and understanding its basic principles will be useful for all IT professionals. Even if our government and the director of an "evergreen" bank are talking about the introduction of this technology, then it certainly has a future.

According to data from HeadHunter, specialists who understand the blockchain receive from 150 thousand rubles. Most of the vacancies are bashfully hiding behind the inscription "salary not specified." But we must remember that it is easier for a scarce specialist to negotiate a salary.

Banks open blockchain competence centers, recruit teams for specific projects and learn to implement this technology in the client's business. If you want to work in a bank, why not try yourself in such a department?

Presentation of the Blockchain Competence Center, opened by Vnesheconombank and NUST MISIS

If you decide to study blockchain from now on, then be sure to read the following materials: "Digital Gold", "Blockchain. New Economy Scheme ”and“ Decentralized Applications ”.

Resources will also come in handy:

• Forklog is an informational site.
• Bits - news and articles about cryptocurrencies.
• Bitmakler is a site for those who dive into the topic. Contains many selections.

There are many more forums with more up-to-date information. Blockchain is developing rapidly, but not everyone understands how to implement it in business. I recommend communicating personally with those who are integrating into their processes or developing to order.

The easiest way to do this is at events, for example, at the upcoming SEO Conference in Kazan. There will be a separate block dedicated to the blockchain. Sergey Solonin (head of QIWI) and Maxim Avdeev (head of QIWI innovation department) will speak at the event.

From them you can find out what awaits blockchain in Russia in the near future and what specialists will be needed for these projects. Maybe even take the contacts of the HR department and try to get a job in a cool federal company.

SEO Conference 2016 in Innopolis

Development to order

The blockchain has special properties: fault tolerance, decentralization, security and confidentiality. All of these properties are important for financial and insurance companies, data storage services, and more.

If you are engaged in the development of software or services, then with the help of blockchain you can expand your competence and offer more interesting solutions to their clients. Who can become your customer:

• Streaming services. Thanks to the blockchain, microtransactions will be evenly distributed among copyright holders, musicians and the service without delay in payments.
• Decentralized data storage. The meaning of such storage is that there is no specific hard disk with a specific file that can be deleted. All data is evenly scattered and duplicated among many users. Such storage is not afraid of failures and attacks.
• Electronic voting. The blockchain guarantees fairness: any data transaction must comply with algorithms and be confirmed by a dozen users. That is, the voting results cannot be influenced from within.
• Electronic document management. In transactions between two parties, it is necessary to keep a mutual record of transactions, verify the agreed conditions and launch the transaction on time after certain criteria. Blockchain helps automate all of the above and maintain privacy.

If today you are conventionally developing CRM-like services and applications for smartphones, then studying the blockchain will help expand the customer segment and include large companies in it.

Hackathons

Banks are interested in blockchain and attract entire teams. They look for teams of specialists at hackathons - competitions where developers from different fields together create a solution for case-problems. The winners receive awards. Usually money and consulting support.

The last high-profile blockchain hackathon was held in Kazan under the leadership of IT Park and Ak Bars Bank. The winners received prizes from 100 thousand rubles for solving the problem of registering real estate transactions up to $ 5000 for a prototype CPA system with guaranteed payments.

Blockchain - Russia's New Oil Hackathon Award Ceremony

These are small sums when divided by the whole team. But hackathons can be a great part-time job for you and additional earnings... In addition, the winners are often invited to incubators or to work in banks. If such blockchain events are held regularly, your team will be able to participate in them all the time.

Trading

Traders trade on cryptocurrency exchanges for huge amounts. If you know how the familiar stock or currency market works, you can imagine how cryptocurrency trading works.

New cryptocurrencies appear almost every day. By playing on their volatility, you can get an increase in income. I myself did not work much with exchanges, so I asked for some advice from a friend who works as a marketer and has been trading on the exchange for about three hours a day for more than a year.

1. First you need to choose an exchange. The most popular and largest is Poloniex. But I prefer Bittrex. It has a simpler and nicer interface. There are more cryptocurrency pairs on Bittrex. Plus secure authorization through the link in the letter. But you shouldn't keep all your eggs in one basket.
2. Choose high-cap cryptocurrencies. The larger the capitalization, the less it is affected by fluctuations and negative news. Bitcoin has long been largely unconcerned by rumors of bans in other countries.
3. Learn fundamental analysis. Start every day with news and keep track of how facts affect the course of a particular cryptocurrency and after what time. This will help you buy cheap and sell dear.
4. Graphical analysis works great in cryptocurrency markets. Track the shapes: "candles", "mountains", "heads" and so on. They work not only because they believe in them, but also because the market participants themselves simulate these situations.
5. Follow the exchange and place "stops" - signals to sell at a certain amount. One day before my vacation, I invested 0.1 BTC in another cryptocurrency and forgot about it. Upon returning, I saw that the cost of the investment had dropped to 0.07 BTC. I would set a stop, at least return everything invested.
6. There are communities and channels with signals - tips to change the rate of cryptocurrencies. Here is an example of such a channel.
7. You can trade against the background, combining with the main work. At the most, how much I earned in this mode was 3000 rubles. On average, 1800-2000 rubles a day is obtained - this is a good increase in salary. The main thing is to work according to the system and not be greedy, trying to hit the jackpot.

Bittrex exchange interface

Investing in traders

Professional brokerage companies like BCS or Otkritie Broker offer investments in their traders. But none of them work with cryptocurrencies. If you are interested in investing in cryptocurrencies (and they tend to be more profitable), I can recommend eToro.

A world without banks, notaries, registrars, regulators - blockchain technology makes you take a fresh look at the exchange of values, documents, money. It removes middlemen and allows users to send sensitive data to each other directly. Some already call it a breakthrough of the 21st century, the greatest invention comparable to the discovery of the Internet, others look with apprehension.

Let's consider in simple words the blockchain for "dummies"

To explain it on the fingers, the blockchain is often compared to a standard diary or file cabinet, where records are made in chronological order about what has been done - sleeping, eating, washing, walking, borrowing, paying $ 100 for dinner, etc.

So that no outsider can make changes to the diary at his own discretion, all information is encrypted in a special way, and the cipher is well thought out. If the diary is in one copy, anything can happen to it - the house burned down and he, along with it, was stolen, deciphered with a great desire and corrections were made.

Therefore, for reliability, the diary has many copies that are stored in different places. Moreover, when new information is entered into the diary, it is updated on all copies after verification.

This is where the lyrics ended, let's get down to business.

What is blockchain and what is it for

Blockchain comes from the English. blockchain (block chain), which literally means "block chain". In other words, it is a database, which in the literal sense of the word is a continuous chain of blocks and is stored simultaneously on many computers.

New blocks in this chain base are constantly being created. Each newly created block contains a group of recently accumulated and ordered records (transactions), as well as a header.

Transactions are any actions that users perform on the network, whether it is sending funds, registering property rights, buying a game item, etc. When a transaction is formed by a user, it is sent to the so-called mempool, where it waits until it is added to one of the blocks and is confirmed by this.

When the block is formed, it is checked by other participants in the network and then, if everyone agrees, it is connected to the end of the chain. Once this has happened, it is no longer possible to make changes to it. In addition to new information the block also stores data about previous blocks in encrypted form.

The database is updated on all computers connected to the system, and the miners (validators) begin to form the next block.


Basic principles of blockchain:

• decentralization and distribution;
• safety and security;
• openness and transparency;
• the immutability of what has already been written down.

Distributed storage

Any significant information, related to one or another area of ​​people's life, is stored somewhere. Buying a house or a car, taking out a loan, registering a marriage, transferring money - all data on these transactions are recorded and placed centrally on the servers of government agencies or private companies. This often leads to abuse - if you want, you can climb into any database and make adjustments to it.

Blockchain technology is fundamentally changing this approach. Its essence lies in the fact that the database is stored not in one place, but distributed on thousands, or even tens of thousands, and sometimes even millions of computers scattered around the world.

The likelihood that all of them will be disabled is negligible and looks fantastic. And as long as at least one computer on the network is working, the blockchain-based system exists.

Safety

As already mentioned, any centralized base data can be hacked, modified. This number will not work with the blockchain. It makes no sense to hack one of the blocks and change the information in it, since all the blocks will have to be broken, and this requires enormous computing power - as we remember, new blocks contain encrypted data about the previous blocks. Therefore, the hacking attempt will certainly be noticed by other network participants.

In addition, a powerful encryption algorithm using hash functions will become an obstacle to falsification, as well as digital signature... The signature uses two keys - public and private. The first is necessary to verify the signature itself, the second is used when creating it and is secret. Keys provide participants with access to certain information.

At first glance, the hash function looks like a sequence random numbers and letters. It is she who ensures the immutability of all recorded data.

As you can see, the operation of the network is based not on the mythical trust of users to each other, but on strict mathematical calculations.

Openness

The whole base is in public access, and therefore anyone can see the data of a particular block. For example, one user transferred 10 thousand dollars to another - everyone can find out about it if they want to. The question is, who transferred the money and to whom remains a mystery. This information is available to direct participants in the exchange, if they themselves do not wish to disclose it.

Interaction without intermediaries

An important point, we constantly need to deal with intermediaries - financial operations we produce with the mediation of banks, payment systems, exchangers, documents are certified by notaries.

Situations are not uncommon when money may not reach the addressee, since the bank will not like the transaction and will be interested in it. Forgery of documents is also not uncommon. Thus, although we do not fully trust all kinds of intermediaries, we are forced to use their services, often at our own peril and risk, since there is no alternative.

Blockchain allows direct data exchange. The authenticity of transactions in the system is verified directly by its participants.

Network device

The network is formed by users interested in using this or that type of information. Participants are divided into two types:

• ordinary users;
• block builders or, as they are also called, miners, validators.

Regular users send new transaction records to the network. For example, user X wants to transfer 100 conventional units to user Y ". And miners from these transactions are already forming blocks. Entries are confirmed and entered into the block only if the majority agrees with it. The rest are ignored and not considered valid until they fall into the content of one of the subsequent blocks. Only the owner of the key that opens access to it can use a particular record in the blockchain.

To become a miner, it is enough to allocate the power of your computer to generate new blocks. They are connected to the network using special software.

There are also systems in which, instead of traditional mining using the Proof-of-Work algorithm, other protocols are used, for example, Proof-of-Stake, when validators need to reserve a certain number of cryptocoins on the account to confirm transactions.

System types

Different types of systems are built on blockchain technology. There is public supranational systems, to which anyone can join and become a simple user or miner. The community itself is in charge of administering such an association.

There is private or the so-called exclusive blockchain networks that are maintained and controlled by their creators. To become a participant, you need to fulfill certain conditions set by the organizers. A well-established certified circle of persons can mine new blocks in such systems.

Areas of blockchain application

As you can see, the blockchain platform is a distributed database for general use, in which there is mainly no centralized supervision over the process. Using the blockchain, you can keep records, store data, and make transactions in any area of ​​life:

• financial operations;
• real estate transactions;
• insurance;
• logistics;
• traffic violations;
• registration of marriages and much more.

The first application of blockchain in practice happened in 2009, when the bitcoin cryptocurrency was created on its basis. Later, a great variety of such cryptocurrencies appeared for a wide variety of tastes.

Today, states are actively considering ways to introduce blockchain into the voting system in elections. China wants to transfer the work of the National Social Security Fund to blockchain.

This technology will also be closely woven into the system of "smart cities", which are actively being implemented in the PRC.

Blockchain-based startups are already being created in the field of medicine, protection intellectual property, copyright. Based on the technology, identification systems, web browsers, decentralized cloud storage data as well as social media.

Moreover, a whole virtual nation has already been created - BITNATION, which opens embassies in different countries. Anyone can become its citizen.

The so-called smart contracts, or in other words, that work on the blockchain and greatly simplify the procedure for signing contracts. They first appeared on the Ethereum network.

In this case, there is no need to involve a third party in the process, which would act as a guarantor of compliance with the conditions. Here, the program code, based on pre-written conditions, automatically decides what to do with this or that asset. All interested parties to the process can audit the transaction at any time.

In international trade, the technology was first tested in early autumn 2016. Then, on the Wave platform, the British bank Barclays carried out a letter of credit for 100 thousand dollars, ensuring the export of a large consignment of dairy products from Ornua, Ireland to the Seychelles company. Typically, such a transaction takes at least a week, here it took about four hours.

Pros and cons of technology

As you can see, blockchain is a universal technology applicable in different spheres of life, which is its definite plus. In addition to the openness, security and safety already discussed above, the blockchain also:

• Reduces transaction costs.
• Reduces the time of transactions from several days, or even weeks, required for data verification and exchange of documents, to several hours.
• Allows organizations, institutions to get rid of unnecessary items of expenditure.

The disadvantages include scalability. Today, the blockchain is unable to provide a huge number of transactions in a short time. For example, MasterCard or Visa payment systems process about 45 thousand transactions per second, while Bitcoin has only 7. The weight of the database, which is stored on the computers of the network, also grows daily.

Do not forget about the load on electrical networks when it comes to networks operating on the basis of the POW algorithm. All these complex calculations cause computers to consume large amounts of power.

Speaking about the invulnerability of the blockchain, experts also point to the probability of the so-called "51% attack". In other words, if a group of network participants concentrate 51% of the computing power in their hands, they can start acting in their own interests, confirming only transactions that are beneficial to themselves. However, this will require such powerful resources that it is extremely difficult to put this idea into practice.

Blockchain in Russia and Ukraine

In the Russian Federation, the technology is going to officially legalize and begin to implement in 2019, having adopted by that time the necessary regulatory and legal acts. So far, the country's large banks, together with the Central Bank, have created the Masterchain platform in order to improve the efficiency of the financial system.

An interesting blockchain project operates in Moscow. The platform is called "Active Citizen", and with its help all kinds of votes are held to improve life in the capital.

In Ukraine, today the State Land Registry has been partially transferred to the blockchain. In particular, the process of checking the statement is based on this technology. At the second and third stages of blockchain cadastre, the existing database will be transferred to a distributed ledger, and then they will start hashing all ongoing transactions. The next step is also the State Register of Property Rights to Real Estate.

Save