If you have not spent the last couple of years in a hermitage, you’ve probably heard about bitcoins and blockchain. Now, even schoolchildren are actively engaged in mining. Let’s try to figure out what is really blockchain and why everyone is going crazy.
The heart of the matter
Blockchain technology is primarily designed for secure storage of data. Here you can store any important information, from credit obligations to new currencies. The reliability of the entire structure is due to the fact that the register of data is not concentrated somewhere in one place but is distributed among thousands of users around the world. Thus, the very possibility of a hacker attack and some kind of clandestine manipulation of information is excluded.
Actually, the blockchain is just a chain of cryptographically connected blocks. A new block is added to the end of the whole chain, all blocks together are connected by mathematical algorithms. This technology can be used not only to record financial transactions, but for everything that has value.
The hash function is a special algorithm that takes input data (any, from image to binary code) and creates from it a code sequence of a specific length. Same files will produce the same hash on the output.
The easiest way is to imagine the blockchain as a kind of database, duplicated tens of thousands of times throughout the network. The database is updated constantly, which ensures transparency and verification of information.
Safer than bank
That sounds ambitious, but according to many experts, the blockchain really became the guarantor of information accounting. The use of this technology excludes the influence of the human factor on the outcome of the transaction: without the agreement of the parties involved, even changes to the general register of data will not be made.
Protection against intrusion
Copies of the database are kept on all participating computers. Decentralised system makes hacker attack impossible. In addition, the hashing process is irreversible, which allows reliable security of personal data: an attempt to change a transaction or an original document will result in a new hash, different from the existing one in the system.
Bitcoin is a decentralized cryptocurrency. Its emission is not controlled by any state, transactions are transparent and anonymous. The system is securely protected, it is simple and at the same time extremely complex. In a couple of years, the cryptocurrency and mining are spreading all over the world.
Who Invented Bitcoin?
The history of the Bitcoin creation is ambiguous, intriguing and mysterious. The author of the cryptocurrency is the ephemeral Satoshi Nakamoto – an Internet user (or a group of users) who published an article on cryptocurrency in the mailing list at the end of 2008. They described the digital peer-to-peer currency. At the beginning of the next year Nakamoto released the first software for working with cryptocurrency.
- Hash function. A mathematical transformation by an algorithm that turns any set of information into a unique number-letter value of a certain fixed length – a hash. Something like a cipher. Even a small change of one character in the original data set, causes the output (hash) to change drastically.
- The key element of the bitcoin system is a blockchain. It is a chain of blocks where information on transactions in the network is stored for the entire time of its existence. A copy of this unique database is kept by every member of the system, gradually and constantly updated due to the receipt of new blocks.
Why is It Safe?
What happens if someone decides to change the transactions in the block and cancel the money transfer or change the addressee? He can do it, but then the hash of the block will change. A new branch will appear in the chain.
To fix its fraudulent block, a hacker will have to solve a new task in 10 minutes faster than others. And one can not solve it beforehand by building blocks, because the solution depends on the hash of the previous block. Thus, an attacker will have to own at least half the power of a Bitcoin network, in order to solve a new task with 50% probability and build new blocks. All in all, this is practically unreal and completely unprofitable.
How are Bitcoins Mined?
Performance diagrams of the network clearly demonstrate that video cards are not of the utmost importance in the field of mining. CPU left this niche in 2011, GPU – in 2013. Now the Bitcoins are mined on the application-specific integrated circuits (ASICs), which are exclusively for the hash calculation. Nevertheless, lots of other cryptocurrencies are still being mined on video cards.
The head of SpaceX and Tesla Inc, Elon Musk, ranked 41st among Bloomberg billionaires with a fortune of $ 21.6 billion, said he does not own bitcoins, with the exception of the 0.25 BTC, which the comrade once sent him.
Previously, SpaceX former employee Sahil Gupta put forward the theory that Elon Musk is the mysterious creator of Bitcoin, Satoshi Nakamoto. Nevertheless, the community was sceptical about this hypothesis. Soon the statement was denied by the billionaire himself.
The South Korean currency exchange Bithumb opened registration for new users after the introduction of the “know–your–customer” (KYC) procedure.
At the end of December, the government of South Korea reported on a demand to prohibit the opening of anonymous unverified accounts for users of crypto exchanges. It resulted in the development of laws and regulations, according to which at present registration on the Korean stock exchanges everybody must pass through the KYC.
The developers of the Bithumb reported that from February 9, users are able to verify their profiles via an open account in Nonghyup Bank. Moreover, the report says that the last revisions on the integration of the verification through Shinhan Bank will soon be completed.
The South Korean crypto exchange Bithumb was able to introduce the KYC system within ten days after the official ban of anonymous trading accounts in the whole country.
According to media reports, on January 30, 2018, new legislation was introduced in the country, created by the Financial Services Commission (FSC). It obliges crypto exchanges to introduce the KYC procedure for all the platform users. Thus, for the implementation of trading on the Bithumb, new users, as well as previously registered ones, must pass the KYC necessarily.
Nexus Earth Partners has announced a partnership with blockchain platform SingularityNET. They will conduct research on the joint use of artificial intelligence and blockchain technology. As reported on the company’s official website, this cooperation can lead to the creation of a blockchain AI as the most secure and flexible infrastructure.
The head of SingularityNET, David Hanson, stressed that this technology might become the most valuable in the history of mankind.
” It will become the single most valuable technology in all of history. This is the chance for us to change the world together,” Hanson said.
Both companies seek to decentralize artificial intelligence and increase its safety, create technologies that will benefit society, rather than individual corporations and governments. Moreover, they set themselves the task of reducing the cost of artificial intelligence and making it accessible to more people.
The world’s most famous humanoid robot Sofia is based on artificial intelligence, loaded into the SingularityNET blockchain platform.
The smallest in terms of assets the Bank of Canada VersaBank announced the creation of a digital vault for cryptocurrency. The new service will be launched in June.
“We’re using what banks are all about — safety and security — only what we’re doing now is saying that physical box in the basement is getting obsolete,” said David Taylor, chief executive officer.
Secure and Super Private Place
To work on the new service, the bank attracted the BlackBerry specialist Gurpreet Sahota. He will lead the team of developers of virtual storage VersaVault. The digital assets will be stored on servers around the world. As in the case of safe deposit boxes, the bank doesn’t know what is inside. In addition, the financial institution will not even have access to the contents of the storage.
“Our differentiator in this market is to be secure and super private,” said Taylor.
The large funds have already shown interest in the novelty. The cost of services in the bank has not yet been determined, but it will not be “cheap”.
LitePay is the new processing service for the Litecoin cryptocurrency. It will be launched in the near future and will allow companies and merchants around the world to quickly and easily accept “digital silver” as payment for goods and services.
The beginning of work on LitePay was announced by the Litecoin Foundation in December of last year. Now the developers are ready to present the product to the general public.
Users will also be offered the opportunity to order a debit card that can be replenished with any wallet and used to withdraw cash from any compatible ATM. The website of LitePay does not say which payment platform supports the cards.
The popular Bitcoin-processor BitPay currently takes a commission of $5.00, and the confirmation of transactions takes a lot of time.
Taking into account the faster and cheaper transactions offered by Litecoin, such a service can be not only more profitable and convenient, but it will also help to broaden the adoption of this cryptocurrency and increase its liquidity.