In literal translation, the word blockchain means “chain of blocks”. Due to the many advantages of this technology over traditional algorithms, it is already being used in many areas. Moreover, most people do not even suspect that they are already participating in the blockchain. For example, when paying for tuition at some universities, buying virtual art objects, or investing in real estate. Let’s figure out why we need a blockchain, what benefits it gives to a person.

How it was before the invention of blockchain technology

First, let’s look at history. To understand why we need blockchain, we need to understand the role of the latter in the modern world. It’s no secret that the Global Network has significantly influenced the economy, the way of doing business. It stores and processes information, implements investment projects.

It is safe to say that almost all information “flows” through the World Wide Web. The fall of this system will lead to collapse. The chains of production and consumption of goods, entertainment platforms, political campaigns, social networks and much more will stop working.

Data on the Internet is vulnerable and can be controlled.  Photo: Markus Spiske / pexels.comData on the Internet is vulnerable and can be controlled. Photo: Markus Spiske /


Now you need to understand how the Internet works. The network is a collection of nodes. Their role is played by servers, supercomputers and data storage systems. Consumers are connected to the nodes: smartphones, computers, tablets. The nodes themselves can connect to each other, providing access to remote points of the World Wide Web.

The described method of organization has several features:

  • firstly, users do not participate in the storage of information;
  • secondly, the destruction of the “node” leads to data loss;
  • thirdly, there is no data verification, so it is possible to change and destroy them.

For example, a bank’s server stores information about customers and transactions. One day, hackers attack a server connected to the Internet. As a result, information about the amount of money in the accounts is lost. Probably everyone has experienced failures in the work of banks. They lead to the loss of funds from the card, which then need to be restored according to a special procedure.

How has it become now

Blockchain completely changes the approach to data storage and verification. In the “traditional” Internet, this task is assigned to the nodes. In the “chain of blocks” a different algorithm operates. Each computer in the system stores absolutely all information about it. Naturally, it is located on the nodes of users in encrypted and compressed form.

There are no centralized nodes as a phenomenon, that is, the conditional “database” is stored not on one server, but on the PC of each user, therefore “Blockchain” is also called distributed registry technology.

What is distributed and where

Now let’s see why the registry is distributed among the nodes and how it helps to protect information. You also need to understand how the whole system functions without centralized control.

The scheme is the following. Computers are connected to each other in a network using existing communication channels. To participate in the blockchain, you need to install specialized software on the user’s device. Simultaneously with its initialization, a file with information about the entire blockchain is downloaded to the hard drive.

Computers “negotiate” among themselves using a “protocol”. It can be different depending on the blockchain algorithm. In a simplified form, it looks like this. Every hour (minute, second) a new block appears in the network. It contains data on transactions made during this time. In addition, it contains encrypted data – a hash – of the previous block, which is why a “chain” is formed.

After registration, the blocks become available to users, and also receive the following features:

  • the block cannot be deleted, you can only add an additional one;
  • if you need to cancel the transaction, it is recorded again with new metadata;
  • hacking a single block is impossible, as this will change the hash and break the “chain”.

Please note that the blockchain cannot be deleted or stopped. The only way is to destroy absolutely all nodes in a distributed network. In practice, this cannot be done.

Why blockchain is changing everything

“Chains” and “blocks” are good. But it is not clear what benefits the blockchain gives to ordinary people. For example, a messenger user or a buyer of goods on the Internet.

When compared with the traditional centralized Internet, the difference is obvious. Now a person, company or state can control servers, so they have the opportunity to dictate their own rules for their use and, accordingly, influence the whole world or individual areas.

For example, to restrict communication, you can simply block access to the Telegram or WhatsApp servers. To create a panic on the exchange, you only need to disrupt the operation of its servers. To ruin a person, it is enough to reset his account. Since the server is under control, such changes may not be known. After all, outsiders will not have access to the “log files”.

Imagine what will happen to the economy! After all, more than 90% of the world’s money is just zeros and ones on the banks’ servers. Thus, we can conclude that the entire world economy is in the hands of the owners of financial institutions. This is an approximate analogy, but it illustrates the problem well.

In the blockchain, each participant has his own copy of the database. If you try to make changes to existing nodes, they simply will not pass verification and will be replaced with the correct ones, so it will not work to falsify information or remove it covertly. This is the revolution that everyone is talking about.

What is the result

Blockchain should not be considered only as a tool for creating cryptocurrencies. The possibilities of this technology are practically unlimited. For example, it is already used in  education, medicine, information technology. The NFT token works on block chains, which protects copyrights on the Internet. And this is just the beginning.