Decentralized information storage technologies were introduced back in the 90s. However, the word "blockchain" became known only recently — when a certain Satoshi Nakamoto showed how these technologies can be used to create a new financial system. So, in 2008, Bitcoin appeared, and with it the history of blockchain development began.

In 2023, the popularity of these technologies turned out to be so high that the cost of Bitcoin already exceeds $ 40,000. And if such a major player as Tesla and it’s CEO Elon Musk is interested in this phenomenon, then why not join the technology for ordinary users.

Let's dive into interesting comparisons.

Let’s imagine that a long time ago, Hugo and Antonio lived. Hugo had several ways to transfer money to Antonio:

• transfer the cash yourself (Hugo comes to Antonio and personally transfers the money);

• use the services of a third party (Hugo transfers money to a bank, postal service or courier who transfers money to Antonio).

Usually, a third party is a whole set of instances and services. Therefore, we have a chain of intermediaries whose work scheme is classified. On the one hand, this is useful for security purposes — even if we go to the bank and ask to tell the technical details of our transfer, no one will do this. On the other hand, security easily turns into insecurity — without knowing the technical details, one can only blindly trust the banking system and hope that "third parties" will turn out to be conscientious guys.

The fact is that, turning from paper to electronic, money does not change its shape — current systems simply form a digital code with information encrypted in it about the type of currency, its value and quantity in order to transfer it from one repository to another. Physically, the paper proof of value remains in the user's hands or in the ATM safe.

In other words, Hugo can find a terminal, offer him cash and receive it on his card or send it to Antonio. We are used to working this way and consider it a safe way to move money. But with the advent of the blockchain, the theory of security takes a new turn.

Blockchain (Block — block, chain — chain) is a decentralized database that is designed to store sequential blocks with a set of characteristics (version, creation date, information about previous actions on the network). An analog example of its structure is an infinitely long metal chain in which it is impossible to break or swap links.

And the blockchain chain can also be represented as a book with the ability to add pages. Each new page is written online, and the rest cannot be edited or deleted.

The main movement in such a system is through transactions. During the transaction, some kind of script can be executed, or some kind of note with data can be written. That is, the word "transaction" is not equal to a money transfer and rather denotes a way of processing information within the network.

In addition to the basic data, each block has a unique set of parameters: nonce, hash of the previous block, hash of the current block and a list of transactions.

To better understand how online transfers work, let's imagine the page of the book again, where there is such information:

• Hugo transferred 100 dollars to Antonio.

• Mark transferred 300 pesos to Juan.

• Nicolas confirmed the replenishment of the account for $ 100.

  Several thousand such records can be stored within a single block. When the memory in the block runs out, it is closed, signed and transferred to a new block in the form of a hash or "fingerprint".

A hash is a set of characters that carries a unique imprint. It is formed based on which transactions and in what amount each block stores.

During the transaction processing, hashes are constantly checked, after which, as if on a pyramid, the system rises to the last hash, where the integrity and correctness of all previous codes are confirmed so that the block is closed.

If suddenly someone wants to add a couple hundred dollars to their wallet without confirmation from the rest of the network participants, then such a transaction will be considered incorrect and will be overwritten with those hashes that are stored by most nodes. That is, if you change at least one byte, at least one dot, comma or zero, then the final hash will change, and the blockchain will have to check all these amounts again in order to understand whether it is true or false.

From all this, we can conclude that the network consists of blocks that can be changed here and now, until they are closed. Everything is recorded in the form of transactions with information that is encrypted as hashes and permanently stored on the network in each subsequent block. If you change something and do not find confirmation from the majority of participants, then such changes simply will not be applied, and the block will be considered invalid.

In simple words, the system will no longer be able to forge documents retroactively, no matter how many hundreds of people would like it, if the common network is controlled by millions of participants.

Hence the name Blockchain — everything works on a chain, sequentially and continuously.

To better understand what a blockchain is, let's look at the closest understandable analogy:

Let's imagine that blockchain is a kind of digital ledger where all transactions (money transfers or other operations) with cryptocurrency, like Bitcoin, are recorded. This ledger is not stored in one place but is distributed across many computers on the internet.

When someone makes a transaction, it gets added to a block (like a page in a book), and then this block is attached to the previous block, creating a chain of blocks, hence the name "blockchain."

Now, why is this important: such a system makes it impossible to change or delete any information in the existing blocks. If someone tries to alter data in one block, it becomes immediately noticeable in the other blocks because all network participants have a copy of this ledger. This makes blockchain reliable and transparent.

Example: Let's say you have 10 bitcoins, and you want to transfer them to someone else. Instead of using a bank, blockchain allows you to make a direct digital transaction recorded in the blockchain. This information is accessible to all network participants, and everyone can verify that the transaction happened honestly and without changes.

Blockchain is like an online notebook where people can write things they want to share with each other. The special thing is, once something is written, no one can erase it. All the writings are kept by everyone at the same time, so it's impossible to fake the information. It's like a shared notepad that everyone sees and checks.

One more example: If you give your virtual gift to a friend, it gets written into the blockchain, and everyone can see that the gift now belongs to your friend. And no one can say you didn't give the gift because it's visible in a special online book.

Thus, blockchain is a kind of "secure book" for cryptocurrency, enabling people to exchange digital assets without intermediaries like banks.

Decentralized information storage technologies were introduced back in the 90s. However, the word "blockchain" became known only recently — when a certain Satoshi Nakamoto showed how these technologies can be used to create a new financial system. So, in 2008, Bitcoin appeared, and with it the history of blockchain development began.

In 2023, the popularity of these technologies turned out to be so high that the cost of Bitcoin already exceeds $ 40,000. And if such a major player as Tesla and it’s CEO Elon Musk is interested in this phenomenon, then why not join the technology for ordinary users.

Let's dive into interesting comparisons.

Let’s imagine that a long time ago, Hugo and Antonio lived. Hugo had several ways to transfer money to Antonio:

• transfer the cash yourself (Hugo comes to Antonio and personally transfers the money);

• use the services of a third party (Hugo transfers money to a bank, postal service or courier who transfers money to Antonio).

Usually, a third party is a whole set of instances and services. Therefore, we have a chain of intermediaries whose work scheme is classified. On the one hand, this is useful for security purposes — even if we go to the bank and ask to tell the technical details of our transfer, no one will do this. On the other hand, security easily turns into insecurity — without knowing the technical details, one can only blindly trust the banking system and hope that "third parties" will turn out to be conscientious guys.

The fact is that, turning from paper to electronic, money does not change its shape — current systems simply form a digital code with information encrypted in it about the type of currency, its value and quantity in order to transfer it from one repository to another. Physically, the paper proof of value remains in the user's hands or in the ATM safe.

In other words, Hugo can find a terminal, offer him cash and receive it on his card or send it to Antonio. We are used to working this way and consider it a safe way to move money. But with the advent of the blockchain, the theory of security takes a new turn.

Blockchain (Block — block, chain — chain) is a decentralized database that is designed to store sequential blocks with a set of characteristics (version, creation date, information about previous actions on the network). An analog example of its structure is an infinitely long metal chain in which it is impossible to break or swap links.

And the blockchain chain can also be represented as a book with the ability to add pages. Each new page is written online, and the rest cannot be edited or deleted.

The main movement in such a system is through transactions. During the transaction, some kind of script can be executed, or some kind of note with data can be written. That is, the word "transaction" is not equal to a money transfer and rather denotes a way of processing information within the network.

In addition to the basic data, each block has a unique set of parameters: nonce, hash of the previous block, hash of the current block and a list of transactions.

To better understand how online transfers work, let's imagine the page of the book again, where there is such information:

• Hugo transferred 100 dollars to Antonio.

• Mark transferred 300 pesos to Juan.

• Nicolas confirmed the replenishment of the account for $ 100.

  Several thousand such records can be stored within a single block. When the memory in the block runs out, it is closed, signed and transferred to a new block in the form of a hash or "fingerprint".

A hash is a set of characters that carries a unique imprint. It is formed based on which transactions and in what amount each block stores.

During the transaction processing, hashes are constantly checked, after which, as if on a pyramid, the system rises to the last hash, where the integrity and correctness of all previous codes are confirmed so that the block is closed.

If suddenly someone wants to add a couple hundred dollars to their wallet without confirmation from the rest of the network participants, then such a transaction will be considered incorrect and will be overwritten with those hashes that are stored by most nodes. That is, if you change at least one byte, at least one dot, comma or zero, then the final hash will change, and the blockchain will have to check all these amounts again in order to understand whether it is true or false.

From all this, we can conclude that the network consists of blocks that can be changed here and now, until they are closed. Everything is recorded in the form of transactions with information that is encrypted as hashes and permanently stored on the network in each subsequent block. If you change something and do not find confirmation from the majority of participants, then such changes simply will not be applied, and the block will be considered invalid.

In simple words, the system will no longer be able to forge documents retroactively, no matter how many hundreds of people would like it, if the common network is controlled by millions of participants.

Hence the name Blockchain — everything works on a chain, sequentially and continuously.

To better understand what a blockchain is, let's look at the closest understandable analogy:

Let's imagine that blockchain is a kind of digital ledger where all transactions (money transfers or other operations) with cryptocurrency, like Bitcoin, are recorded. This ledger is not stored in one place but is distributed across many computers on the internet.

When someone makes a transaction, it gets added to a block (like a page in a book), and then this block is attached to the previous block, creating a chain of blocks, hence the name "blockchain."

Now, why is this important: such a system makes it impossible to change or delete any information in the existing blocks. If someone tries to alter data in one block, it becomes immediately noticeable in the other blocks because all network participants have a copy of this ledger. This makes blockchain reliable and transparent.

Example: Let's say you have 10 bitcoins, and you want to transfer them to someone else. Instead of using a bank, blockchain allows you to make a direct digital transaction recorded in the blockchain. This information is accessible to all network participants, and everyone can verify that the transaction happened honestly and without changes.

Blockchain is like an online notebook where people can write things they want to share with each other. The special thing is, once something is written, no one can erase it. All the writings are kept by everyone at the same time, so it's impossible to fake the information. It's like a shared notepad that everyone sees and checks.

One more example: If you give your virtual gift to a friend, it gets written into the blockchain, and everyone can see that the gift now belongs to your friend. And no one can say you didn't give the gift because it's visible in a special online book.

Thus, blockchain is a kind of "secure book" for cryptocurrency, enabling people to exchange digital assets without intermediaries like banks.