Blockchain technology, is a real revolution in the world of financial trading, not only financial trading, but it goes beyond that to be a comprehensive and reliable technology to create an integrated technological system like the Internet system that we are accustomed to.
What is Blockchain Technology?
Blockchain technology is an entirely new software technology, first appeared in 2009 in a research paper by Satoshi Nakamoto, whose purpose was primarily to create the digital currency Bitcoin.
This technology is based on a peer-to-peer system, that is, transactions are conducted between users of this technology without any intermediary.
It is a decentralized technology, meaning that no one controls the operations that take place through it. For example, there are no government agencies that control the course of things in it, not even companies that manage and organize work in it.
Block chain technology is an encryption technology, meaning that the data that is transmitted, or the money that is traded through it is anonymous, for example, if Ahmed sends 3 bitcoins to his brother Mohammed, no one will be able to know Ahmed or Mohammed, because the people in the block chain system are Just codes.
Bitcoin is the first currency and the first system built on Blockchain technology, but fortunately Blockchain technology is an open source system, and this led to it being copied and applied in many other digital currencies.
In fact, many people understand that this technology only disposes of digital currencies, but this technology or technology goes beyond the idea of digital currencies.
The blockchain system can be used in many things, so it can be predicted that the blockchain technology - as I mentioned before - can be applied as an alternative or parallel system to the idea of the Internet in general.
Through blockchain technology, it is possible to build applications that perform any task, implementation or function, such as smartphone applications or computer programs, and the only difference is that they operate on a different system, as I will explain shortly.
In fact, these are not theoretical ideas, but on the ground there are applications for blockchain technology other than digital currencies.
Whoever read my previous article about Ethereum can easily clarify this.
And for those who haven't read it: Through Ethereum, you can make smart contracts between you and anyone, through the technology of the blockchain itself.
Blockchain technology from a technical perspective:
In fact, the technical concept of this technology is not easy to understand, especially for non-specialists, as is the case with technology in general, as it is not easy to understand, so it is not surprising that you see many so far do not know what the Internet is, for example.
Every project that is done based on blockchain technology represents an application or an application. This application is designed and programmed in programming languages such as C++ or JavaScript, and the first application of this technology was the Bitcoin project, which is the most famous and successful so far.
It is worth noting here that blockchain technology is an open source technology, meaning that anyone can copy the code of any application, make modifications to it and publish it again as a new application. This explains why this technology used to be limited only to Bitcoin, and now there are more than 1,500 different currencies on this system.
We come back to the idea again, in order to start dealing with this application, let it be Bitcoin, for example: you have to create an account, this account is created through something called a wallet, which you have to download to your computer or smartphone.
The main idea here and different in this technology is that it is managed and recorded the transactions that take place through it, by members who actually use it.
We said above that it is a decentralized system, so anyone can play a role in maintaining the system, by recording the transactions that take place through it.
There are hundreds of thousands of these people around the world, so every transaction or transaction that takes place is saved on thousands of devices in different places around the world. Hence the genius idea of the security of this system, which makes it almost impossible to penetrate.
These people arrange the operations into individual chains of computation, which together make up the block chain, which is a huge ledger containing everything that has been done through the system.
These people or groups (who record transactions) do not do so (ie, keep order) voluntarily, but in return.
The reward is coins that are generated for those who solve difficult and complex mathematical equations.
In fact, this requires certain types of huge computers, which are very high specifications and very fast, and they need a high level of electrical power in order to operate.
In order to explain the idea more practically, let us compare the blockchain system that we are talking about today with a system that we are all familiar with, which is the banking system.
It is known that banks are central systems that record and save financial transactions on their own databases, and it is they that guarantee the right of everyone to own their money, and in return they charge commissions for all the work they do.
Since transactions are only recorded on bank databases, they can be tampered with (this often does not happen in reality, but it can).
On the other hand, blockchain systems, such as Bitcoin, are decentralized systems, and no person or institution owns them.
Preserving the rights of people to own Bitcoin is determined by recording transactions on hundreds of thousands of computers around the world, and recording these transactions means acknowledging each right holder of his right.
The blockchain system is a cryptographic system, you as its user will be just a code on the system, and anyone who uses the system can know that code X has converted 5 bitcoins to code Y and this is not tamperable, because it is stored in the block chain on hundreds of thousands of devices.
By owning the access data for the X code, you are the owner with the testimony of hundreds of thousands of computers around the world, and this is what makes the difference between this new technology and other traditional systems.
Features of Blockchain Technology:
1- Technology that no one can control
One of the cool and most attractive features of many of the backers of blockchain technology is the decentralized system. The decentralized system here means that this technology is not owned by anyone but rather the property of its users. Its users are the ones who maintain order, and they are the ones who guarantee the rights of all.
Proponents of blockchain technology in general, and supporters of digital currencies in particular, believe that governments or banks do not have the right to control people’s money, and everyone has the right to send and receive money without an intermediary, and this contributes very significantly to reducing money transfer fees or even not completely.
2- Technology belongs to everyone
Blockchain technology is an open source technology, so it belongs to all of humanity, and everyone can copy, reuse and apply it in many fields.
3- The level of security and protection is very high
Although the traditional financial systems owned by banks and governments are systems of any level of security and protection, they are systems in one way or another that can be hacked.
As for the decentralized system of Blockchain technology, the idea of hacking the system is almost impossible, in order to hack a Blockchain technology system, you must change the data of thousands of devices distributed around the world.
4- Technology that guarantees a high level of privacy and confidentiality for its users
In systems based on blockchain technology such as cryptocurrencies, users are just encrypted codes in the system, and no user can know any personal data about another user. Of course, because it is a decentralized technology, no body or organization can know users' data either. (We'll see shortly how, from another perspective, this is a serious flaw.)
Disadvantages of Blockchain Technology:
1- It represents an opportunity for many to work in the dark
There is no doubt that the absence of censorship represents, in one way or another, an opportunity and a working space for the Birds of Darkness. There are many who reject blockchain technology, who believe that through the emergence of this technology and the currencies that it brought without any control, this led to the existence of channels for exchanging money and transferring it to support illegal activities and trade.
In fact, with the existence of the dark web, this disadvantage must be taken into account.
2- You need expensive devices and large energy
Those who maintain order to record transactions need computers with special specifications, which are very expensive, and these devices require a very large amount of power.
3- The large fluctuation in currency rates
Not long ago, the price of one bitcoin exceeded 19 thousand dollars, to record its highest price since its appearance, and several weeks later there was a major collapse in the price of bitcoin, which led to huge losses and profits for users of this currency, each according to his moment.
In fact, this large price fluctuation made Bitcoin an arena for betting and speculation rather than a stable and reliable currency that can be trusted and relied upon.