Blockchain technology, which we hear a lot about these days, is said to have such potential that it can be described as “the most technological innovation since the Internet.” What kind of technology is blockchain? With that in mind, I did some research, but many of them were explained in the context of bitcoin and virtual currency, and I couldn’t quite solve the question, “What is blockchain after all?” This time, I created this article with the aim of providing the most polite and easy-to-understand explanation on the Internet so that you can get a rough idea of what blockchain is. I try to explain as much technical stuff as possible, so I think even non-engineer readers will be able to get an overview of blockchain by the end of the book.
table of contents
- Chapter 1 What is Blockchain?
- Chapter 2 Reasons why blockchain is attracting attention
- Chapter 3 Examples of services that can utilize blockchain
- Chapter 4 How Blockchain Works
- Chapter 5 Types of Blockchain
- Chapter 6 Benefits of Blockchain
- Chapter 7 Disadvantages of Blockchain
- Chapter 8 Blockchain and smart contracts
- Chapter 9 The Future of Blockchain
- Related seminars and events
Chapter 1 What is Blockchain?
Blockchain is defined as “Even if there are participants who commit fraud or do not operate normally, correct transactions are possible, it is extremely difficult to falsify, it does not stop, and the same data is distributed to a large number of participants. It is a mechanism to let
Without fear of misunderstanding, if I dare to sum it up in one word, this is how blockchain works. However, as of now (April 2018), the definition of blockchain has not yet been established, and the word is used in various ways depending on the time and situation. In Japan, the following definition published by the Japan Blockchain Association in October 2016 is frequently referred to, and the above is also an easy-to-understand paraphrase.
Characteristics of blockchain
The characteristics of blockchain can be narrowed down to the following four points.
・ Extremely difficult to falsify
・No system down
– Transaction records cannot be erased
・Autonomous decentralized system
Blockchain has a mechanism that can easily detect falsification of data by using cryptographic technology such as “hash” and “electronic signature”, which will be explained in Chapter 4 “Mechanism of Blockchain”. In addition, although an unspecified number of participants conduct transactions in blockchain, many participants (not necessarily all participants) record copies of everyone’s transaction history, so some computers may go down. However, the entire system does not go down, as many of the remaining participants continue to keep records. Since the copy of this transaction history cannot be deleted, the transaction record once recorded remains as evidence without disappearing. A system in which data is distributed among many participants is called a distributed system.
Many distributed systems to date have had a central administrator for the system. However, in blockchain, all participants continue to copy transaction history autonomously. This is called an autonomous decentralized system and can be said to be one of the major features of blockchain. The characteristics of this autonomous decentralized system, which does not allow fraud or tampering and stably records the history of fair transactions, has been indispensable for transactions that require high credibility, such as cryptocurrencies.
Difference between blockchain and database
After reading the explanation so far, you may feel that “Blockchain is not so different from cloud database, isn’t it?” It’s half right and half wrong.
It’s true that cloud databases are distributed across multiple computers and backed up, so errors and tampering can be repaired. In addition, it can be said that the stability is high if it is a major service. However, the mechanism is centralized and requires the presence of an administrator to provide the service. If the administrator stops the service, the contents of the database will be lost, and there is a possibility that the data will be deleted due to the convenience of the administrator. Also, if the administrator has malicious intent, the contents of the data can be falsified.
On the other hand, with blockchain, even the service provider cannot tamper with or delete recorded data, nor can participants delete their own transaction history. This is the biggest difference between blockchain and database. Due to this characteristic, it can be said that even a nameless service provider with low credit can be entrusted with transactions such as currency.
Relationship between blockchain and virtual currency
I think you have understood that blockchain is used for currency transactions because it is safe and secure.
Blockchain was first announced as a concept in 2008 and emerged as the technology that underpins bitcoin, which began trading in 2009. It is a technological innovation that combines existing technologies brought about by Mr. Satoshi Nakamoto, who is said to be the creator of Bitcoin and blockchain.
Satoshi Nakamoto is said to have created bitcoin to create a new infrastructure that no one can intervene in, never goes down, and records transactions fairly because he dislikes repeated government interventions in the economy. there is And the underlying technology is blockchain.
Chapter 2 Reasons why blockchain is attracting attention
What you can do with blockchain
So what exactly is so great about blockchain? It is said to be “the technological innovation since the Internet”, but many people think that it is too much. To find out the answer, let’s imagine what we can do with blockchain.
In a nutshell, what blockchain can do is to “keep a clear record of transactions”. And the content of this “transaction” is not limited to virtual currency or financial products. Not only financial transactions such as securities transactions, insurance contracts, remittances and fund raising, but also sharing services, food traceability, copyright management, art ownership, medical services, even administrative procedures and voting are fair and transparent. It can be left as a record. Even if public information that is new to memory is lost or rewritten, once it is correctly recorded in the blockchain, it can be left as a clear record that will not be rewritten.
In addition, since the public chain explained in Chapter 5 does not require an administrator, personal information will not be collected centrally, and since it is difficult to falsify, even transactions between unknown individuals can be done with peace of mind.
In a world where blockchain has permeated the world, users will be able to carry out transparent transactions without overwriting or fraud without even being aware that the technology is being used. Like the Internet for us, it should exist as a natural infrastructure.
Blockchain market size forecast
In 2016, the Ministry of Economy, Trade and Industry announced that the market size that blockchain technology could affect was 67 trillion yen. This figure not only exceeds 64 trillion yen in construction, but is approaching the 73 trillion yen in the real estate industry and 68 trillion yen in medical welfare. (Ministry of Internal Affairs and Communications White Paper on Information and Communications)
As you can see from this figure, blockchain has the potential to be called “the technological innovation since the Internet.” In Japan, legislation is being developed for practical use, and the Ministry of Economy, Trade and Industry is conducting a survey, saying, “It has the potential to become a next-generation platform in all industrial fields.” In addition, in other countries, practical services other than finance are gradually appearing. Blockchain is one of the hottest technologies in the world right now.