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Blockchain to put it simple

Blockchain is a talk of the town today due to numerous promising opportunities it provides. What is this and why is it a subject of interest for everyone today? Blockchain is a unique technology positioned at the intersection of multiple sciences and industries, such as distributed computing, macroeconomy and games theory: game theory methods are widely used in mathematical tools of cryptocurrencies, encouraging users to take various actions.

To put it short, blockchain is a distributed ledger storing records of digital events. Key element of blokchain is a ledger of transactions and making transactions are the only way to update the ledger. Transaction can only be executed successfully or not executed at all (pending transactions are not possible). At the same time, recording into ledger can only be made with confirmation of network participants.

An important feature of transactions ledger is its integrity, there is no way to remove a record from ledger in a hidden way or add a new record in the middle of it. Integrity is provided by cryptography methods; rather than trust to the organization or people, like it has traditionally been before. Two simple cryptographic algorithms used in blockchain, hash functions and electronic signatures are key elements that provide transactions integrity and are responsible for authentication.

Though blockchain is a distributed system and transactions can be created by any knot, this does not mean that all participants are equal in permissions, in almost all cases there are multiple roles, like validators (participants who are able to add records into ledger), auditors and clients.

From a global angle of vision, blockchain is a network for processing transactions with a set of rules (a protocol), which provides a unified vision of ledger and allows to view network condition at any moment. At the same time, blockchain is decentralized: even if a significant part of knots drops out of the net or is hacked, the system remains functional.

Thus, due to its open, decentralized and mathematically balanced nature, blockchain allows people and organizations minimize risks and get rid of 3rd parties in transactions. Classic hacker attacks do not work in blockchain environment.