Makes you undetectable the use of bitcoin

Blockchain - the technology behind Bitcoin

Blockchain is on everyone's lips. But hardly anyone understands how the technology behind the cryptocurrency Bitcoin works. An overview of the idea of ​​blockchain, how the consumer benefits from blockchain in terms of transparency and what makes this technology so secure - keyword hashing.

What is blockchain anyway? Overall, it's about trust and about enabling forgery-proof processes with full transparency that only authorized persons can access.

What is the idea of ​​blockchain?

Blockchain is the idea of ​​distributing all information decentrally on so-called "ledgers"And accessible to everyone, so"open", save. These "Open ledgers“Are then linked chronologically with other blocks of information. This creates a forgery-proof information chain, divided into interlocked blocks.

These information blocks are stored in chronological order. Every computer connected to the blockchain network automatically receives a copy of the information blocks. Therefore one speaks of a "Distributed Ledger Technology". The technology behind it is already ten years old.

Blockchain and cryptocurrency Bitcoin

Blockchain was originally developed to track the flow of the cryptocurrency Bitcoin. All transactions are transparent. In this way you can ensure that every change in the Bitcoin inventory can be detected by any person.

For example, if person A has 100 bitcoin and buys something worth 10 bitcoin from person B, then person B knows that person A has 100 bitcoin and can pay the purchase price. Person A knows, like everyone else who does business with Person B at a later date, that Person B has an increase of 10 Bitcoins.

Every other person also knows that person A only has 90 bitcoins left. This transparency strengthens trust in the trading partner and in the transaction, and trading is simplified.

Blockchain: more transparency for consumers

Today it's not just about Bitcoin anymore. Blockchain technology can be used in many ways, e.g. at the interface between the supply chain and the value chain. This means that consumers can keep an eye on the food industry, for example.

The consumer knows reliably: The raw materials used meet the promised standard, fertilizers were ecological and the origin is beyond doubt.

In the financial sector, especially for transfer transactions, blockchain technology can be used to avoid “middlemen”. The Internet alone cannot transfer money because it cannot manage valuables.

Here it is necessary to involve at least two banks. One bank confirms a credit balance, the other accepts the transfer and credits it to the recipient's account.

In practice, other service providers are also active between the banks - especially in international payment transactions. With blockchain, it is no longer necessary to use middlemen.

Encrypt information and keep it secret

The question is: how do you ensure that the information cannot be falsified? and Stay "secret"? You distribute the information to different computers and initially make it more difficult to falsify this information. All information is encrypted.

Only authorized persons can access the encrypted information. Third parties, on the other hand, have no access. Encryption is based on four principles: confidentiality, integrity, authenticity and liability.

Who can decrypt encrypted information?

The principle of confidentiality says: Only authorized persons are allowed to decrypt encrypted information again.

Example: Person A would like to send Person B a password via SMS. The password should be protected against access by third parties. Person A and person B have agreed on a key so that person B can decrypt the password.

If a third party intercepts the SMS, he still cannot access the password. Because he lacks the key. This must be designed in such a way that the password as such is not changed and can also be decrypted again.

In short: the integrity of the password must not be lost. You should also make sure that the SMS actually comes from person A - that is, the message is authentic. Person A must also not be able to plead that the information they sent did not come from them. Otherwise the message is not binding.

What makes blockchain so secure?

Each block of information is processed by an algorithm with a so-called "Hash" Mistake. At the Hashing (dt: chop up) each block of information receives its own Hash.

This Hash, a kind of cross sum of the information, is stored with the information block. If data changes in the information block itself, something completely different comes about because of the algorithm Hash conditions. This one fits with the original one Hash not together anymore.

If you create a further information block on the basis of the first information block, it works Hash of the first block into the new block.

If you falsified information in the first block, they would get it Hashes the other blocks immediately have different values. The result: It would be immediately apparent that the data was inconsistent. However, the encryption does not end there.

The Hashes of all blocks could theoretically be recalculated. To prevent that, the Hashes new blocks meet certain conditions, e.g. end on the number "5" despite the algorithm.

Since the data from the previous blocks cannot be changed, you have to add data to the information of the last block. In order to calculate this data ("mining“), An enormous amount of computing power is required.

Blockchain technology has proven itself in practice

Overall, the technology seems to be working. Through the interaction of the public key encryption and the Hashing of the block information, there has been no known manipulation of Bitcoins in the past. And here criminals would certainly have enough reason to reroute the billions through manipulation.

Author: Oliver Socher