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Future technology – Blockchain: The secret behind Bitcoin & Co | News

Saturday, September 2nd, 2017 | Economy

"The blockchain is on the Internet in the mid-nineties," says LBBW economist Guido Zimmermann. "While the technology is in place, the potential is not yet clear, and many players are trying to find the right application."
The main questions and answers about Blockchain:
What is Blockchain?
"Blockchain functions like a digital land register, which publicly records all transactions made," says Jens-Thorsten Rauer, the IT service provider DXC responsible for business with the financial sector. The software collects data from transactions such as transfers, summarizes them into blocks, and hangs them together. This technology was originally developed for the digital currency Bitcoin. However, it can also be used for goods orders or as a digital identification card.
What is special about Blockchain?
The greatest advantage is data security. All information is stored encrypted. In addition, each user manages a copy of the database. It is therefore practically impossible to manipulate them without warning. As a result, central control and control authorities, such as banks, which ensure that the money is placed in the right account, is no longer necessary in the payment system.
At the same time, all transactions are anonymous because users only have to disclose their identifiers. Absolute safety does not guarantee this, nevertheless, warns DXC expert Rauer. Through a comparison with other online activities people could be identified.
How does a blockchain work?
The blockchain software collects the information, encrypts it and appends it to the database. Each transaction receives a time stamp as well as each block, which is made up of several transactions. This prevents duplications and ensures that the new data sets distributed to all users are then attached in the correct order to the blockchain.
In addition, the so-called hash value of the preceding block is stored in each block. This is a checksum, almost a digital fingerprint. This ensures that no block can be manipulated or unintentionally removed from the database.
In addition, each block is validated for authenticity by solving complex mathematical formulas – validated. The necessary computing power is provided by bitcoin so-called "miners" ("miners"). They are paid for in the digital currency. The longer the data chain, the more complex and lengthy the validation of new blocks.
What are the disadvantages of blockchain?
The main criterion at the blockchain is the lack of speed of data processing in mass operation – that is, if millions of users wanted to transfer money at the same time or pay with Bitcoin & Co. Encryption and organization of the data stocks require time and computing power. The blockchain named "Coco", developed by the world's largest software company Microsoft, can handle about 1600 transactions per second. For comparison, the network of the credit card provider Visa handles 15 times as much.
Since this technology is still relatively new, there is also a lack of binding legal framework conditions. It is unclear, for example, who is liable for mistakes when entering or programming the blockchain. Experts, however, soon expect solutions for these questions. "The attitude of regulatory authorities is surprisingly open and friendly towards this new technology," stresses LBBW economist Zimmermann. "Not least because it lowers counterparty risks, prevents money laundering and helps regulate data collection."
Environmentalists, blockchain is a thorn in the eye, because the validation computes performance and thus eats energy. It is estimated that alone the processing of Bitcoin transactions consumes more than 4.4 billion megawatts of electricity annually, Don and Alex Tapscott write in a White Paper for the World Economic Forum. This corresponds to the needs of a German city.
Where is Blockchain used?
This technology is most widely used in virtual currencies such as Bitcoin. Almost every day, new cyber money comes onto the market. This technology is also an issue for stock market operators because it allows securities without banks or other middlemen to change ownership. Deutsche Börse is working on various blockchain projects, including in cooperation with the Bundesbank. Numerous banks, such as the Dutch ING or the British Barclays Bank, are also working on pilot projects for fully-digested commodity trading. Power suppliers are thinking about how customers can pay for blockchain charging stations for electric cars.
(Reuters)

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