Blockchain technology is the hype of today, without a doubt. To a greater or lesser extent, everyone knows about the existence of blockchain, although many people do not understand how it all works and what it is for. If you recognize your case, do not worry, now you will finally understand it in the simplest way. This will be very useful for you now, and especially in the future, when we will have it through. What is blockchain?
A blockchain is a database that functions as a network that allows participating users to exchange value with each other, instantly, in real time. It is called a database because all these exchanges, or rather transactions, are automatically recorded in a distributed ledger (Distributed Ledger Technology or DLT), in an immutable form and chronologically ordered.
No, don't you understand? Then we will conduct an educational course "Blockchain for Beginners", and explain it in simple words, so that it is clear.
How blockchain technology works
Imagine: there is a network, and everyone has free public access to it. You can send, receive, exchange and buy values on it absolutely instantly, paying a minimum of commissions. Everything is done completely autonomously. In other words, users do not depend on any bank, government or anything else. The network simply internally ensures that all the actions of users that they want to perform work, and are completely safe. In other words, without intermediaries.
Imagine, all these transactions are happening, automatically and chronologically recorded in a ledger to track everything that happens on the network, and recorded in this book. It cannot be erased or changed. In these records, you could see the parties to these transactions, what is being sent, when it is being sent, etc. And the best thing, imagine: anyone can get acquainted with all this information, without violating the privacy of any user, because there is no personal data, only encrypted addresses that identify you on the network, but not personally. So, meet the Blockchain network.
Explained this way, it all seems very simple: a network acting as a database, with free access for anyone to make instant transactions and retrieve information that permanently records all actions. In a way, it is that simple, but even so, the truth is that there is a lot of technology involved in every part of the process to make it work so well.
Cryptography, for example, is one of them, perhaps the most important of all. The main goal is to ensure the security of users, since the data stored in this network is encrypted, and due to this, the confidentiality of any participant is not violated. Moreover, the name “Blockchain” comes from the property of the method of storing information through cryptography.
Data in a blockchain is stored in blocks of information, and each block contains the encrypted message of the previous block. In this way, the information is linked together. The encrypted message is derived from a cryptographic function called a "hash function."
How is information added to the chain? Blockchain networks have what are called “nodes” or participants. They play a fundamental role, as they are the ones who make everything work. These nodes verify each transaction that users intend to make and decide among themselves whether the transaction will be executed (and therefore recorded in the chain) or not. This is where cryptography comes into play again.
Each node must verify each transaction and “vote” on whether it is “good” or “bad.” If all nodes agree that “it” is good, the transaction becomes part of the chain. If not, it is discarded. This verification is not a subjective process, but a consensus mechanism in which each node must solve a cryptographic problem to understand whether the transaction is valid or not.
We mentioned earlier that everything recorded in the chain is absolutely immutable, it cannot be erased, changed or modified. Of course, again thanks to cryptography.
Types of blockchains
What are the advantages of blockchain?
The advantages can be discussed at length, but let's talk about the main ones. After reviewing its characteristics, we can highlight several key advantages of using this technology instead of traditional systems.
- First, Blockchain has added the concept of ownership to the internet, to the digital world. Previously, this did not exist, in the digital world, you could not own anything. Today, yes, we can receive values of all kinds, not just cryptocurrencies. Non-fungible tokens or NFTs have made this possible. Moreover, we can buy, sell, send and receive values without intermediaries, only with the help of this technology. Significant cost savings and, above all, time, since these transactions take place in real time.
- The second advantage is that the user has absolute control over their assets and what they want to do with them. While this may seem possible with traditional systems, it is not.
- The records remain immutable and public, so anyone can consult and verify the authenticity of any transaction, confident that the information they read has not been altered or tampered with. Blockchain is completely fraud-proof.
Blockchain in Ukraine
In Ukraine, blockchain technologies are actively integrated into various areas, contributing to increased transparency and efficiency of processes. One of the striking examples is the “Diya” application, which provides citizens with access to digital documents and government services. In February 2023, the cryptocurrency exchange WOO X announced its integration with “Diya”, simplifying the user verification process. From now on, Ukrainian citizens can confirm their identity on the exchange using digital documents through “Diya”, speeding up and simplifying the KYC (know your customer) procedure.
In addition, crypto companies and startups are actively developing in Ukraine, using Blockchain for various purposes. For example, some companies are implementing it to ensure transparency of charitable donations, track supply chains, and even in the real estate sector to register property rights.
The Ukrainian government is also showing interest in blockchain technology. In 2021, the Law “On Virtual Assets” was adopted, which creates a legal framework for regulating cryptocurrencies and other digital assets in the country. The legislation is aimed at attracting investment and developing the digital economy, while ensuring the protection of user rights and preventing illegal activities.
In the field of education, Ukrainian universities are starting to offer courses and programs dedicated to blockchain technologies and cryptocurrencies, training specialists to work in this field. This contributes to increasing awareness and competence in the blockchain field among young people and professionals.
The cryptocurrency industry is also actively developing: the country has already established itself in the global crypto space as an important player. Here are some key points about the current state of crypto companies in Ukraine:
Legalization of cryptocurrencies
In 2022, the Verkhovna Rada of Ukraine adopted the Law “On Virtual Assets”, which regulates the use of cryptocurrencies and other digital assets. This step created a legal framework for the operation of crypto companies, as well as improved the investment climate in this area.
Big players
There are many companies operating in the cryptosphere in Ukraine. Among them:
- WhiteBIT: One of the largest crypto exchanges in Europe, based in Kharkiv. It provides cryptocurrency trading services and is actively involved in educational initiatives.
- Kuna Exchange: the first Ukrainian crypto exchange. Allows you to buy/sell cryptocurrencies for hryvnias.
- Bitfury: an international company with an office in Ukraine. Specializing in blockchain solutions and mining equipment production.
Integration of cryptocurrencies into the economy
Ukraine is among the Top 3 countries in terms of cryptocurrency usage. In times of war, cryptocurrencies have become an important tool for financing charitable projects and government needs. For example, the Aid For Ukraine Foundation accepts crypto donations and redirects them to support the Armed Forces of Ukraine and humanitarian purposes.
Blockchain and business
Ukrainian developers are actively creating blockchain-based projects:
● Everstake: the world's largest staking provider, created in Ukraine.
● Hacken: A cybersecurity project. Offers auditing services for blockchain solutions and crypto projects.
● DMarket: a blockchain platform for trading digital assets created by Ukrainian developers.
Educational initiatives
Ukrainian universities and independent organizations have begun launching programs and courses dedicated to cryptocurrencies and blockchain, helping to train professionals for the rapidly growing industry.
Regulation and the future of blockchain
The National Bank of Ukraine is considering the possibility of issuing a digital hryvnia (CBDC). The government is actively cooperating with international crypto organizations to further develop the ecosystem. Thus, Ukraine demonstrates its desire to integrate blockchain technologies into various aspects of life, from public services to the private sector, creating favorable conditions for the development of innovation and the digital economy.
Conclusion
As you can see, Blockchain technology is as secure and reliable as a Swiss bank, and thanks to smart contracts, it offers to use its capabilities not only to carry out valuable transactions between users, but also to develop complex software on this technology. In the future, it will completely fill our daily lives in a very short time, therefore creating more opportunities. If there is a technology that you should know, it is this one.
