Blockchain Introduction

To make it easier to express a block chain, a block chain system participant or a virtual currency owner owns all of the transaction books one by one.

Through this, it is possible to prevent counterfeiting at the source. If one book out of ten is forged, the remaining nine keep the same record, so one forged is not recognized and the remaining nine are matched.

This simple idea started with a block chain. Therefore, a block chain is not a concept that has never existed in the world, and it is to keep several important books, to check each other online in real time, and confirm the identity of the books to maintain the validity of the books. So, why this simple technique is so much attention, and whether it is a realistic technology is an important topic for those who are new to the block chain.

The birth of the block chain, as everyone knows, began with bit coin. First, let's talk about bit coin and cryptography (virtual currency) being true "money".

First, we need to talk about what the definition of "currency" is. Economically, money is defined as money if it meets the following requirements:

"Money" refers to the distribution of value to the market. Academicly, it is defined as money if the following five conditions are met.

1. The market recognizes and accepts money.
2. Value is stable.
3. Management There is a final responsibility body.
4. Money with the same face value is equal in value. (The value does not change even if it is shared or merged.)
5. It is easily distinguishable from others and has sufficient durability.

Money has the following functions.

1. means of exchange
2. Unit of calculation
3. means of storing value
4. Payment means

According to the definition of academia, it can be said that money from precious shells used in place of money in prehistoric times to scabs used among local children can also be considered as money. According to this definition, virtual currencies are clearly more deficient than actual legal currencies (won, dollars, etc.). It is the function of the value 2, which is the above-mentioned condition, the stability of the value and the value derived from it. This part is now being used as a justification and basis for regulating virtual money in the Korean and regulatory governments. So now we need to sort this out. And what is the "value" - the core of the problem of value change - is the problem.

Value and price are different. Prices can change from time to time. But values ​​are not as easily formed or changed as prices. When new things appear, the price of a new thing does not exist as one thing in the marketplace, as historically it has always been. The market, however, allows the price of an object to be matched by an "invisible hand" (transaction between economic entities). In other words, as the transaction continues to increase and the frequency increases, the price of the transaction eventually converges to a certain level according to the "principle of family members". There is a market that remains a logical basis for this. It is the "stock market" that we have come to see for a long time. No one knows the exact price of the value of a new company. However, they will pay for their future value, their choice, and their investment, and transactions will continue to occur. As a result, the stock of the new company shows a certain price level in the market and the market stabilizes.

This is a process that has always happened naturally since the establishment of the market economy, and I think that the key factor of the block chain, cryptography, will also be adjusted naturally by the market. It is also not impossible to create a cipher that can control the extent of price fluctuations.

The next thing to discuss is the management subject, which is number 3 of the above-mentioned definition of currency. The existing currency paradigm has always existed as a management subject. Users must comply with the policies and procedures of the central entity, such as legal money, game money, and cards. This is often causing problems in the present society. An example of this is the recent Samsung Securities accident. In the presence of a central entity, a user (public or public) who forms and sustains the value of the currency (transaction means) in the event of manipulating the book by a central entity's mistake or intentionally intention can not I will wear it. Therefore, many centralized actors are not free to this problem, and occasionally they are abused. Centralized bookkeeping creates problems such as hacking, manipulation, embezzlement, misrepresentation, and factual distortion. To solve this problem, distributed chain technology, block chain.

-How the block chain works-

Another advantage of the block chain is that it does not necessarily require intermediaries or central mechanisms for mutual trust. As an example of a block chain to replace a bank, I would like to make it easier and more detailed to understand the working principle of the above-mentioned block chain. First, you need to know what the bank is doing to get rid of the bank.

The first is to keep the transaction history books securely with the archive function.
The second is to verify that there is a problem with the transaction history with the verification function.
It keeps data on who sends the money and who has what, and does not cause duplicate transfers, omissions, or excess transfers when new transactions occur.
Since the birth of the bank, many have tried to solve this problem, but no one has succeeded. Now, however, a block chain can eliminate a bank by solving both of these to replace a bank. And I solved both of them.

In the archive function, the block chain distributes copies to participants. So, even if a participant breaks his or her book or does not participate, the whole book is not wrong. Each one has its own books, so everyone can see who has what and how much they have. The transaction of this book is automatically synchronized when a certain amount of transaction volume accumulates. A bundle which is a unit of synchronization is called a & quot; block & quot ;. These blocks are continuously connected and have continuity. The content of each block is encrypted, and if the transaction contained in the block is changed even by one character, the "block" fails. These blocks are falsified in the entire network and are discarded. The abandoned part transfers the valid parts of the network to each other and restores them to the original. This process is not only for one block, but also for the previous block. Therefore, if the contents of the previous block are changed, all the blocks connected to the next block are not recognized. Therefore, once a block chain book is recorded, it is impossible to change or delete it in principle. This makes the block chain impossible for any covert transaction.
Everyone has the same book, and the contents of the book are irreversible. Because these blocks are connected together, they are called block chains.

Let's take a look at the transaction verification feature. Participants should not make false transactions in order to make transactions. Therefore, verification must be possible before recording. Someone can not give money to another person without money, and should not send more money than he has. Programming this thing is not difficult. What is important here is how honest the person is than who performs the verification process. At the present time, banks are also responsible for all transactions on the assumption that banks are honest when they reasonably think. Let's see how we can program it to solve the "problem of honesty".

The block chain allows the participants to verify the contents of the block randomly per block. Therefore, the verification subject is not specified and the authority is not concentrated. This, of course, does not solve the problem perfectly. This is because a person who is randomly selected may have a bad heart. To do this, we have to pay a small fee to become a candidate to be randomly selected. It is the "Pow" method that pays by computer calculation.

In order to become a candidate to obtain authority to verify a book, a participant is required to pay for or pay for such expenses as mining. Naturally, if you pay this price heavily or try for a long time, the person becomes more likely to become a verifier. As a result, he tells the entire network that he will be involved in these costs, and he is willing to maximize the reward because he has paid for it.
The winner of this cost (fee) payment process (or effort) is rewarded for the value of the network to rise. That is "virtual money (bit coin, etherium, etc.)". As with other currencies, the value of the money increases as more people use or receive it.

This can be understood by considering that the value of the won is less than that of the US dollar. That is, as the number of network users increases, the value of money increases. This means that if the reliability of the network is high, the number of network users is increased, and the value of the money in which the users are increased increases, and a virtuous cycle structure in which all the participants must be honest is established.

This is the working principle of the block chain, and participating participants must behave honestly and they do not suffer any harm. So the participants can trust each other and leave the verification. This allows the block chain to build a complete financial system that does not require a centralized entity or intermediary. In conclusion, no person, institution, country or government can falsify a block-chain ledger if the growth of a particular block chain exceeds a certain level. This is the core value of the block chain.
Many people still confuse the block chain with the beat coin. We can see that these two are clearly different.

Finally, we mention the relationship between block chain and virtual currency. The relation between the block chain and the virtual currency is absolutely inseparable. However, it is not necessary to sell virtual money to the public to provide any block-chain system services. The virtual money is responsible for the function of raw materials and fuel to operate the system in the block chain and has a commission economic characteristic because there is a fee structure using the virtual currency for the system change. In other words, in order to write something on a block-chain book, you must have a virtual currency. This feature will prevent hacking and attacks such as Ddos attacks or spam attacks on existing Internet services. More easily, every time a hacker attempts to attack, the hacker must continue to consume the virtual money he receives as a cost of his purchase, mining, network maintenance, and hardening efforts Level capital or effort.
Because of this relationship, those who buy virtual money will see the value of the network in which the virtual money is used and judge that the network will have a high value in the future, so it is normal to purchase virtual money, which is the fuel of the network. Therefore, it is true that it is more like gambling or speculation to invest in who is investing or being listed on the exchange.