Blockchain technology combines several existing technologies, including asymmetric cryptography, timestamp, and consensus, etc.
Asymmetric cryptography, also known as public-key cryptography, is a process that uses a pair of related keys (one public key and one private key) to encrypt and decrypt a message and protect it from unauthorized access or use. A public key can be used by any person to encrypt a message so that it can only be deciphered by the intended recipient with their private key. A private key, which is also known as a secret key, is shared only with the key’s initiator.
Timestamps mark the time for each transaction on the blockchain and show how blocks are connected in chronological order. It is tamper-proof and nobody can alter the information on the blockchain. Given the features of timestamp, blockchain technology is suitable for areas such as intellectual property protection.
The proof-of-work mechanism solves the problem of distributing the 21 million Bitcoins fairly in a decentralized environment. For example, timestamps and the Proof-of-Work system have been used in the Bitcoin network to ensure that Bitcoin cannot be spent twice and transactions across all nodes in the decentralized network remain consistent.
Overall, blockchain technology is flexible, anonymous, decentralized and transparent. That’s why it has been used in a wide range of domains such as records management, patent protection, product traceability and anti-counterfeiting, transaction settlement and private equity process. It is expected to be applied widely in many fields and will thoroughly revolutionize the current system of transferring value. It is believed that blockchain can be used to establish trust between institutions and revolutionized the currency system of transferring value.