What is blockchain?

Blockchain is a relatively new kind of database where users can store transactions. With blockchain technology you can build distributed software. Transactions such as payments, data exchange or contracts can be done without the intervention of a third party. ID2bytes builds Smart Contracts based on blockchain. These Smart Contracts are digitally signed by both parties. Anyone can view the information at any time and the ‘rules’ of the transaction are saved and executed. As a result, you do not need a middle man and everyone within the network can verify that the transaction of the Smart Contracts has taken place.

How does a blockchain work?

In a blockchain, information is stored in ‘blocks’ via cryptography. (Cryptography is a method of protecting information through the use of codes based on a certain algorithm.) Every block, stored in the network of computers, contains information about the previous block and so on. In this way, a chain of information is created, which explains the name ‘blockchain’.

With blockchain, information isn’t externally stored, but is directly stored in the database that everyone uses. There is no central point, but the user’s computers all contain an exact copy of the database. Every computer functions as a node and together they form a peer-to-peer network. Using a peer-to-peer network is relatively safe. If, for example, one of the computers is hacked, that ‘node’ will simply be switched off. There are enough other ‘nodes’ left, all of which contain a copy of the transactions (in our case, transactions between the Smart Contracts).

What are the benefits of a blockchain?

  • With blockchain you have less chance of fraud because it is organized through a peer-to-peer network.
  • Blockchain is transparent: every computer within the network has a copy of the transactions.
  • Blockchain works in a fast way. Processes like approval, saving and execution are all automated.
  • Blockchain is relatively cheap. There’s no need for third parties such as banks or lawyers anymore and that saves money.