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What is blockchain and what are its uses?

What is blockchain and what are its uses?

Blockchain is the technology from which most cryptocurrencies derive their power. So much so that some people mistakenly use the word blockchain instead of cryptocurrency.

Of course, the fact is that cryptocurrencies made blockchain so popular. Because while blockchain was developed in 1990, it had no use until 2009 when Bitcoin was born. At that time, many people thought that blockchain could only be used for the development of digital currencies. While some believed that the uses of blockchain would go far beyond cryptocurrencies. In reality, the prediction of the second group turned out to be more correct. In order to fully understand all these concepts, we suggest you to participate in the digital currency course of Rahvard Academy.

In this article, we will first discuss what blockchain is in simple language and then we will examine its applications.

What is blockchain?

“Blockchain is a chain of blocks that contain information.”

Of course, probably when you saw the phrase “in plain language” in the title of this section, you did not expect to encounter such a definition! So let’s put it more simply:

Blockchain is translated as “block chain” in Farsi. In practice, we are facing exactly this meaning. Blockchain technology consists of blocks that are interconnected. Each of these blocks contains information that we will discuss further. Blockchain is a system for recording information and reports.

But if you want to know how it differs from other systems, the point is that it is almost impossible to hack, delete or manipulate the information recorded on the blockchain. It is better to say that it is so hard that few people think of hacking it!


Blockchain achieves this level of security in two ways:

Hashing and Proof of Work



A hash is a function that takes an input of letters and numbers and turns it into an encoded output of a fixed length. Hash is actually the foundation of the blockchain network. Simply put, hashing converts one value into another using a mathematical function.

But only hashing is not enough to create security in the blockchain network. Rather, the main burden of security is carried by the Proof of Work process.


Proof of work

Proof of Work, Proof of Work Consensus Algorithm, Proof of Work, PoW. Each of these phrases you come across has a meaning.

There is a ledger in every blockchain network. This ledger is neither in the hands of a single person nor in the hands of a particular organization. Rather, it is distributed among all the people of that network. That is, information, all transactions in the blockchain are available to all network users. For this reason, user consensus is needed to change transaction information or add new transactions.

When users agree about the correctness of the information added to the network, the transaction is confirmed. Naturally, the members of this network do not know each other and it becomes impossible to manipulate the network. Therefore, the consensus or PoW process ensures the security of the blockchain network.

So it can be said that by using encryption and data distribution, the possibility of hacking, deleting and manipulating recorded information is almost eliminated.

What is the basis of blockchain work?

Each block consists of three parts:

  • Data
  • Hash
  • Hash of Previous Block

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Data is the information that is stored on each of the blocks. For example, if we consider the blockchain of a digital currency, the information related to their purchase and sale is stored on the blocks.



Hashing is a process in which fixed-size outputs are generated from variable inputs. Hashing makes the blockchain achieve an acceptable level of data integrity and security, and as long as the input of the blocks is not changed, the hashing algorithms produce the same output.


Hash of Previous Block

In each block, not only the information of the current block is stored, but also the information of the previous block. The hash of the previous block is known as (Pre-Hash).

But you might be wondering what happens to the first block?

In the first block, there is no information from the previous block. Because basically the previous block is not working. The first block of any blockchain is known as Genesis and stores only information related to itself.

What problem does blockchain solve?

We talked about how blockchain works. Here we mention the areas in which blockchain is used. Blockchain is a reliable way to store information about all types of transactions and is used in various fields. Here we mention some of the most important of these areas. Of course, blockchain applications are not limited to the ones we mention here.


Blockchain in financial services

You must have used banking services until today and you know that if your banking work is a little more complicated than a simple card, you need to do it during office hours. The blockchain network does not recognize Thursday, Friday and between holidays! Financial transactions on the blockchain can be done at any time.

For example, if you want to transfer some bitcoins to someone’s account, you don’t need to wait until tomorrow morning, or if the amount is large, you don’t need to wait for Keller’s agent at the bank. Rather, the transaction is done almost instantly. In addition, if the blockchain becomes widespread in the banking network, the total fees will be significantly reduced.


Blockchain in health and treatment services

It may have happened to you that when you go from one doctor to another, many of your previous medical records are either lost or not accepted by the second doctor. With the help of blockchain, medical institutions can redefine the way of storing patient records. This technology can encrypt information so that it is only available to certain people.


Blockchain in voting

The impossibility of changing the history of transactions, collective security, no tracking of users and access to people’s information, etc., are the advantages that many hope for the possibility of faster and healthier voting through blockchain in the future.


Blockchain in digital currencies

The concept of blockchain is tied to digital currencies. To the extent that many mistakenly consider these two concepts to be the same. Currently, blockchain has provided the platform for the most important digital currencies such as Bitcoin and Ethereum. Before the emergence of digital currencies, the control of almost all currencies in the world was in the hands of the central banks of different countries.

Blockchain allows cryptocurrencies to operate without the need for a specific credit center. As a result, not only risks such as bank bankruptcy or the leaking of users’ financial information are eliminated, but the fees for transactions and financial processing are also greatly reduced.


Blockchain in smart contracts

Smart contracts, which are very popular these days, are one of the other uses of blockchain. These contracts are the codes by which the provisions of a contract are carried out.

A smart contract was first proposed in 1996 by Nick Szabo, a computer expert and cryptographer. He wrote several articles in this field and improved his concept. But practically, these contracts were not used until 2009.

Smart contracts were used when the groundwork was created and that was when Bitcoin and blockchain emerged.

Let’s look at an example of this type of contract in the insurance industry:

A smart insurance contract can be open until the parties need it. Then, the insurance funds are released for those who are eligible to use the insurance. In this way, the need to communicate with individuals and insurance groups is eliminated.

These are just a few of the applications of blockchain. Blockchain technology can be used in video games, capital market, trade, media, energy, civil registry, big data, tax and many other areas.


Is blockchain the same as bitcoin?

Blockchain is abbreviated as BC and Bitcoin is abbreviated as BTC. But by reading the above lines, you must know that blockchain is not the same as Bitcoin. Rather, Bitcoin uses blockchain technology.



The initial idea of ​​blockchain was proposed in the early nineties. But practically, it was not used much until 2009 when Bitcoin appeared. The basis of blockchain work is a chain of blocks, each of which contains information, and with the help of hashing and the process of proving the work, they have high security and efficiency. Blockchain can be used in various areas such as digital currencies, smart contracts, financial services, medical services, voting, big data and many other areas.

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