Banks monopolize money. Their systems are turned off and their reliability cannot be verified by their users. The Blockchain cannot monopolize Bitcoin. The system is public and can be checked by anyone that the system is operating according to the protocol. Also known as the Distributed Ledger community.

Banks charge high transaction fees. Trading fees in Bitcoin are quite low.

The systems of the bank you trust may crash. However Bitcoin is traded on a distributed network through blockchain, so it is almost impossible for the entire system to crash at the same time.

The duration of high-amount transactions made by banks to any part of the world may take 1-7 working days. There is no such restriction in the Bitcoin application.

Banks have paperwork and bureaucracy. That means more workforce. In the Bitcoin Blockchain application, there is no paperwork. Bureaucracy is almost zero. The entire system depends on mathematical algorithms and encryption mechanisms.

The procedure of printing money by central banks is confidential. The amount of Bitcoin to be printed over the years is certain and does not contain the concept of inflation.

Most importantly, the functioning of the existing banking system can be manipulated. Blockchain Technology, on the other hand, is almost impossible to manipulate.

The existing banking system is the past. Blockchain Technology is the future.

As I mentioned above, Bitcoin is only an application for the banking and financial sector. The main issue I want to talk about and focus on here is Blockchain Technology, not to denigrate the existing banking sector. On the contrary, today, especially in America and Europe, large banks are working very hard to integrate their infrastructure into the Blockchain Technology infrastructure. We can think of the importance of Blockchain Technology as follows:

“All systems and sectors that contain any intermediary or contract element can be integrated into Blockchain Technology.”

That's why this technology is revolutionary. Work times, processes and bureaucracy can be completely minimized. The priority of democracy and consensus can be achieved. Quality business processes can be created, in which objectivity and employment contracts take their first place. Instead of the interests of certain individuals and institutions, a mutualist order can be established in which all the people and system users can benefit.

Of course, in practices where this theoretical knowledge is reflected in the real world, we will encounter wrong examples and systems. Even in Bitcoin, many suspicious approaches and events took place in the beginning. However, when compared to the existing system, the rate or attempt of abuse and irregularity is very low. In addition, this system is open to the public, development and future.

There is only one thing that is certain and clear about Blockchain Technology: "The element that creates the trust mechanism is not people, but mathematics and encryption algorithms".

The blockchain mechanism makes no sense to many non-computer science professionals. Clarifying this is critical for fundamental technology development and integration with open innovation. Let's try to understand this through the construction sector...

Of course, we will have a list of conditions for this construction (Bitcoin Blockchain Protocol), and a system where each contractor is connected by a network (Blockchain Network) that is aware of each other and at the same time, for each floor (Each Block in the Chain) that he has built on his own site, the moment he places this floor on the construction site, he receives the approval (Work Contract) of other contractors and earns the sales price of that floor as a reward(Bitcoin)(This prize is created out of nothing digitally, no one pays for this prize). In this construction system utopia, contractors and other system participants are aware of:

• Building this skyscraper is a competition among contractors.
   
• Those of us who want to live in a skyscraper constantly produce bricks and send them to contractors for construction.
   
• There is an incredible resource of bricks (Bitcoin transaction) from which we can build the skyscraper. There are so many bricks that contractors can choose what they want in a certain order among them. So much so that some bricks are made of gold and the contractors are almost competing with each other to use those bricks in the construction of the floor they have built.
   
• The rules of the race are simple, within the scope of the conditions, the contractors form the rooms with the bricks connected to each other and complete the floor. It doesn't matter which brick the contractors choose. They already know that each brick that comes to the system is unique and the bricks will be removed from the system as soon as they are used in the construction of their own floor. At the same time, it is certain that if the floor is finished, +1 floor will be added to the skyscraper. No other contractor will come and demolish that floor.
   
• Contractors are quite selfish. They get away with saying “I have much better construction equipment (Computer hardware) than other contractors and I completed the floor. That's why I deserve the award. If they wanted the reward, they had to be faster!” After that they immediately engage in the struggle of the next floor.
   
• Construction tools are used here not only for the construction of floors, but also for the race to verify that the bricks are of material and construction conforming to the conditions. This is the most important detail in the competition.
   
• You can be involved in this construction as a contractor from all over the world. There is no restriction.
   
• Objectivity and basic sequencing rules are provided by mathematical algorithms in the system. Individual or institution comments are disabled at this point. In this way, the trust of the public and system participants is once again gained.
   
• The floor race of the contractors also depends on mathematical rules and verification mechanisms. Compliance with the conditions of each floor is also verified by other system participants in accordance with these rules.
   
• As the number of floors increases, the attempt to demolish the floors below by another malicious contractor becomes more difficult. This increases the reliability of bricks, rooms and floors. In addition, the correctness of the bricks and floors are also open to all observers, whether participating or not.
   
• Thanks to this construction system, win-win projects are created. The people who will be sitting in the skyscraper and the contractors will be happy. As long as the number of well-intentioned contractors and flat owners in the system is high, the collapse of the system becomes even more impossible.
   
• As the number of floors in the system and the number of well-equipped contractors increase, it becomes more difficult to build floors in the system. As a matter of fact, the contractor who has the best and quality materials starts to earn more.
   
• Of course, several contractors can join forces (Pool Concept) and put pressure on the market. (Let this be the subject of another article for now).

Over the centuries, the profits and power of the banks increased with a rising momentum. They also took their place as the most important building block in the processing of capitalism into the marrow of societies. The old bridge of trust, money had found such a beautiful harbor that people could now rely on banks rather than trust money. In this way, money transferred all the trouble and worry on it to the stylish four-walled bank keepers. The process was proceeding with such solid steps that banks kept your existing money or lend you money if you wished. All control of the money began to pass to the banks. Therefore, the monopoly of the economy was gradually transferred to the banks. Money was just a tool now.

Technology, computers and digitalization have begun to influence the whole world at the retail level since the beginning of the 90s. The banks we trusted could now circulate money in seconds and make people spend it instantly. With computers and the internet in our palms, money took its place on the screens. Because we now have internet banking. If I wanted, I could send you money through the bank I work with, without any question marks in my mind. This way, traders and money users could take a big breather!

In this adventure, a pioneer (Nakamoto) came out in November 2009 (this date is very important since there was a great Mortgage crisis in the USA and the world in 2008) and asked the following question:

“Why do we have to trust banks?”

Then he began to give himself the following answers. “What is the most basic function of banks at the moment; perform money transfer and prevent double use (duplication) of money on the screen. Ok very good, I can solve this trust mechanism and double use problem with a certain data network using math and encryption algorithms. So why would we need banks then?”   

Of course, Nakamoto could have achieved this by eventually purchasing a large data storage solution or with data storage systems that he would create in-house. But in the name of it, it was a revolution. The system that he would establish should not be monopolized by anyone, all participants should be responsible for the management. His sole desire was to get participants to be involved in the system by relying on it, rather than relying on him. In other words, he wanted this system to go on like a chain by creating a kind of correlated gear mechanism. So he said to himself:

I'm making all the data public, and anyone can even keep all this data on their own computer!"

Yes, you didn't read it wrong. In the system established by Nakamoto, all data subject to processing was made public. Moreover, there would be participants of the system operating this system. Which is why the title of his article began with "peer to peer" (each participant is depicted when saying pair to pair).

He wanted data to be distributed to everyone, peer-to-peer, because only in this way could he establish an uninterrupted and non-lost data network. “Bitcoin", which we can easily encounter on the internet today, was not only a reward mechanism, but also the first application of blockchain technology, which was derived to enable Nakamoto to operate the system he established. Then the following question may come to your mind:

“What were the participants doing to win prizes?”

Actually, this issue is technically quite complex. However, at the most basic level; The system that Nakamoto built was based entirely on encryption algorithms and high-level mathematical analysis depending on its reliability. Just as calculators need batteries to perform even the simplest operations, Nakamoto needed computer power to perform these complex and heavy operations. Turning this into a win-win relationship in the simplest way, he promised the participants the following:

“Join the Bitcoin system! If you join this system with your computing power, I guarantee to give you this new currency that I have created!”

This is how Nakamoto made the heated proposal. Since 2009, the value of Bitcoin has increased so much that today 1 Bitcoin is equal to 54300 USD. Thus, the first phenomenon of the internet, digital currency was also formed. After 2009, many digital currencies began to be created using blockchain technology. They were named “altcoin”. Now the main question may have come to life in your mind.

We can say that we have taken this concept as a basis in every area that our lives can touch. Trust is the decision with the highest degree of importance between the parties. If it is also encountered in digital life, the decision-making mechanism in the event is provided through the identity and authority of the other person. So as humans, we ask these questions, "Are you really the person you're talking about?" and "Should you be doing what you're trying to do?"

At this point, Blockchain private key cryptography offers you ownership. In other words, you do not have to provide more than the information you need to introduce yourself to the person in front of you without asking the first question we asked. In this way, you get rid of the person we define as an information thief or hacker who probably attacked you.

Of course, authentication is not enough. Having the right network also needs some requirements, such as trading on the right network. A distributed network minimizes the risk of centered corruption or error. This distributed network should also be used for the record keeping and security of the transaction network. For example, to authorize a money transaction, it happens when the entire network follows the rules. In the meantime, unity is achieved. An identity verification done in this way eliminates the obligation to trust the person in front of you. Today, entrepreneurs of industries all over the world have realized the effects of this development. Unimagined, new and powerful digital relationships are now possible thanks to this.

Blockchain technology is often described as the backbone of money transactions over the internet. In fact, this makes it easier to protect cryptographic keys and very important commonly used documents. In short, this idea or technology can be used wherever a reliable registration system is needed.

How It Works

Once we understand why blockchain technology is so important and promising, we need to have an idea of how it works. We call blockchain a decentralized database where records or data are kept for a certain period of time. These records are open to everyone and can be checked for accuracy at any time. It is also constantly updated by P2P network.

When a new transaction is made, those who keep track of the transaction, known as miners, check that request and calculate the most efficient way to resolve it. After the transaction is verified, it is added to the chain as a block. Then, all miners check these transactions, confirm if there is any inconsistency and update the registry.

At this very moment, we are touching the heart of the blockchain. Its main advantage is that it is a dynamic database system. It potentially allows thousands of miners to keep logs, but adds the most efficient input to the database. After the transaction is verified, no one can change the records.

In this way, the accuracy of the block is dynamically updated and is not affected by any cyberattack. Miners can't cooperate to change records. In the event of any cheating, those responsible are removed from the system, which is important for the security of the site.

I decided to write this article to get an idea of exactly what blockchain is and how it is used, which we have heard for a long time. After we met Bitcoin, we actually heard more about blockchain. Because one of the areas where this technology is most feasible is the financial sector. I think, I should mention Bitcoin briefly.

Bitcoin is a decentralized cryptocurrency developed in 2009 by a person or group named Satoshi Nakamoto. So, it's a digital currency.

Although there are hundreds of altcoins in the market later on, bitcoin is the most popular and we can say that it is a pioneer trying to tell us what this technology can do.

Returning to the blockchain, we can define it as a distributed database system that provides encrypted data management.

Blockchain technology is not much different from other systems you have encountered before. It can see in what direction the information records we are talking about have been changed or updated. An example of this is the Wikipedia site.  That is, knowledge is not the monopoly of one person. It belongs to everyone.

When you look at the Wikipedia example roughly, you can see the similarity with this technology, but many features that make blockchain unique are hidden deep. While both work on distributed networks, Wikipedia is built on the World Wide Web (WWW) protocol and uses a client-server architecture.

In other words, we can say, a person who is authorized and has the necessary permissions can change or delete Wikipedia articles on the central server. Database control is in the hands of administrators and there is a central authority.

Today, this is how all banks, government systems, are managed with high protection and centered databases. All control, including the method of protection against cyber threats, belongs to the owners of the site. If we go through the Example of Wikipedia again, the original copy of Wikipedia is edited through a server and all users see the new version.

In blockchain use, each node on the network achieves the same result. They all update the recorded information independently of each other, and the most popular record becomes a kind of official record. At this point we can think about why this technology is so popular and useful.

This difference represents an innovation in recording and distributing information accurately and reliably, completely eliminating the need for a single central authority that we trust to facilitate digital relationships.