<p><a href="https://reliasoftware.com/blog/what-is-blockchain-technology">A blockchain is a decentralized, immutable ledger</a> that records transactions across a network of computers. You can think it likes a notebook that everyone can see and update, but no one can erase or change what's already written. That's the idea behind blockchain.</p>
<p>Today we will delve deeper into the inner workings of blockchain technology. I'll explain how blockchain works using simple ideas like:</p>
<ul>
<li>Hashing: Turning data into a unique code.</li>
<li>Blocks: How data is grouped together.</li>
<li>Mining: The process of confirming and linking these groups.</li>
<li>Decentralization: How many computers work together to keep everything honest.</li>
</ul>
<p>This guide will help you understand the basic building blocks of blockchain technology and why it has the potential to change how we manage data and trust in our digital world.</p>
<p>&gt;&gt;&nbsp;<em>Read more: </em><a href="https://reliasoftware.com/blog/advantages-and-disadvantages-of-blockchain"><em>Advantages and Disadvantages of Blockchain Technology</em></a></p>
<h2>Hash Algorithm</h2>
<p>To understand blockchain, we need to grasp the concept of hashing. Hashing is a process that transforms any input data, regardless of its size or complexity, into a unique, fixed-length string of characters. These inputs can be a text document, an image, a video, or even a complex financial transaction This string, known as a hash, acts as a unique fingerprint for the original data.</p>
<p dir="ltr">This unique hash has several crucial properties:</p>
<ul>
<li dir="ltr" role="presentation">Uniqueness: Ensure that each piece of data has a distinct and unalterable identifier.</li>
<li dir="ltr" role="presentation">Fixed Length: Be efficient in storing and comparing hashes.</li>
<li dir="ltr" role="presentation">Deterministic: Given the same input data, the hash function will always produce the same hash.</li>
</ul>
<p dir="ltr">Popular hash functions used in blockchain technology include SHA-256 and Keccak-256 (used by Ethereum). Although different blockchains might use different algorithms, the core principles of hashing remain the same.</p>
<figure class="image align-center"><img style="display: block; margin-left: auto; margin-right: auto;" src="https://api.reliasoftware.com/uploads/hash_algorithm_384d9adbfe.webp" alt="Hash Algorithm" width="650" height="390">
<figcaption>Hash Algorithm</figcaption>
</figure>
<h2 data-start="11" data-end="106">Block</h2>
<p data-start="11" data-end="106">A block in a blockchain is like a page in a ledger. It contains three key pieces of information:</p>
<ul data-start="108" data-end="354">
<li data-start="108" data-end="165"><strong data-start="110" data-end="127">Block Number:</strong> Shows the block&rsquo;s order in the chain.</li>
<li data-start="166" data-end="273"><strong data-start="168" data-end="177">Data:</strong> Includes details like transaction records, smart contracts, or any other important information.</li>
<li data-start="274" data-end="354"><strong data-start="276" data-end="286">Nonce:</strong> A unique value that miners must find to create a valid block.</li>
</ul>
<p>How Does Blockchain Mining Work?</p>
<p>To validate a block, miners (nodes perform mining) combine the block number, data, and a trial nonce value. This combined information is then fed into a cryptographic hash function that represents the entire block's contents.</p>
<p>The crucial aspect of mining lies in finding a nonce that, when hashed with the block's data and number, produces a hash meeting specific criteria. In the case of Bitcoin, the criteria might be to find a hash that starts with a certain number of leading zeros. In Ethereum, the criteria may be different.</p>
<p>Regardless of the specific criteria, the process of finding the correct nonce is computationally intensive and requires significant processing power. This mining process is essential for securing the blockchain network and adding new blocks to the chain. After mining completely, miners should receive some crypto as their rewards (aka. transaction fees).</p>
<figure class="image align-center"><img src="https://api.reliasoftware.com/uploads/how_mining_proceed_0be5c4d5a8.webp" alt="How Mining Proceed?" width="650" height="390">
<figcaption>How Mining Proceed?</figcaption>
</figure>
<h2><strong id="docs-internal-guid-88ad7629-7fff-6f61-83d9-154dfef35c91">Blockchain - Linked Blocks</strong></h2>
<p dir="ltr">A blockchain is a chain of interconnected blocks. Actually, each block contains data, a block number, a nonce (a unique value), and the hash of the previous block. This creates a continuous chain where each block is connected to the one before it.</p>
<p dir="ltr">The Genesis block, the first block in the chain, has a special case where its "previous hash" points to an arbitrary value, typically a string of zeros.</p>
<p dir="ltr">To validate a block, the block number, data, nonce, and the hash of the previous block are combined and then hashed. This process continues for each subsequent block, creating an unbroken chain of linked hashes.</p>
<p dir="ltr">This interdependency makes the blockchain immutable. If any data within a block is altered, its hash will change. This invalidates the hash of the subsequent block, which then invalidates the next, and so on down the chain.</p>
<p dir="ltr">However, this immutability is only as strong as the control over the blockchain itself. If a single node controls the majority of the mining power, they can potentially alter past blocks by recalculating the chain. This highlights the importance of decentralized control in public blockchains, where the mining power is distributed among many participants, making it significantly harder to manipulate the chain.</p>
<figure class="image align-center"><img src="https://api.reliasoftware.com/uploads/linked_blocks_1d0320a117.webp" alt="Linked Blocks" width="650" height="390">
<figcaption>Linked Blocks</figcaption>
</figure>
<h2 dir="ltr" role="presentation">Distributed Blockchain</h2>
<p dir="ltr">The true power of blockchain lies in its decentralized nature. In a distributed network, multiple independent nodes (peers) maintain their own copies of the blockchain. Each node validates transactions and adds new blocks to the chain independently.</p>
<p dir="ltr">The consensus mechanism ensures that all nodes agree on the valid state of the blockchain. This is achieved by comparing the hashes of the latest blocks across all nodes. If a node attempts to alter past transactions, its resulting hash will differ from the hashes of other nodes. This disagreement triggers a process where the majority of nodes reject the altered chain.</p>
<p dir="ltr">This decentralized approach ensures that no single entity can manipulate the blockchain without the agreement of the majority of network participants. It fosters trust and security by making it incredibly difficult for any individual or group to alter the historical record of transactions.</p>
<p dir="ltr">In a blockchain, transactions are recorded within blocks. Each block includes a set of transactions, and these transactions are incorporated into the block's hash. This ensures that any alteration to a transaction within a block will invalidate the block's hash, and consequently, the hashes of all subsequent blocks in the chain. Therefore, blockchain can be considered a digital ledger.</p>
<figure class="image align-center"><img src="https://api.reliasoftware.com/uploads/distributed_ledgers_53e2144382.webp" alt="Distributed Ledgers" width="650" height="390">
<figcaption>Distributed Ledgers</figcaption>
</figure>
<p>&gt;&gt;&nbsp;<em>Read more:&nbsp;</em></p>
<ul>
<li style="font-style: italic;"><em>Top 15 <a href="https://reliasoftware.com/blog/mobile-app-development-trends">Latest Mobile App Development Trends</a> in 2025</em></li>
<li style="font-style: italic;"><em>Top 6 <a href="https://reliasoftware.com/blog/healthcare-technology-trends">Healthcare Technology Trends</a> in 2025</em></li>
</ul>
<h2 dir="ltr">Final Thoughts</h2>
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<p data-start="0" data-end="426" data-is-last-node="" data-is-only-node="">In short, blockchain technology changes how we store and manage data. By using secure cryptography and a network of many computers instead of a central authority, it creates a reliable and transparent system. This technology can be used for many purposes&mdash;from financial transactions to supply chain management and beyond. Although it's still evolving, blockchain has the potential to transform many areas of our daily lives.</p>
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<p>This blog explains how <span class="dg6jd">blockchain works step by step,</span> including: Hashing (Turning data into a unique code); Blocks (How data is grouped together), Mining, etc.</p>

How Does Blockchain Work? Step By Step with Diagram | Relia Software

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How Does Blockchain Work? Hash, Blocks, Mining

<p dir="ltr">After talking about &ldquo;<a href="https://reliasoftware.com/blog/what-is-blockchain-technology">What is Blockchain</a>?&rdquo;, you may ask yourself a lot of questions like what makes Bitcoin so interesting, why it's like digital gold, and how smart contracts add real-world value.&nbsp;That's what we're going to go into next.</p>
<p dir="ltr">We'll talk about the advantages of blockchain and smart contracts that are over our traditional system environments, as well as the challenges that we need to be concerned.</p>
<p dir="ltr">&gt;&gt;&nbsp;<em>Read more: </em><em>Top <a href="https://reliasoftware.com/blog/mobile-app-development-trends">Mobile App Development Trends</a> In 2025</em></p>
<h2 data-pm-slice="1 1 []"><strong>Advantages of Blockchain Technology</strong></h2>
<h3 data-pm-slice="1 1 []"><strong>Decentralized</strong></h3>
<p>Blockchains are decentralized, meaning there's no centralized source that controls the blockchain. You'll hear the term "decentralization" used a lot because it has a massive benefit - a more open and fair financial system.</p>
<p>Unlike traditional systems, individuals that make up a blockchain are independent and also known as node operators. They run the software that connects the whole blockchain together as a decentralized network. So, there's no single point of failure or control exists.</p>
<p><strong>Centralized vs. Decentralized System</strong></p>
<p data-pm-slice="1 1 []">A strong example of why decentralization matters is the GameStop stock saga of January 2021. A centralized entity abruptly halted trading of GameStop shares, showcasing how a single organization can wield immense control over financial markets. This incident highlighted a key risk&mdash;centralized systems can manipulate markets and restrict individual choices, raising concerns about fairness and transparency.</p>
<p>The 'bankless' movement shapes a future where individuals can manage their finances without relying on traditional banks. Historically, these centralized institutions have been criticized for questionable practices and the power to freeze or restrict access to funds without notice. This can cause financial instability for individuals who depend on these institutions.</p>
<p data-pm-slice="1 1 []">Blockchain solves this issue by removing intermediaries and giving individuals direct ownership and control over their assets. Through decentralization where power is distributed across multiple independent operators, users can freely transact without needing approval from centralized entities.</p>
<figure class="image align-center"><img src="https://api.reliasoftware.com/uploads/centralized_vs_decentralized_system_0a19b45c06.webp" alt="Centralized vs. Decentralized System" width="699" height="419">
<figcaption>Centralized vs. Decentralized System</figcaption>
</figure>
<h3 dir="ltr" role="presentation">Transparency &amp; Flexibility</h3>
<p dir="ltr">Blockchains offer transparency. Every action and rule is visible to all participants, eliminating the possibility of backdoor deals or secret privileges. This ensures a level playing field where everyone operates under the same set of clear and immutable rules.</p>
<p dir="ltr">It's important to note that while blockchain transactions are public, user identities can remain anonymous. By creating multiple accounts, individuals can interact with the blockchain in various ways, preserving their privacy. This anonymity, combined with the transparency of the system, empowers individuals and fosters a sense of freedom.</p>
<h3 dir="ltr" role="presentation">Speed and Efficiency</h3>
<p dir="ltr">Have you ever tried to make a withdrawal from the bank and it took three to five days? All the bank is doing is adding and subtracting numbers, basic first-grade math. So why does it take so long? This delay is largely due to centralized systems and manual processes.</p>
<p dir="ltr">Blockchain technology, on the other hand, offers significantly faster transaction times. By leveraging decentralized networks, blockchain transactions can be verified and processed within minutes, or even seconds, depending on the specific blockchain.</p>
<p dir="ltr">In contrast to traditional stock trading, which can take up to a week to settle a buy or sell order, blockchain-based systems can speed up these processes.</p>
<figure class="image align-center"><img src="https://api.reliasoftware.com/uploads/blockchain_technology_have_faster_transaction_times_0eee25be9e.webp" alt="Blockchain technology have faster transaction times" width="700" height="420">
<figcaption>Blockchain technology have faster transaction times.</figcaption>
</figure>
<h3 dir="ltr" role="presentation">Security and Immutability</h3>
<p dir="ltr">Blockchains are immutable, meaning they cannot be altered or corrupted. This fundamental property ensures the security of data, transactions, and digital assets. Unlike traditional systems where data loss can happen due to hardware failures or cyberattacks, blockchain networks maintain data integrity even if multiple nodes go offline. As long as a single node remains operational, the entire blockchain remains accessible and secure.</p>
<p dir="ltr">Hacking a blockchain is an extremely difficult task, far more challenging than attacking a centralized system. The decentralized nature of blockchains and the cryptographic techniques used make them highly resistant to cyber threats.</p>
<p dir="ltr">Furthermore, blockchain technology offers a secure and convenient way to store and manage assets. Instead of relying on physical storage or paper documents, digital assets can be securely stored on the blockchain. Access to these assets is controlled by private keys or mnemonic phrases, so there's no need for physical transportation or storage.</p>
<h3 data-pm-slice="1 1 []">Removal of Counterparty Risks</h3>
<p data-pm-slice="1 1 []">Smart contracts, in particular, remove conflict of interest in the traditional world. When we deal with users or individuals, they don't always have our best interests at heart. A lot of them are usually self-motivated in some sense and there's nothing wrong with that. That's how a lot of people are. However, when we make an agreement with them, this can have a serious conflict of interest when one party has control over execution.</p>
<p dir="ltr">Let's take insurance for example. I pay an insurance provider $100 a month and we have an agreement or a contract that they will pay my medical bills if I get hit by a motor.&nbsp; However, they have this massive conflict of interest. While the insurer promises to pay out claims, their primary goal is to maximize profits.</p>
<p dir="ltr">This can lead to disputes and delays when it comes time to fulfill the terms of the contract. Insurers may try to avoid paying claims by scrutinizing policies for loopholes or denying coverage based on technicalities.</p>
<p dir="ltr">This inherent conflict of interest is common in many contractual relationships. The party with the power to execute the contract may not always act in the best interest of the other party. As a result, individuals may need to resort to legal action to enforce their rights, leading to costly and time-consuming legal battles.</p>
<p dir="ltr">Smart contracts solve this issue by automating the execution of agreements without relying on biased intermediaries, making transactions more secure, transparent, and fair for all parties involved.</p>
<h3 data-pm-slice="1 1 []">Trust-Minimized Agreements</h3>
<p data-pm-slice="1 1 []">Smart contracts allow us to engage in trustless and trust-minimized agreements. We currently live in a world of brand-based agreements where we depend on brands or institutions to uphold their promises. If we engage in some agreement and we don't like the service provided, our only option is to switch to another provider&mdash;one that makes similar promises, requiring us to trust them once again.</p>
<p data-pm-slice="1 1 []">Smart contracts allow us to move from brand-based agreements to math-based agreements. These math-based agreements do not require trust, hence the name &ldquo;trustless&rdquo;. One plus one is always going to equal two in a math world. So, whatever the code determines is the input or output, that's exactly what's going to happen every single time.</p>
<p data-pm-slice="1 1 []"><strong>To sum up:</strong></p>
<p data-pm-slice="1 1 []">Now these lead to two major benefits, freedom and trustlessness. All these pieces allow us to live in a world that's more accountable, more trusting, and fairer. It allows us to work in an environment in a universe where things just work. It allows us the freedom to engage with other people how we wish because there's no centralized controlling body influencing every action that we make. All the rules are the same and no one's getting special treatment.</p>
<p>This brings out the new world of Economic Opportunity as well. As our lives become more and more digital, centralized services often restrict user choices and impose limitations based on profit motives. These platforms control interfaces, guide decisions, and benefit from user interactions. Smart contracts, decentralized applications and blockchains allows us to be free of these repressors and live in an environment that's truly free and trustless.</p>
<p>With smart contracts, we transition from an economy dominated by centralized platforms to one driven by open, automated, and transparent agreements that function independently of traditional institutions.</p>
<h2 data-pm-slice="1 1 []"><strong>Disadvantages of Blockchain Technology</strong></h2>
<p dir="ltr">Blockchain technology, while promising, also faces lots of significant challenges that prevent its widespread adoption and full potential.</p>
<h3 dir="ltr" role="presentation">Scalability</h3>
<ul>
<li dir="ltr" aria-level="1">
<p dir="ltr" role="presentation">Transaction throughput: Many blockchains struggle to process a high volume of transactions, leading to slow confirmation times and high fees.&nbsp;&nbsp;</p>
</li>
<li dir="ltr" aria-level="1">
<p dir="ltr" role="presentation">Network congestion: As the number of users and transactions grows, the network can become congested, further impacting performance.</p>
</li>
</ul>
<h3 dir="ltr" role="presentation">Complexity and User Friendliness</h3>
<ul>
<li dir="ltr" aria-level="1">
<p dir="ltr" role="presentation">Technical barriers: Blockchain technology can be complex to understand and implement, requiring specialized knowledge and skills.</p>
</li>
<li dir="ltr" aria-level="1">
<p dir="ltr" role="presentation">User experience: Many blockchain applications have a steep learning curve, making them less accessible to the general public.</p>
</li>
</ul>
<h3 dir="ltr" role="presentation">Interoperability</h3>
<ul>
<li dir="ltr" aria-level="1">
<p dir="ltr" role="presentation">External services: Different blockchains often operate independently, making it difficult to share data and collaborate across platforms.</p>
</li>
<li dir="ltr" aria-level="1">
<p dir="ltr" role="presentation">Standardization: A lack of standardized protocols and interfaces hinders seamless communication between blockchain networks.</p>
</li>
</ul>
<h3 dir="ltr" role="presentation">Regulatory Uncertainty</h3>
<ul>
<li dir="ltr" aria-level="1">
<p dir="ltr" role="presentation">Evolving regulations: The regulations for blockchain are still developing, creating uncertainty for businesses and developers.&nbsp;</p>
</li>
<li dir="ltr" aria-level="1">
<p dir="ltr" role="presentation">Compliance: Adhering to various regulatory requirements can be complex and costly.</p>
</li>
</ul>
<p>&gt;&gt;&nbsp;<em>Read more: </em><em><a href="https://reliasoftware.com/blog/how-does-blockchain-work">How Does Blockchain Work</a>? Hash, Blocks, Mining</em></p>
<h2 dir="ltr" role="presentation">Summary</h2>
<p>Blockchain technology is changing the way we interact digitally by making transactions more transparent, secure, and efficient. It eliminates intermediaries, reduces risks, and allows for trustless agreements, creating a fairer <a href="https://reliasoftware.com/blog/fintech-app-development">financial system</a>.</p>
<p>However, challenges like scalability, usability, and regulation still need to be addressed for wider adoption. As blockchain continues to grow, its ability to transform industries and give individuals more control will grow. Applying this technology can lead to a more open and secure digital future.</p>
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<p>Advantages of Blockchain Technology are: Decentralized, Transparency, Speed, Security and Immutability, Removal of Counterparty Risks, Trust-Minimized Agreements.</p>

Advantages and Disadvantages of Blockchain Technology | Relia Software

What are Advantages and Disadvantages of Blockchain Technology?

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<p dir="ltr"><span id="input-sentence~0">In the digital age, where information flows freely and rapidly, the need for secure and transparent systems is more important than ever. Fortunately, blockchain technology appears to be a game-changing answer. It provides a new way to manage data and process transactions securely.</span><span id="input-sentence~1"> In this blog, let's explore together what blockchain is and how it&rsquo;s transforming the way we handle data.<br></span></p>
<p dir="ltr">&gt;&gt;&nbsp;<em>Read more: </em></p>
<ul>
<li dir="ltr"><em>What are&nbsp;<a href="https://reliasoftware.com/blog/advantages-and-disadvantages-of-blockchain">Advantages and Disadvantages of Blockchain Technology</a>?</em></li>
<li dir="ltr"><em><a href="https://reliasoftware.com/blog/how-does-blockchain-work">How Does Blockchain Work</a>? Hash, Blocks, Mining</em></li>
</ul>
<h2 dir="ltr">What is Blockchain?</h2>
<p dir="ltr"><strong>Blockchain is a decentralized, immutable digital ledger that records transactions across many computers.</strong> This distributed system ensures transparency, security, and trust in a wide range of applications.&nbsp;</p>
<p dir="ltr">Unlike traditional systems, blockchain eliminates the need for intermediaries, empowering individuals and organizations to interact directly and securely.</p>
<h2 dir="ltr">Understanding Blockchain Fundamentals</h2>
<p dir="ltr"><span id="input-sentence~2">To fully understand blockchain, we need to get familiar with its fundamentals, which will shape how we code and architect our smart contract applications.</span><span id="input-sentence~3"> Start with the 2 most well-known blockchains: Bitcoin and Ethereum.<br></span></p>
<h3 dir="ltr">Bitcoin &ndash; The Pioneer of Blockchain</h3>
<blockquote>
<p dir="ltr"><strong>Bitcoin is a decentralized digital currency, operating on a peer-to-peer network without the need for intermediaries like banks.</strong></p>
</blockquote>
<p dir="ltr"><span id="input-sentence~3">You've likely heard of Bitcoin, one of the earliest applications of blockchain technology. Introduced by the pseudonymous Satoshi Nakamoto in 2008, Bitcoin revolutionized peer-to-peer transactions by enabling decentralized, censorship-resistant finance powered by cryptography.</span><span id="input-sentence~4"> Like gold, its scarcity made many people consider it as a superior store of value. This digital gold can be bought, sold, and traded like any other asset.<br><br>Bitcoin's success was just the beginning. Its breakthrough motivated others to explore how blockchain could be used for even more applications.</span></p>
<figure class="image align-center"><img src="https://api.reliasoftware.com/uploads/what_is_bitcoin_35e8457796.webp" alt="Bitcoin &ndash; The Pioneer of Blockchain" width="789" height="473">
<figcaption>Bitcoin &ndash; The Pioneer of Blockchain (Source: Canva)</figcaption>
</figure>
<h3><strong id="docs-internal-guid-44b08517-7fff-b3d0-f287-e718c36499a1">Ethereum &ndash; The Next Generation of Blockchain</strong></h3>
<blockquote>
<p dir="ltr"><strong>Ethereum is an open-source, decentralized blockchain platform that enables developers to build and deploy smart contracts and decentralized applications (dApps).</strong></p>
</blockquote>
<p dir="ltr">Vitalik Buterin published a whitepaper outlining Ethereum, a new protocol that leveraged blockchain technology. Unlike Bitcoin, Ethereum introduced a groundbreaking feature: smart contracts. In 2015, Buterin and his co-founders launched the Ethereum project, enabling developers to build decentralized applications (dApps), decentralized organizations (DAOs), and smart contracts.&nbsp;</p>
<p dir="ltr">This innovative approach eliminated the need for third-party intermediaries or centralized authorities, empowering users to engage in peer-to-peer agreements directly on the blockchain. Essentially, Ethereum took the core principles of Bitcoin and expanded them to create a more versatile and programmable platform.</p>
<figure class="image align-center"><img src="https://api.reliasoftware.com/uploads/what_is_ethereum_c784b7ec74.webp" alt="What is Ethereum?" width="801" height="481">
<figcaption>Ethereum &ndash; The Next Generation of Blockchain (Source: Canva)</figcaption>
</figure>
<h3 dir="ltr">Smart contracts - Bitcoin vs Ethereum</h3>
<p dir="ltr">Ethereum introduced a new feature - smart contract living in blockchain. What is really a smart contract? Why does it open lots of blockchain developments?</p>
<p dir="ltr">In reality, the concept of smart contracts wasn't entirely new. As early as 1994, Nick Szabo proposed the idea of self-executing contracts. These contracts, written in code and deployed on a blockchain, eliminate the need for intermediaries. Unlike traditional contracts, which rely on paper or digital documents and human enforcement, smart contracts are automatically executed by the blockchain network itself.</p>
<p dir="ltr">Ethereum, in particular, embraced smart contracts as a core feature, differentiating it from Bitcoin. While Bitcoin does support basic scripting capabilities, Ethereum's Turing-completeness allows for far more complex and versatile smart contracts. This intentional design choice reflects the different visions of the two projects: Bitcoin as a digital asset, and Ethereum as a platform for building decentralized applications.</p>
<p dir="ltr">Smart contracts are poised to revolutionize numerous industries, enabling trustless and transparent interactions between parties without the need for intermediaries.</p>
<figure class="image align-center"><img src="https://api.reliasoftware.com/uploads/smart_contracts_bitcoin_vs_ethereum_9eda65d2cd.webp" alt="Smart contracts - Bitcoin vs Ethereum" width="805" height="483">
<figcaption>Smart contracts - Bitcoin vs Ethereum (Source: Canva)</figcaption>
</figure>
<h2 dir="ltr">The Oracle Problem and Hybrid Smart Contracts</h2>
<h3 dir="ltr">Oracle Problem</h3>
<p dir="ltr">Blockchains are powerful tools, but they suffer from a significant limitation known as the Oracle Problem. Blockchains are deterministic systems, meaning they operate on a predefined set of rules and can only process information that's already on the chain. This closed-loop nature prevents them from directly accessing real-world data and executing external computations.</p>
<p dir="ltr">For smart contracts to function effectively and interact with the real world, they need a reliable source of external information. This is where oracles come into play. Oracles are systems that bridge the gap between blockchains and the real world. They provide real-world data and execute computations off-chain, then report the results back to the blockchain. By doing so, oracles enable smart contracts to make informed decisions based on real-world events.</p>
<p dir="ltr">To be more obvious, the Oracle problem prevents blockchains connecting directly to the world via 3-rd APIs.</p>
<p dir="ltr">But, Oracle cannot be centralized. Its data must be reliable and consistent.</p>
<p dir="ltr">So, Oracle would be decentralized as well and only offer data with origin proofs. Our blockchains now can trust these Oracles.</p>
<h3 dir="ltr">Hybrid Smart Contract</h3>
<p dir="ltr">Smart contracts that combine the power of on-chain logic and off-chain data are called Hybrid smart contracts.</p>
<p dir="ltr">Hybrid smart contract = Smart contract + off-chain components</p>
<p dir="ltr">The following keywords can be interchangeable: Smart contract application, Decentralized application, Decentralized protocol, and dApp.</p>
<h3><strong id="docs-internal-guid-7e74a6e9-7fff-c104-948c-285f2e50d676">Chainlink</strong></h3>
<p dir="ltr">Chainlink is a popular decentralized oracle network that empowers smart contracts to interact with the real world. By providing reliable and secure access to external data and computation, Chainlink enables hybrid smart contracts to function effectively.</p>
<p dir="ltr">Key Benefits of Chainlink:</p>
<ul>
<li dir="ltr" aria-level="1">
<p dir="ltr" role="presentation">Data Feeds: Access real-world data from various sources, including financial markets, weather conditions, and sports scores.</p>
</li>
<li dir="ltr" aria-level="1">
<p dir="ltr" role="presentation">Randomness: Generate verifiable random numbers for fair and transparent outcomes in games, lotteries, and other applications.</p>
</li>
<li dir="ltr" aria-level="1">
<p dir="ltr" role="presentation">External Computation: Execute complex computations off-chain, reducing gas fees and improving performance.</p>
</li>
<li dir="ltr" aria-level="1">
<p dir="ltr" role="presentation">Customizable Oracles: Build custom oracles to meet specific needs, allowing for greater flexibility and innovation.</p>
</li>
</ul>
<p dir="ltr">By leveraging Chainlink, developers can create more sophisticated and powerful dApps that can adapt to real-world events and deliver innovative solutions.</p>
<h2 dir="ltr">Summary</h2>
<p dir="ltr">We've explored the fundamental concepts of blockchain and smart contracts, starting with Bitcoin, the pioneering cryptocurrency. Bitcoin, often referred to as "digital gold," introduced the idea of decentralized, peer-to-peer transactions.</p>
<p dir="ltr">Ethereum, however, took blockchain technology to the next level by enabling the creation of smart contracts. These self-executing contracts, written in code, automate agreements and interactions, opening up a world of possibilities for decentralized applications (dApps).</p>
<p dir="ltr">To bridge the gap between the blockchain and the real world, oracles like Chainlink are crucial. They provide real-world data and computation to smart contracts, allowing them to interact with external systems and make informed decisions.</p>
<p dir="ltr">Hybrid smart contracts, which combine on-chain logic with off-chain data and computation, are becoming increasingly prevalent in the blockchain ecosystem. They empower developers to build more sophisticated and versatile dApps, driving innovation and reshaping industries.</p>
<div id="article_content" class="inner_article__entries__X3PKd">
<p style="text-align: right;"><em>&gt;&gt;&gt; Follow and Contact&nbsp;<a href="https://reliasoftware.com/">Relia Software</a> for more information!</em></p>
</div>

<p>Blockchain is a decentralized, immutable digital ledger that records transactions across many computers, ensuring transparency, security, and trust in many applications.</p>

What is Blockchain Technology? Blockchain Fundamentals Explained | Relia Software

What is Blockchain Technology? Blockchain Fundamentals Explained

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Software Development

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Business

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Automation

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AI/ML

Relia Software is a leading software development company based in Vietnam and Canada. We offer reliable custom software development and outsourcing services to clients in USA and worldwide. Transform your ideas into reality with our innovative solutions.

Relia Software: Trusted Partner for Custom Software Development Services

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<p dir="ltr">At Relia Software, we believe in the power of design thinking &ndash; a human-centered approach to problem-solving. It's about understanding your users' needs, brainstorming innovative solutions, and iterating on ideas to create exceptional software experiences.&nbsp;</p>
<p dir="ltr">Our Design Thinking Services empower you to uncover deep user needs, turn ideas into action, and create intuitive UX/UI. Are you ready to develop software that delights your users?</p>

<p>Stop guessing, start understanding. We use design thinking to crack user needs, craft intuitive interfaces, and build apps that win hearts.</p>

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<span>Design</span> Thinking

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UX/UI Design Services

Relia Software is a top UX/UI Design Company that stands by to a design-driven approach. Checkout for our Web and Mobile Application UX/UI Design Services here!

UX/UI Design Agency | Web & Mobile App Design | Relia Software

MVP Development Services

Relia Software offers Minimum Viable Product (MVP) development services for businesses of all sizes. Our leading criteria are: agile, cost-effective, and value-loaded.

MVP Development Company | Relia Software

Full-Stack Web Development Services

Relia Software offers a full-stack website development service to ensure a solid online presence of your business in the evolving digital landscape.

Web Development Company | Relia Software

<p dir="ltr">Mobile apps are increasingly crucial in today's fast-paced society. They allow us to stay in touch, get the news, and get things done on the go.&nbsp;</p>
<p dir="ltr">At Relia Software, we understand the immense potential mobile apps hold for businesses like yours. Therefore, we offer comprehensive Mobile App Development Services to realize your vision. Our expert developers, designers, and strategists work with you to build a stunning mobile app with exceptional features and user experience.</p>
<p dir="ltr">Don't miss out on the mobile potential for your business growth. Let's chat about your app vision and see how we can help!</p>

<p>We build scalable, responsive applications that grow with you. Our experts handle everything, from user-friendly interfaces to robust back-end systems.</p>

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<span>Mobile App</span> Development

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Custom Mobile App Development Services

At Relia Software, we specialize in custom mobile app development, creating holistic solutions that perfectly align with your unique business goals and target audience.

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Enterprise App Development

We design our project-based end-to-end development services for the enterprise. Relia holds the experience to deliver mobile products that are successful and consistent in results.

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Flutter App Development Services

Relia Software is a Flutter app development company with a decade of experience in the mobile app development industry. We build robust Flutter solutions to clients.

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iOS App Development Services

Over the last decade, Relia Software has built a reputation as a go-to iOS app development company, serving clients in various industries. Explore our services here!

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Android App Development Services

Relia Software offers a full spectrum of Android app development services to cater to your unique needs. We will help you launch your project on Apple platforms.

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Cross-Platform App Development Services

Relia Software specializes in cross-platform app development, creating high-quality apps for Android and iOS devices. We use frameworks like React Native and Flutter.

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React Native App Development Services

At the forefront of React Native development, Relia Software delivers cutting-edge mobile apps for both Android and iOS platforms. Check out our React Native services!

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<p dir="ltr">The future is intelligent, and artificial intelligence (AI) is at the forefront of innovation. At Relia Software, we help businesses leverage the power of AI to solve complex problems, automate tasks, and gain valuable insights. Our team of experienced developers, data scientists, and strategists collaborate closely with you to create intelligent solutions tailored to your unique needs.</p>
<p dir="ltr">Embrace the future with AI. Let's collaborate to bring your groundbreaking ideas to life and set your business on the path to success!</p>

<p dir="ltr">AI isn't sci-fi anymore. We build intelligent solutions that automate tasks, gain insights, and unlock new chances. Let's make your business smarter!</p>

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Digital Transformation Consulting Services

At Relia Software, we offer comprehensive digital transformation consulting services, giving clients a technology-powered plan to improve business processes.

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AI/ML Consulting & Development Services

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<p dir="ltr">With over a decade of experience, Relia empowers you with DevOps as a Service (DaaS) to streamline your software development lifecycle. We automate the entire delivery pipeline across top cloud platforms, enabling continuous integration and development (CI/CD) for faster deployments and smoother workflows.&nbsp;</p>
<p dir="ltr">Integrate your development and operations teams with cloud-based DevOps automation to achieve peak performance and effortless application onboarding. Partner with Relia and unlock the power of DevOps for your business!</p>

<p>Let&rsquo;s unleash the power of DevOps. We automate your software pipeline, smash deployment times, and keep your teams in sync &ndash; all on the cloud.</p>

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DevOps Automation Services

As a DevOps services company with over 11 years of experience, Relia may bring value to your product from start to finish.

DevOps Services And Solutions

<p dir="ltr">Relia Software understands that building a top-notch development team can be challenging. Our Software Development Outsourcing Services offer a cost-effective and flexible solution to fulfill your project needs. We connect you with a pool of talented developers worldwide, optimize your development process, and achieve your business goals.</p>
<p dir="ltr">Need a full development crew? We've got you covered. Looking for specific expertise? We can source it. Our range of engagement models, from outsourcing to dedicated teams, gives you the perfect fit. Contact us today!</p>

<p>You want to build a top tech team? We will help you access global talent, optimize workflows, and achieve your goals &ndash; all under your budget.</p>

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Offshore Development Center Services

For over a decade, Relia Software has been empowering businesses of all sizes and fields with robust and scalable Offshore Development Center (ODC) solutions.

Offshore Development Center Services | Viet Nam | Relia Software

Software Support & Maintenance Services

Relia Software offers superior software maintenance and support services for optimal efficiency, security, performance, and better user experience. Contact us!

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Dedicated Software Development Team Services

Relia Software specializes in building dedicated development teams that seamlessly integrate into your project, becoming a true extension of your in-house force.

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IT Staff Augmentation Services

Relia has been a trusted partner in Staff Augmentation for 10+ years. We've a streamlined process to seamlessly integrate skilled experts into your existing team.

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Build-Operate-Transfer (BOT) Services

The Build-Operate-Transfer model (BOT model) lets you stay competitive and successful in the market. Your ODC team should be reliable to work with.

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Software Development Outsourcing Services

At Relia, we've spent over a decade cultivating a reputation for excellence in outsourced software development. Our weapon is a dream team of skilled developers.

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Software Quality Assurance & Testing Services

Relia Software is a dedicated Software QA & Testing Services provider with a proven track record of ensuring exceptional quality in our clients' applications.

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<p dir="ltr">Website is not only a digital brochure, but also the heart of modern businesses. Relia Software understands the critical role of web applications in connecting you to your customers and achieving your goals.&nbsp;</p>
<p dir="ltr">That's why we're your one-stop shop for web app development. Whether you need a custom application or a streamlined web presence, we have the expertise to deliver.&nbsp;</p>
<p dir="ltr">Don't settle for a website gathering dust &ndash; Let Relia turn your vision into a vibrant digital space, converting browsers into brand loyalists.</p>

<p>We build powerful web apps that connect you with customers, drive results, and launch your digital strategy into overdrive.</p>

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<span>Web App</span> Development

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Custom Web App Development Services

Relia Software is the top web app development company. We offer great services for building robust web applications. Check out for our detailed services here!

Custom Web App Development Company | Relia Software

Ruby On Rails (RoR) Development Services

Relia Software develops Ruby On Rails custom web applications using cutting-edge custom setups and pre-designed technologies. Contact us!

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.NET Development Services

Relia Software - Leading Dot Net Development Company in the USA & Vietnam. Offers the best .net development services. Hire our top Dot Net Developers!

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NEXT.JS Development Services

Relia Software is your one-stop shop for powerful Next.js development services. Our elite Next.js developers craft web apps that propel your business forward.

Next.js Development Company | Relia Software

Angular Development Services

Relia Software is a top software development company in Vietnam with recognized Angular expertise. We use Angular to deliver innovative products for businesses.

Angular Development Company | Relia Software

Golang Development Services

Relia is a reputed Golang Development Company that promises to ensure a scalable, sound and user-friendly development of your application with quality and performance guaranteed.

Golang Development Company | Relia Software

Node.js Development Services

Relia is the best Node.js development company in Vietnam. Learn about our expertise, custom solutions, full-cycle development services, and more. Transform your web development with our top-notch nodejs services

Why Choose Relia Software as Your Node.js Development Company

React Development Services

Relia Software is a leading ReactJS Development Company based in the USA & Vietnam offers the best react development services. Hire Top ReactJS Developers!

React.js Development Company | Hire Top React.js Developers

Python App Development Services

Relia Software boasts over 10 years of combined experience and a proven track record of delivering a wide range of successful Python projects for clients worldwide.

Solutions We Provide

Articles by Hung Le