What is blockchain? Why use blockchain?

The term blockchain in French came along with bitcoin. The idea is to be able to exchange value without intermediaries, while still benefiting from ultra-secure transactions. If blockchain was intended primarily for cryptocurrencies, then now it tends to develop in other sectors of activity, such as cryptography. Blockchain, what is it? Focus on blockchain technology!

What is blockchain technology?

To understand blockchain, here’s a simple definition: blockchain is a technology that will allow information to be exchanged securely and transparently on the Internet and, above all, operates without a central control authority.

Its creation, dating from 2008, is credited to a certain Satoshi Nakamoto, whose real identity has not been proven, some believe that it is a pseudo to hide the anonymity of Elon Musk, CEO of Tesla.

We know this especially thanks to the famous digital currency bitcoin. But blockchain finds its usefulness in other areas, in particular, for the transfer and storage of assets (of course, securities, stocks and currencies), products, as well as contracts (smart contracts).

Thus, since its inception, the blockchain has evolved into a huge database of all transactions made by users.

Specifically, what is blockchain? Well, it’s kind of a big ledger known as tamper-proof.

How does blockchain work?

The principle of blockchain operation is relatively simple:

  • A transaction is made between two people, it is presented online in the form of a block.
  • The block is sent to various members of the network for verification, signature and encryption.
  • After the transaction is accepted, the transaction is blocked and its block is added to the blockchain.
  • The blockchain is then replicated across all nodes in the network.
  • Finally, each node represents a miner who is a voluntary user responsible for verifying the validity of transactions. They are paid in Bitcoin for their surveillance work, this is called Proof-of-Work.

Thus, the blockchain is not hosted on a single server, but is decentralized. Each participant in the transaction can check the validity of the chain. On the other hand, once verified, it is protected by a cryptographic process and no one else can modify it.

Why use blockchain?

If initially the blockchain was used for money, now its scope is very wide. The ability to trace transactions from start to finish opens up a wide range of possibilities such as market creation, information tracking, activity logging, etc.

Increased traceability and security

Whether tangible or intangible, transaction anonymous or not, the blockchain is tracked through the signature of the blocks. It can be used, for example, for:

  • Package Tracking;
  • Traceability of food products (Carrefour has integrated it into its QR codes, which allows you to find out the origin of the products: origin, name of the manufacturer, etc.);
  • The registration of digitized tokens is called security tokens.

Everything is very reliable and outdated!

On the blockchain, what is a token? A token (or token) is a digital asset transferred between two parties without third party authorization. Specifically, the company releases securities (tokens) on the market, which investors will purchase for cryptocurrency (often in ether or bitcoins).

Neutrality guarantee

Transactions on the blockchain are non-modifiable and therefore inviolable. Encrypted data is available only to network participants, which decentralizes its management. Thus, there are practically no risks of fraud and abuse.

Guaranteed confidentiality

Thanks to cryptography, the transmitted information and data are protected from unauthorized access. Thus, governments and in particular the Center for Combating Digital Cybercrime are using blockchain. Visa is also there to optimize security and identity verification.

Take on the role of a trusted third party

Typically, a trusted third party is a person capable of verifying transactions, such as lawyers, notaries, bailiffs, etc.

Today, in certain sectors such as real estate, blockchain tends to play the role of a trusted third party. Transactions called smart contracts start happening between promoters without any trusted third party other than the blockchain.

Blockchain, what is the difference between private blockchains and public blockchains?

The big difference between the two blockchains is their degree of openness. The public blockchain can be used and viewed by anyone, as is the case with the Bitcoin blockchain and the Ethereum blockchain (whose currency is ether). Each user can submit transactions to the private blockchain and view them in the ledger. On the other hand, things are different in a private blockchain where you need authorization to participate. However, it remains available to everyone.

Why is blockchain protected from hacking?

The blockchain is protected from hacking because it is doubly secure:

  • Through cryptography: Every transaction must be signed and confirmed by users before it can be encrypted and stored in a block.
  • By miners: then the block is added to the blockchain, and each previous block is numbered by the miners, which certifies the validity of the new block, then we talk about “mining”.

It is this security guarantee that makes the blockchain unique!

Back to top button