Blockchain: definition and application of the techno behind Bitcoin

Blockchain is one of the technologies to watch in the years to come. It could revolutionize several sectors of the economy, starting with banking and insurance.

Blockchain is one of the buzzwords in the world of technology. All sectors are starting to work on concrete use cases, but few players can claim to have developed revolutionary solutions. For good reason: blockchain technology is still very complex to understand.

Definition of blockchain

Blockchain is a technology that allows information to be stored and transmitted transparently, securely and without a central control body. It looks like a large database which contains the history of all the exchanges made between its users since its creation. The blockchain can be used in three ways: for the transfer of assets (money, securities, shares, etc.), for better traceability of assets and products and to automatically execute contracts (“smart contracts”).

The great particularity of the blockchain is its decentralized architecture, that is to say that it is not hosted by a single server but by some of the users. There is no intermediary so that everyone can verify the validity of the chain themselves. The information contained in the blocks (transactions, title deeds, contracts, etc.) is protected by cryptographic procedures which prevent users from modifying them a posteriori.

Blockchain applications

Blockchain technology is still young, but a few applications are already operational. One of the most widespread is food traceability. Carrefour is one of the pioneers with its QR code affixed to several types of food (chicken, tomato, egg …) which allows you to know everything about the origin of the product (provenance, name of the producer, date of packaging … .). Automatically triggering compensation is an application of great interest to insurers. This is made possible through smart contracts, stand-alone programs that run automatically following pre-defined conditions. Axa, for example, allows passengers to be compensated for a flight that is delayed. Finance has also made good progress in the field of blockchain, particularly in the field of “security tokens”, financial securities digitized and recorded on the blockchain. For the issuer of the token (or token), there are only advantages: less intermediary, almost immediate execution and settlement and less expensive process. The world of video games has found a use case in blockchain: digitizing features. Thanks to a system of tokens (or tokens), players actually own their objects (and no longer the publisher) and can therefore buy, sell and exchange them at their own disposal. There are many others such as securing commercial transactions in trade finance or disintermediation in advertising.

The Bitcoin blockchain

Bitcoin is the most well-known use case of blockchain. It was created in 2008 by an unknown man whose pseudonym is Satoshi Nakamoto. It designates both a secure and anonymous payment protocol and a cryptocurrency. Anyone can access this blockchain (it is public, therefore open to everyone) and therefore use bitcoins. To do this, simply create a virtual wallet, downloadable from the application stores. Cryptocurrency is used to buy goods and services and can be exchanged for other currencies.

Some platforms offer the conversion of dollars, euros or yuan into bitcoins. This is the case of Paymium, a French company that allows bitcoins to be exchanged for euros. Bitcoin has a very volatile price. It can increase or decrease by 20% in just two days. This volatility is linked to the strong speculation around this currency and the absence of a regulatory authority. In early December 2017, the price of bitcoin exceeded $ 15,000 for the first time. It increased by more than 1000% in 2017. Faced with this surge, the Autorité des marchés financiers (AMF) and the Prudential Control and Resolution Authority (ACPR) have warned investors about the related risks to bitcoin purchases. “This valuation may as well collapse in the same way. Buying / selling and investing in bitcoin is currently carried out outside any regulated market. Investors are therefore exposed to the risk of loss. very high in the event of a downward correction and do not benefit from any guarantee or protection of the invested capital “, indicates the two regulators in a press release. The latter would be more and more solicited by savers on this subject. through their call centers. In Japan, bitcoin was recognized as a legal means of payment on April 1, 2017. The capitalization of the first cryptocurrency reached $ 191 billion in November 2017.

Private blockchain versus public blockchain

What differentiates the private blockchain from the public blockchain is its degree of openness. The public blockchain can be viewed and used by anyone. Anyone can send transactions to it and expect them to be recorded in the ledger (if they follow the rules of this blockchain). This is the case of the Bitcoin and Ethereum blockchains. In the private blockchain, an organization can change the protocol whenever it wants. No one can participate without being authorized, but anyone can view it. Private blockchains are used a lot by companies to experiment internally. They can also make it possible to connect different information systems that do not speak well to each other within the same organization. There is also the “permissionned” blockchain in which an entity has the controlling authority over the network. This is the case for example with the Rippe blockchain because it is a start-up (of the same name) that determines who can validate transactions on the network.

Consortium blockchains

The “consortium” blockchain brings together several actors who have rights and decisions are made by the majority of actors. For example, a dozen financial institutions could agree and organize a blockchain in which a block would have to be approved by at least 8 of them to be valid. So it’s very different from private blockchain and public blockchain. Not only are the participants in the approval process limited and selected, but majority rule is no longer required. This hybrid blockchain is a real advantage for players in the financial sector because they operate in regulated environments and are notably obliged to know the identity of the participants (which is not the case in the public blockchain). The most well-known blockchain consortium is R3. It has around 100 financial institutions including BNP Paribas. In May 2017, he raised 107 million euros.

Let’s talk about your blockchain projects: contact us!

Enkronos Marketing Team

Add comment

By gluca

Recent Posts


Get in touch