Its name is Blockchain, and it is being heralded as a technology that will be very present in our lives in the not-too-distant future. It will change our business models and bring transparency to multiple digital transactions. In this post we will talk about this new technology, which will have a strong impact on the business and industrial world. In this way, we will seek to help you lose the fear that anyone has before knowing the details of the Blockchain; read on.
What is a Blockchain?
If you held a blockchain in your hands, what would it look like? You might think it would look like a computer, a set of Legos or a safe. All this could not be further from reality.
It would look like a set of folders, full of sheets of paper with zeros (0s) and ones (1s), just like a secret FBI code. It is basically a language, and it is called ‘binary’. It is the only language that computers know, before translating it for us into letters or images. When we decipher it using whatever tool we get from Google, admittedly the message can get boring. Much of the blockchain is just a record of millions of transactions.
We can say that a blockchainis like a huge book. In it, each transaction made with any cryptocurrency must be recorded, including exact dates and amounts. It should be noted that these transactions can also be used to represent other issues within the chain and thus validate its authenticity. Among these we can mention documents, messages of almost any type and/or smart contracts.
The ‘ink’ with which you write in this book is called ‘cryptography’. This means that all the messages in there are encrypted; in this way, their authenticity is guaranteed, and the data is protected from prying eyes.
To achieve the latter in a distributed manner, a Blockchain must contain thousands of copies. These copies, in the hands of thousands of users of that same cryptocurrency or platform around the world, must be identical. All these users are supposed to have their own folders with accurate data.
How does it work and what are its benefits?
How it works
When a transaction takes place, it is recorded as a ‘block’ of data. These transactions show the movement of an asset, which can be tangible, such as a product, for example. Or it can also be intangible, such as something intellectual. This block can record the data of your choice: what, who, who, when, how much, where, among others.
Each block in question is connected to the next and previous block. These blocks form a chain of data as an asset changes ownership or moves from one place to another. The blocks confirm both the sequence of transactions and the precise timing and are securely linked to prevent tampering between existing blocks.
Transactions are joined together and form an irreversible chain (Blockchain). Each additional block invigorates the verification of the previous block and, consequently, of the entire blockchain in question. This allows the chain to be shielded against tampering, which generates its main advantage: unalterability.
- Increased trust. If you use a private network that only members can access, with the blockchain you have the security of receiving accurate data. In addition to this, your hidden Blockchain records will only be shared with specific network members who have been previously granted authorization.
- More efficiency. With a distributed ledger among members of a network, all the time spent on record reconciliation actions is eliminated. And, to proceed quickly with transactions, a set of rules called a ‘smart contract’, is stored on the Blockchain, and executed automatically.
- Increased security. All validated transactions are unaltered as they are permanently recorded. Absolutely no one, not even a system administrator can delete a transaction.
Being a recent technology, it is likely that its potential applications have not yet been sufficiently discovered or developed. However, there are a certain number of uses that are very recurrent nowadays.
- The main function it employs in this area is to record the values transferred between users and validated by miners and nodes in an unalterable way, generally. Many cryptocurrencies have dedicated themselves to creating their own blockchain, such as SolarCoin. Others, meanwhile, rely fully on the mature structure of Bitcoin or Ethereum and are built based on their platform. Such as Couterparty’s digital assets and Ethereum’s popular tokens.
- Payment systems. Various networks associated with the blockchain possess attributes such as instant data distribution and security. In addition to this, it also possesses privacy qualities, which is evident among users when making transactions. For this reason, many companies, mostly banks and financial institutions, have taken this type of ledger to generate their own platforms. These will allow them to have a much faster verification and greater transparency. A good example of this is Ripple, which even offers its services to multiple companies.
- Document registry. A blockchain is a huge registry that multiple parties can access from anywhere in the world. And not only money can be recorded, but virtually anything that can be represented by a transaction.
Ultimately, the Blockchain is a technology that allows businesses to be at a higher level within financial freedom. It also gives you the opportunity to have completely fast and transparent transactions. As time goes by, this technology will become more popular and will gain more recognition worldwide. Contact Enkronos today.