Blockchain. This word is everywhere. The media has been covering this topic regularly for a few years now, but what is it really about? Is it a “revolution,” as the newspaper Le Point put it? Could this technology “change the world” as The Economist titled it a few months ago? Deciphering a phenomenon that raises many questions.
We have all heard about Bitcoin digital currency. But without necessarily knowing that Blockchain technology is the virtual infrastructure on which it is based. More precisely, it is a technology for storing and transmitting information, which is transparent, secure, and operates without a central control body.
A tamper-proof and secure database
The blockchain is considered tamper-proof and secure. And unlike more traditional databases, it is “distributed”. That is to say that different copies exist simultaneously on different computers commonly called “nodes” of the network. The information is not stored in a central server but is simultaneously present on all the computers participating in the network. This technology is based on peer-to-peer (P2P) exchanges, which means that there is no control body or trusted third party.
Each modification to the database must be approved and verified by a peer community. This community is responsible for preventing any attempt at fraud. When a change is approved, the database is automatically updated on all the workstations in the network. This means that anyone can consult it freely. To ensure complete transparency, it is possible at any time to trace the history of all the changes made to the database since its creation. Obviously, it is possible that some people may be tempted to cheat. But this system, based on trust between the nodes of the community, guarantees the integrity of the information as long as 51% of the “peers” play the game.
No intervention by a central control authority
The blockchain is therefore a duplicated and shared register, made up of blocks, each containing the record of all exchanges between its users. The register notifies and timestamps each exchange between each node in a block. It is the users who own and update the information. No central authority intervenes. This technology allows a transaction to be carried out between several parties without the presence of a trusted third party.
Distributed and not centralized, the database is also doubly secure. Firstly, by a system of cryptography known as “asymmetric”. This means that two different keys (one private, one public) are needed to submit a transaction in the blockchain. Then, the validation of the exchanges in block form is subject to a process known as “mining”.
“A large notebook that cannot be erased and is indestructible”.
There are public blockchains, open to all, and private blockchains, whose access and use are limited. It is possible to see the blockchain as a kind of account book or registry that contains a list of all the exchanges made between users. A public blockchain can therefore be likened to a public, forgery-proof accounting ledger. As the mathematician Jean-Paul Delahaye writes, one has to imagine “a very large notebook, which everyone can read freely, on which everyone can write, but which is impossible to erase and indestructible”.
Types of blockchain network
There are several ways to create a blockchain network. These networks can be public, private, licensed, or created by a consortium.
Public blockchain networks
A public blockchain is a blockchain that any user can join and use, Bitcoin for example. Disadvantages can include high computing power required, little or no transaction privacy and low security. These are important considerations for corporate blockchain use cases.
Private blockchain networks
A private blockchain network, similar to a public blockchain network, is a decentralized peer-to-peer network, with the significant difference that one organization governs the network. This organization controls who is allowed to participate in the network, execute a consensus protocol, and maintain the shared registry. Depending on the use case, this can significantly enhance trust between participants. A private blockchain can run behind a corporate firewall and even be hosted on site.
Blockchain networks with rights
Companies that have set up a private blockchain will usually set up a blockchain network with rights. It is important to note that public blockchain networks may also have rights. This places restrictions on who can participate in the network, and only in certain transactions. Participants must obtain an invitation or permission to join the network.
Several organizations may share the operating responsibilities of a blockchain. These pre-selected organizations determine who can submit transactions or access data. A consortium blockchain is ideal for companies where all participants must be authorized and have shared responsibility for the blockchain.
The fields of use of this technology are very vast: banking, insurance, real estate, health, energy, transportation, online voting…
Would you like to get more information to implement blockchain for your business? Please contact us.