What is Blockchain?
Every time you hear more terms that have to do with it, such as Bitcoin, Stellars, Farm, Mining … Let’s start with something easier, the definition of Blockchain from Wikipedia :
A blockchain, also known by the acronym BC ( Blockchain ) is a distributed database, made up of blockchains designed to avoid its modification once a data has been published with using a stable time stamp and linking to an earlier block. For this reason, it is especially suitable for storing increasingly ordered data over time and without the possibility of modification or revision.
It’s not easy to understand, so let’s try to better understand what Blockchain is and how it works with an example. Let’s imagine that we have a database (for example, an Excel file in which we are adding lines, one below the other). This file is stored on a cloud server (in Dropbox for example). In this way the file is unique and where it is stored as well. Synchronizing this file, that is, making a change in the file and overwriting the previous one, is something that can be done in a very simple way, since there is only one copy of the file on my computer and another on the server, and when doing the Changes do not go through any validation.
Blockchain: the security of the blockchain
Now let’s think that this file is replicated on thousands of computers around the world and that when making any changes to that file, thousands of computers have to validate it by checking that change with their copy. Every time we try to make a change in that file, it will only be considered good through the consensus of most computers on the network. With this, the level of security is infinitely higher. It is also understood that if a computer on that network disappears it is not a problem (the same would not happen if the Dropbox server disappeared, for example).
There is one last important difference: nothing that is entered into the Blockchain can be deleted or modified, only information can be added, and always under consensus.
How does Blockchain work?
It is clear that it is a very complex concept and difficult to assimilate, but we must bear in mind that beyond understanding how Blockchain works, the most important thing is to trust.
At the moment in which we live, we do not stop to understand how the Internet works: many people use it and do not even know how to define what it is. Nor do we stop to fully understand the protocols that support it, but we already totally trust its operation, we trust in mathematics and software, and that is enough. Based on that trust, we have included the Internet in our daily lives.
A thorough understanding of how Blockchain works is just as complicated as it is on the Internet (and in most cases unnecessary). Also, there is an added problem: it is so changing that in a short period we would have to assimilate too much information to understand what is behind this new technology.
So, little by little we must begin to believe in this system and generate that necessary trust. But so that this trust is not blind, at least let’s base ourselves on these two concepts:
- Blockchain is based on crypto, which today is the most secure form of encryption. This means that decrypting information is extremely complex, much more so than with some existing systems that we trust.
- Blockchain is based on distributed consensus. As we have explained Blockchain is distributed on thousands of computers and not on a single server or set of them, which makes it very safe and reliable.
If we take these concepts as good, then we will understand that we can (and should) trust Blockchain.
Okay, I trust. But what is Blockchain for?
Based on this trust that we have just generated, many things can be built on Blockchain, and especially those that generate or have a value (money, intellectual property, identities, etc.). Let’s see some examples that will make it a less abstract concept and that we can get a clearer idea of how Blockchain works today.
Cryptocurrency: The most famous is Bitcoin, which recently came to have a value of about 5000USD.
Blockchain software: for example Cerium, payment method software on Blockchain.
Applications of all kinds: for example Storj, an alternative to Dropbox on Blockchain.
New forms of business: the emergence of ICOs, startups that offer tokens instead of shares, which can be exchanged for the company’s service or sold.
Other Blockchain applications
Blockchain technology applications do not stay in the field of cryptocurrencies. There are other applications based on the advantages it offers: Trust, security, immutability. Applying Blockchain on online platforms such as mobile applications or web pages is easier than it seems.
Maximum purchase security
Customers and businesses do not need to trust the other party because Blockchain supplies that trust. An example of this is being applied in online sales through eCommerce and mobile applications. When making the payment, the money goes to a ‘bridge account’, which only reaches the recipient when the user confirms receipt of the purchase.
Traceability, where your money goes
Another of the most useful applications is traceability, that is, the possibility of seeing, for example, the exact monitoring of every penny of a donation to an NGO.
Finally, Smart Contracts
Instead of signing a paper and having a third party -either a notary or a judge- ensure that this contract is fulfilled, by signing a Smart Contract what you do is give OK to an application. It is a contract that is self-executed when the conditions signed by the two parties are met, so that there will always be an encrypted copy in the cloud, generating maximum compliance security.
And then, why is there so much reluctance?
Well, not everything is positive. It is a relatively new technology, which is still being worked on, and which still has a long way to go. What is clear is that this type of technology and everything that derives from it is more and more frequent, this does not mean that it will displace or eliminate the existing one, but it will be an actor that will gain a lot of weight with the passage of the years, so let’s look closely at its evolution.