What is Blockchain? – Learn more about this technology and its main applications
WhatisBlockchain? Blockchain technology is the great innovation that made Bitcoin possible. BTC was its first application. In the words of Satoshi Nakamoto, with the Blockchain it became possible:
“[…] that online payments were sent directly from one entity to
another without having to go through a financial institution”.
This means digital transactions without the need of a third party, such
as a bank or a government. In addition to this, the anonymity, speed, and low transaction costs that have made Bitcoin
– and cryptocurrencies in general – a resounding success. At its beginning, BTC
was worth cents. Today its price is in the five digits.
However, other applications for blockchain technology were soon
developed, such as software, games, insurance, accounting, among others. Today,
there are master’s degrees and specializations in the area.
In this article, the Cripto InterCambioblog will further explain what blockchain is, and some of its main applications.
Blockchain is literally a digital
chain of blocks. Let us explain the concept by exploring each of these
are blocks of digital information. Theoretically, blocks can be made by any
type of file that can be stored on a computer.
In the case of Bitcoin, blocks store information about transactions.
Details such as the sender’s and recipient’s addresses, as well as the
quantity, are stored in the blocks. Each block size is 1 MB and can store
information from thousands of transactions.
Also, the block contains a number known as hash. A hash is like the “ID” of each block, and it
ensures its uniqueness.
Chain: This is a kind of public database on which information about each of the blocks is
The concept of blockchain goes hand in hand with that of
decentralization. Since the network is public, the blocks are not verified by a
central computer, but by all the computers that have the blockchain software.
Why a chain? The blocks are structured like a “pearl
necklace”. After the first pearl is inserted, then the next one is added,
and so on. Each block has a fixed position, which cannot be changed in any way.
That is why blockchain
technologies are so safe. If one of the computers tries to trick the system
by changing a block or validating transactions that were not made, then the
other computers on the network will easily notice the error and report it.
In addition, data immutability is excellent for multiple applications, as we will see later on.
One of the main uses of the blockchain is for the development of cryptocurrencies, not just for Bitcoin. Although there are small variations in the architecture of altcoins(for example the size of blocks, how to validate transactions, degrees of anonymity, etc.) the logic behind the structure is similar to the one described above.
Blockchain technology works well in online
gaming. Proprietary companies can create their own tokens, which are then used
to bet, buy equipment in the virtual universe, grant access to VIP clubs and so
on. All this without a payment company mediating the transactions.
Blockchain is an excellent option for generating digital documents.
Since its blocks are immutable and can only have one identity (the
“hash”), it is perfectly feasible that these blocks could store
information about national/personal documents: birth certificate, passport,
driver’s license, etc.
Blockchain could completely digitize the document creation process,
avoiding the bureaucracy responsible for managing that data.
Large companies can build customer loyalty with their own tokens. For
example, someone who usually shops in the same store could earn special tokens,
and exchange them later on for discounts, gifts, airline miles, etc.
The idea of large
blocks of public and unalterable data could modernize the way we treat
copyright. Blockchain can be used to associate a song, a photograph, a book or
whatever, and a unique ID. This would be more dynamic than the current process,
which depends on national bureaucracies.
Data storage could be revolutionized by blockchain in the coming years.
Instead of storing your data on a large company server (Drive, Dropbox), it
would be possible to rent hardware from individual users.
Blockchain encryption technology would keep this content anonymous.
Also, it would fragment the data between several computers.
Freelancer Work Platforms
are excellent for direct agreements between two parties. Smart contract technology would enable the development of algorithms
mediating the relationship between the service provider and its customer.
could eliminate both the mediation of payment companies – since payments could
be made with cryptocurrencies – and the mediation of platforms, which can
absorb up to a quarter of freelancer’s income.
Conclusion – Blockchain still has a lot of room to grow
The cryptocurrency market was the first testing ground for blockchain
technology, and it was very successful. More than ten years after the launch of
Bitcoin, no one has been able to defraud this currency security system. As a
result, trust and interest in this technology has only grown.
Besides crypto, we have seen blockchain initiatives flourish in other
areas. There are countless blockchain games on the Internet, as well as
startups that promise the use of this technology to solve hundreds of
real-world problems. Countries, such as China and Germany, have invested great
resources into this field.
This is just the beginning!
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