WHAT IS THE BLOCKCHAIN AND HOW DOES IT WORK?

how does the chain of blocks work and what is it for

It is difficult to categorize blockchain into a single definition. The blockchain can be read and presented from different points of view and from different perspectives.

Blockchain is a very recent invention, created by a person or group of people known as Satoshi Nakamoto , whose true identity is still unknown.

Blockchain: the definition

The blockchain can be considered as a digital register in which a large number of information (transactions) of different kinds are recorded, this register is not physically located anywhere because it is shared between all the users of the network, for this reason it is said to be decentralized and for the same reason it cannot subsequently be modified, thus allowing the sending of digital information but not its copying.

Blockchain is a young technology but is developing at high speed. This is why it is part of emerging and exponential technologies. In recent years, these technologies have had an incredible impact on our lives and our society, profoundly changing the way we do business, interact with each other and even the way we see the future.

As you will have understood, the Blockchain is really an essential technology that you will no doubt have to use one day.

How does Blockchain work?

Although services using the blockchain are multiplying day by day, the basic technology is similar on all platforms. It is thus possible to summarize the operation of the Blockchain in 6 key points :

1. Decentralization: the information contained in the digital register is distributed among several nodes, so as to guarantee the security and resilience of the systems, even in the event of an attack on one of the nodes or the loss of a node.
2. Traceability: Every item recorded in the registry can be traced back to its exact origin and any changes made over time, with absolute precision.
3. Disintermediation: the individual nodes of the blockchain certify the distributed information, thus making the presence of central organizations or companies to certify the data completely unnecessary, unlike banks for example.
4. Transparency: the content of the ledger is visible to everyone and can be easily consulted and verified by each node in the network, but also by the services that query the blockchain without making any changes to it. Nobody can hide or modify data without the whole network knowing about it. This is a central point of this technology and is one of the reasons for its effectiveness and success.
5. Registry robustness: Once information has been added to the registry, it cannot be changed without the consent of the entire network.
6. Scheduling capability: Transactions can also be time-scheduled , so that one can wait for certain conditions to occur before entering or editing.

All these conditions allow the technology to compete with the organizations and professionals who have until now been responsible for certifying economic transactions (notaries and banks): the Blockchain is presented as a secure method of storing important information, inviolable by computer, difficult to modify without leaving traces, and impossible to break down as long as there are at least two blocks that can certify the information stored in the shared ledger.

Blockchain and cryptocurrencies

You are probably wondering now what is the link between Blockchain and cryptocurrencies. As you have understood, the blockchain is made up of a network of computer “nodes”. A node is a computer connected to the blockchain network using a client that performs the task of validating and transmitting transactions. Each node is an “administrator” of the blockchain and voluntarily participates in creating and stabilizing the network, receiving in return the opportunity to earn bitcoins .

A lot of computing power is needed to encrypt the countless transactions made, because more and more blocks are needed to authenticate transactions: the nodes that provide their computing power are called Miners and they earn a fraction of new cryptocurrency ( never owned by others) for each block they participate in.

Cryptocurrency mining

Cryptocurrency mining is becoming more and more difficult today, not to mention the investment required to be able to touch these few fragments of Bitcoin.

Thus, cryptocurrency can be used in the blockchain both as a reward for those who help grow ledger blocks and as a transaction tool, so that digital currency already in the market can circulate.

Bitcoin was the raison d’être of the blockchain when it was conceived in 2008. Today, it is recognized that it is only the first of many potential applications for this technology.
There are already thousands of bitcoin-like cryptocurrencies (tradeable value tokens). Additionally, a number of other potential applications of the original blockchain concept are currently active or under development.

Blockchain Applications

Blockchain, as it has evolved to date, has multiple applications beyond cryptocurrency.
All sectors that use large amounts of data and need reliable and certified information can benefit from blockchain.

The food industry can use this technology to certify the origin of raw materials. In the field of logistics, for example, a contract of carriage can go so far as to include information on the weather conditions expected along the route.
Other applications can be found in the fields of digital works of art or for pieces of music, thanks to the blockchain they are made unique and original, thus preventing their counterfeiting.

There are already companies on the market that offer their certification services online via the blockchain, with the possibility of also signing Smart Contracts, authenticating an asset of any kind (a song, a painting or even a meme) via tokens or manage innovative fundraising via an ICO .

Blockchain could replace intermediaries in any market, providing traceability and transparency.

The Future of Blockchain

Blockchain is probably the most promising technology that can be used today : its simplicity leaves scenarios open for the creation of ever more efficient variants of the technology, making it one of the pillars of future society.

Blockchain could become one of the pillars on which the economy will be based in the future : practically all human economic activities can benefit from information encrypted and authenticated by a blockchain, so as to avoid fraud and prevent the entry of entities and professionals who have been working for decades on data authentication and the resolution of irregularities (lawyers and notaries).

However, some people who have understood the challenges presented by this technology will do everything to take advantage of it and use it for new projects, this is how we will be able to observe in the future new uses of the Blockchain because the possibilities are numerous .

What we remember

Blockchain must be considered in a broader context than cryptocurrencies when thinking of all the applications that may be developed in the future. Thanks to this technology today, the development and growth of the entire cryptocurrency industry and its use in digital payments and investments has been possible. It is therefore a technology with great prospects that will revolutionize our lives and various areas of our daily lives in the not so distant future.