What is Blockchain?
Blockchain is a data structure that makes it possible to create a digital ledger of data and share it across a network of independent users. It is a chain of blocks, which contain encrypted information of a transaction in the network. And, being intertwined, they allow the transfer of data (or value) with secure encryption through the use of cryptography.
Blockchains create permanent and historical records of transactions. The permanence of these logs is based on the permanence of the network. It would require a large part of the network community to agree to change the information for this to happen. Therefore, it is extremely difficult to change or delete data once it is registered in the Blockchain.
Since there is no central authority that manages the flow of information within the Blockchain, its administration is decentralized. However, this is not the only security measure within the Blockchain. Generally, these networks use cryptocurrencies, which consist of digital tokens with market value. Cryptocurrencies are traded in a similar way to stocks. These employ cryptographic encryption to ensure ownership, ensure transaction integrity, and control the creation of additional units.
What types of Blockchain are there?
– Public Blockchain:
It is a large distributed network that uses a native token. It is open to anyone who wishes to participate at any level and has open-source code that is maintained by its community. An example of it is Bitcoin.
– Permissioned Blockchain:
It controls the roles that individuals have within the network. Like the public Blockchain, it is a large distributed network that uses a native token. However, its core code may or may not be open-source.
– Private Blockchain:
It tends to be smaller than the previous ones and does not use a token. Its membership is strictly controlled: a single organisation manages the network and controls who is allowed to participate, decides when to run a consensus protocol, and maintains the shared ledger. It is generally used by consortiums with members considered “trusted” and who exchange confidential information with each other.
– Blockchain consortium:
In it, various organisations can share the responsibilities of maintaining the Blockchain. These organisations, which are preselected, determine who can send transactions or access data.
– Hybrid Blockchain:
In it, a single organisation manages the network, however, there are certain processes that do not require the granting of permissions by this organisation.
How is the Blockchain structured?
A Blockchain is made up of three main parts:
– Block:
A list of transactions recorded in a digital ledger in a certain period. All Blockchains record the movement of their cryptocurrency or token.
– Chain:
A “hash” that links one block to another mathematically. It is a function that meets the encryption demands required to solve a Blockchain computation.
– Network:
It is composed of nodes which are computers running an algorithm that is contributing to network security. Each node contains a complete record of all transactions that were ever recorded on the Blockchain.
How is a transaction request carried out through the Blockchain?
1. A user requests a transaction
2. The request is transmitted to the network
3. The network may validate the transaction or not
4. If the transaction is validated, the nodes receive a “Proof of Work” reward (usually in cryptocurrencies)
5. The transaction is added to the current block of transactions
6. The transaction block is “chained” to previous transaction blocks
7. The transaction is confirmed and the update is distributed through the network
How is Blockchain used in the business world?
Most Blockchain use cases consist of facilitating the movement of money or other values quickly and cheaply. Examples of them are: the trading of company shares, payment to employees from other countries and currency exchange, among others. However, this technology has many more applications that companies from different parts of the world are taking advantage of.
There are platforms that use Blockchain technology to make the supply chain of the products we consume visible. In this way, it is possible to follow the path that food travels from when it leaves a crop until it reaches our table. Walmart is one of the companies that has implemented this technology for this particular use.
Electoral processes could also benefit from the use of Blockchain since the use of decentralised accounting for vote counting can be a good alternative to fill the gaps in existing auditing systems in elections.
Some airlines, such as British Airways, have implemented this technology for flight information management. As well as the implementation of a billing system that verifies the identity of those who travel.
UnitedHealthcare, a healthcare industry company, is using Blockchain to protect healthcare data so it can be distributed safely. This will improve the quality of the data that is delivered to insurers and reduce administrative costs.
In the field of cybersecurity, Blockchain technology is used for issues such as identity protection, data protection, infrastructure protection and information flow traceability. Meta (formerly Facebook) is a company that has had difficulties with the protection of its users’ data. Therefore, it has implemented Blockchain technology for its management.
What do you think about the Blockchain?
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