Not only does it provide innovation and transparency to the world economy scenario, but also greater progress to other aspects of society
Blockchain is an innovation that has been applied for a decade. It was born with the launch of the first cryptocurrency in the world, Bitcoin, which is based on this technology. This advance is not only initiating a significant change in the way we see the economy and the global financial map, but it can also be applied to other areas essential for the development of society, such as health and information registers for each citizen by government institutions.
No more third parties
An example of a common or traditional transaction in most countries is when a person wishes to deposit an amount of money to another person, usually using a link or intermediary between the two, which could be a bank, centralizing the capital movements from one place to another.
The bank’s job is to deduct the amount from the account of the depositor, who tells the other bank (if the account is from another financial institution) that the amount of money must be deposited to the borrower. Everything is very simple when explained in this way, but both clients depend on the bank’s control to carry out this type of transactions, as well as being prone to their conditions and the collection of commissions for carried out transactions.
A chain of blocks
Its technology eliminates almost the whole appearance of some intermediary to carry out some transaction, so that the transactions carried out are decentralized. Participating users are in control to make money transfers and other types of transactions that, at the time they are made, thousands or millions of nodes verify the transactions to validate them, with a copy of the them that is transmitted through the entire Blockchain.
Blockchain works like a large accounting book where records or blocks are interleaved and cryptographically encrypted to securely protect and maintain each transaction.
How is a transaction made?
It’s not a complex process. When a person decides to transfer money to another, it’s essential that a group of users or miners check whether the process is done correctly. It’s always unknown which is the identity of the person who makes the transaction or who receives it, the only known thing is that cryptoassets will be transferred from one wallet to another.
The issuing user notifies the network that they want to carry out a transaction and they check if their wallet has the amount available to carry it out, the nodes take that information and become part of a block of transactions, however, the data is not stored in a definitive way. More and more transactions are added to that same block, which has a limited capacity, depending on the structure of the chain and the size of each transaction until the moment the block is completed to move to validation. This process is called cryptocurrency mining.
What is block mining?
Block mining is based on performing a number of complex mathematical calculations that require time, electricity and large hardware or powerful computers, which become miners of the network that validate transactions and compete with each other to be the first to create a block that is added to the chain and thus, receive a prize in cryptocurrency. By having the chain of blocks, operations are synchronized through nodes to avoid that the transactions are reversible and that there is no fraud.
Mining or adding blocks is increasingly expensive, that is why groups called “pools” are made, which work similar to a cooperative: when one of them manages to create the block solving the cryptographic problem, it notifies the others and they are in charge of confirming this and add it to the complete Blockchain in the computers.
Linked blocks contain a coded hash pointer that links each block with the previous one, in addition to the time and all the transaction data to make it public, or that explains its purpose of protecting the user, but that allows to control the transparency and traceability of the transactions. This process shows the path that each cryptoasset has taken in Blockchain.
Although Blockchain began as a new approach to see the economy and finances, it is also applicable to other areas of society. One of the main platforms is Ethereum, with which you can perform many types of transactions. The most positive aspect of its technology is that any of these transactions will be added to Blockchain, which allows the acquisition of products and services in which intermediaries are commonly needed to not need them for the purchase anymore.
Its applicability can be seen in different areas, such as:
– The registration of properties, speeding up the long procedures;
– When making real payments with a cryptocurrency prepaid card, which can be used to make purchases as with conventional money;
– When registering car owners and low-cost insurance;
– For storage in the cloud in a decentralized way, validating the identity of each user;
– In the storage of citizens’ data by state agencies or in public services, social security and public health areas;
– In the accounting of a company that can simplify and make more the information they handle more secure, among others.
Transparency and security are the most accurate words to talk about the essence of Blockchain, a technology that changes the perspective of the traditional way of doing procedures and management. A fair ecosystem definitely capable of providing confidence and benefits to those who use it.