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Wednesday 15 December 2021

The blockchain revolution: fields of application, definition, and operation

 The blockchain revolution: fields of application, definition, and operation

The blockchain revolution: fields of application, definition, and operation
The blockchain revolution fields of application, definition, and operation

The blockchain, or "chain of blocks", is "a technology of storage and transmission of information, transparent, secure, and functioning without a central control body", according to the definition of Blockchain France. It makes it possible to trace and validate financial transactions by checking the history of operations already carried out.

 The term "blockchain" refers to a technology for digital storage and transmission / sharing of information, which operates outside the control of a centralized body. It is characterized by the transparency and the security of the process.
The decentralized database formed by a blockchain fully and permanently retains the history of exchanges between its users. The information stored or transmitted, recorded after verification and validation, is encrypted and cannot be modified or falsified.
There are two categories of blockchain: public (accessible to all potential users) and private (limited access). In both cases, the primary interest of the blockchain lies in the possibility of direct exchanges, without any intermediary, and in complete security.

How a blockchain works: the protocol

A blockchain works in the form of “transactions”, thanks to a system of programmable virtual tokens called “tokens”. The data exchanged by the users are grouped together in “blocks”. Each of its blocks is then checked, validated or refused by “network nodes”, via algorithms of different kinds. Validating a block results in its timestamp and its insertion in the string. Each "transaction" it contains is then received by its recipient and can be viewed by all network users.
The protocol therefore breaks down into five steps:

1. X issues a "transaction" to Y.
2. The deal joins others in a block.
3. Validation and encryption of the block by the “network nodes”.
4. Addition of the block to the blockchain that can be viewed by all users.
5. Receipt by Y of the transaction sent by X.

Blockchain was born with bitcoin

The blockchain, or chain of blocks, in French, was born at the same time as the cryptographic currency called bitcoin and appeared in 2008. Bitcoin makes it possible to buy goods and services; it can also be exchanged for other currencies. Unlike traditional currencies, bitcoin is not administered by a single banking authority, it operates in a decentralized fashion through a set of nodes. These form the network through which all transactions take place. A secure public register keeps the history of all these operations. It is deemed to be tamper-proof since it is based on the principle of mutual trust.

"Miners" form the nodes of the blockchain

Each transaction is encrypted and stored in a block, which can contain several separate transactions. A block includes a digital marking from the previous block which certifies its validity. This marking operation is carried out by voluntary users, called "minors". They make their time and the computing power of their computers available to administer the blockchain. Miners form the nodes, or rather the links of the blockchain.

This operation called "mining" allows these people to be paid, in bitcoin of course. The value of bitcoin is maintained by software that adapts the intensity of calculations to the number of active miners. The more bitcoin miners there are, the more complex the calculations and the more secure the blockchain.

The future of blockchain beyond bitcoin

Blockchain has many advantages. Financial first of all, since it reduces the costs associated with banking transactions and even eliminates banks as trusted third parties. In addition to digital payments, this technology can be used to transfer other assets, for example securities, bonds, stocks, voting rights...
In addition, the transparency of the system and its decentralized architecture give it a potential for applications that go beyond the financial sphere. The blockchain being a register, it can be used to establish traceability on all kinds of products and services. It can also be used to ensure the application of smart contracts, programs that automatically execute the conditions of a contract.


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