Sure you have heard a lot about this technology, but you probably still do not know well what it is about or why it is said to be revolutionizing the global economy.
What is blockchain?
Blockchain is the technology that supports Bitcoin, the largest and most famous cryptocurrency so far. It was known in late 2008 when Satoshi Nakamoto published the Bitcoin P2P e-cash study. This was an electronic money system that was independent of intermediaries.
Today, Bitcoin is not the only cryptocurrency that exists. After it, many others were created that have been called ‘Altcoin’, among them Litecoin and Dogecoin. Currently, one of the cryptocurrencies that has a solid position, just behind Bitcoin, is Ether. These digital currencies have one thing in common: Blockchain supports them. We have already discussed the types and cryptocurrencies that exist, you can find it here on the page that article.
It is basically a system with which you can make secure transactions between people around the world without the need for intermediaries.
Blockchains can only be updated by the consensus of the majority of the system’s participants, which are called nodes and which are essentially a willing computer for these transactions. This information can never be deleted or modified, so Blockchain is presented as an immutable and permanent record.
Blockchain was born out of the need to eliminate intermediaries such as banks, in the case of financial operations. These institutions are necessary to be able to make value transactions, because they are in charge of certifying that we are who we say we are. In exchange for providing this service, banks or electronic platforms such as PayPal keep user data and trade with them. This restricts privacy and with it freedom.
How does blockchain technology work?
Personally we can say and give a statement that: Blockchain is a distributed database where all participants have access to verify past transactions. If someone wants to start a transaction, the first step is to propose it.
The miners verify the balance and possession of the account of the one proposing the transaction. If everything is in order, the transaction is executed, and everyone on the network can see that it was executed. The transactions are accumulated in blocks, in the Bitcoin blockchain they are closed every 10 minutes, a hash signature is chained and a new one is created. Today 12.5 Bitcoins are distributed to the miners who close each block for their work of giving up computing and electricity resources. This keeps the bitcoin network secure because there is an incentive to close each block, join the next, and keep the network honest.
Bitcoin’s network is so big, it’s almost impossible to hack it (you need the electricity equivalent of all of Singapore to take over the network). If someone wants to cheat, the other miners reject it, making the blockchain immutable and impossible to erase the past.
Today the blockchain is used to execute and archive transactions of value through the internet. That value transaction can reseal silver, health data, real estate, and more.
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