Do you know what the Blockchain is and how exactly this digital technology that everyone talks about works? If you are part of the average Internet user, surely you know the famous cryptocurrencies, whose flow is based on this system, which is revolutionizing the way we conduct commercial transactions.
These represent “virtual” a type of money generally away from any government and banking entity, which means that in this blockchain technology, the only two protagonists of these transactions are the issuer and the receiver, causing them to eliminate the intermediaries.
But, as most likely the concept of “Blockchain or Block Chain” and its operation is somewhat confusing, I have decided to explain step by step its definition, the different uses that this technology can have for users or Businesses and, in addition, why it’s used in the digital economy and in the cryptocurrency sector.
What is blockchain?
The Blockchain, which is also called «Block Chain» is a non-centralized P2P coded transfer network, which operates through a technology that allows data to be transferred more securely and is based on Decentralized blocks or nodes of linked and encrypted records.
In the case of cryptocurrencies, we can see the Block Chain as a chain of accounting books where each of the transactions (entries and exits of money) are recorded. And once the information is entered into them, it can no longer be deleted, only new records can be added.
The main feature of this new technology and the reason why it is widely used in the virtual economy is its security since it is intrinsically resistant to changes or individual modifications in its registry.
It can be said that the chain works linearly, adding new transactions as it progresses, but making it impossible to modify previously registered transactions.
An easy way to see it is if you compare the Blockchain with an accounting book:
In it, a company records movements linearly, registering one transaction after the other, but on a much larger scale, since the transactions made in the blockchain include millions and millions of people or ” Nodes “, as they are technically called.
Why does blockchain eliminate intermediaries?
As I mentioned, it is millions of people who make up this “blockchain” and, in fact, they are (which we will call “nodes”, assuming that each person uses a computer or equipment to connect to the network) people that make such blocks.
This is because a large number of nodes are needed to approve and record the transfers made on the network.
But what relationship do these nodes or people have in the security of this technology?
Well, very simple: for a transaction to be registered, it must have been approved by the rest of the participants in each block.
The same happens if we want to make a modification in the blockchain, the approval of the rest of the nodes is required to be able to approve this modification, which is simply impossible.
I must clarify that this is not done manually, but that it happens automatically, so the only way that a person could modify the blockchain is if you use a computer with an incredible computing capacity, powerful enough as to overcome all the other nodes, together.
Do you see why it is inherently safe and impossible to modify?
There is no way that a single person has a computer with a computing capacity greater than that of millions of people.
What advantages and benefits does the Blockchain have for a business?
Blockchain technology has a lot to offer the world, from a non-centralized economy with cryptocurrencies to more reliable electoral systems.
But what interests us in this opportunity is the benefits it offers to digital businesses :
1. Fast and secure payments
The main advantage that it has is that it offers the possibility of making economic transactions quickly and safely.
This allows companies to offer a more global payment alternative to customers, without jeopardizing the security of both parties.
The use of cryptocurrencies to pay for products and services is an activity that has been growing for some years now.
In addition to security, it stands out because its transactions are quite fast and can be done from anywhere in the world, provided there is an Internet connection, without the need to go through an intermediary (such as a bank).
2. Facilitate international transactions
As a consequence of the previous point, the Blockchain can be an excellent tool capable of helping you expand your business outside your country.
While this is possible with other payment methods, it never hurts to have more alternatives. In addition, it is not only one of the freest methods, but one of the most reliable.
3. Total transparency
Another great benefit that it offers is the possibility of implementing a totally transparent business system, and this is possible thanks to any change or registration that is made in this P2P network can be seen publicly.
This, in addition to its inherent protection against unwanted modifications, makes it possible to maintain a true and reliable record of all business carried out.
4. Decrease commission expenses
One of the problems inherent in using intermediaries in transactions is the cost generated by commissions that, although not always high by themselves, when multiple transactions are made, add up to become a considerable expense.
With the help of the Blockchain system, intermediaries are eliminated and, therefore, the commissions they manage are also eliminated, which will help you greatly reduce the operating costs of your company.
5. You can store your important documents securely
I already mentioned that this methodology not only works for economic transactions, and it is that with the Blockchain it is also possible to store important documents in a completely secure way, without the possibility of someone accessing them without your consent and, even less, Modify them.
This way, you can store contracts, files you don’t want to lose, important company documents.
6. You will have an easy-to-follow accounting book
Each transaction that is carried out through the Blockchain leaves a public record that you can consult at any time, leaving at your disposal a means to verify the different transactions that are carried out within the company in a reliable and safe way.
That is why, among those understood in the field, Blockchain technology is usually compared with an accounting book.
7. It is a completely private network
Unlike banking systems, with such a network you have complete privacy since it works with cryptic encryption that allows you to maintain total anonymity, becoming one more node among millions, with nothing that identifies you.
Even when making transfers in this P2P network, the only thing that is recorded is the transfer data, such as date and amount, among others.
This is another reason why people prefer to use cryptocurrencies, as they are a secure method of protecting the identity of those involved.
Ironically, during the beginning, it was customary to criticize those who used this type of virtual currency, because those who ignored the subject, considered these transactions ” illegal ” or that were made for reasons of doubtful morality.
However, with the passage of time, society has learned to accept that the use of Blockchain technology offers many benefits and advantages over more traditional systems, even using Bitcoin more openly.
To the point that more and more countries are giving facilities to users to use these virtual currencies.
How does Blockchain technology work exactly?
You already know what Blockchain is and what are the benefits or advantages it can have for your business, but how exactly does blockchain technology work?
Suppose a person A wants to make a transfer to a person B. A decides to make the transfer, taking money out of his virtual wallet (suppose it is 1 bitcoin) and sends it to the virtual wallet (let’s call it “Blockchain Wallet”) of B.
Once A carries out the transaction, it will pass to a block from which it will be sent to the different nodes that are also connected to that block.
These nodes will first verify that A has enough bitcoins to complete the transaction and then they will decide to approve it.
Once most of the nodes in the block approve such a transaction, it will be registered in the block and B will successfully receive the A bitcoin.
Throughout this process, none of the nodes know that A is A, nor that B is B, they simply know that someone somewhere wants to transfer 1 Bitcoin from their wallet to some other wallet or wallets.
Now, is it already registered and sealed?
Well, no, there is still another step, and it is waiting for the block where A sent money to B, enough transactions to saturate the block until there are no more transactions in it.
It is precisely at this point where the block is sealed and a new block is created for new transactions, and this is made possible by Bitcoin or any other cryptocurrency miners.
What are the miners?
The miners are responsible for putting the transactions together in a block and then sealing said block to add it to the BlockChain as a complete set without possible future modifications.
This is a very expensive process, usually, because it requires powerful equipment and a lot of electrical energy, of course, the miners do not work for free, and for each block they seal successfully they receive bitcoins or other cryptocurrencies as a reward.
It should be noted that each block is sealed cryptographically through an encoding called “ Hash ”, which serves to identify it securely within the chain.
In addition, each block stores in its code the “ Hash ” of the previous block, so that the connection between each block is created.
In summary, a block contains information from its own Hash that identifies it and from the Hash of the previous block to link to the blockchain.
What should I do if I want to modify something in the blockchain?
First, similar to what should be done to make a transfer, if you would like to make a modification, more than half of the nodes belonging to the network must approve such modification.
And of course, this will not be possible, since there are no reasons why the registration of a transaction must be changed.
What assures me that Blockchain technology cannot be corrupted?
This P2P network works exceptionally and is very secure because all the records that pass through it are copied to the hundreds of millions of nodes connected to it.
In a nutshell, it would be like trying to damage or delete a file from a computer, when that file has been copied to hundreds of millions of computers worldwide, to which you must also add that you need the permission of all these computers to even delete the file.
How long does it take to complete a transaction on these types of systems?
When we read it, it may seem that this whole process would take time, however, these steps that must be followed to complete the transactions are made imperceptibly.
Therefore, it is impossible even to realize when the whole process occurs. As a result, you only see that you “ made a transfer, ” and everything that happens in between is unexplored territory.
The best thing is that transfers will not take more than a few minutes to complete, something that does not always happen with banks.
Another interesting point regarding Blockchain transactions is that they do not have an “ office hours ”, they work constantly 24/7 without a single moment of rest, something that many will love, considering that some bank transfers can only be made during business days.
As you can see, the Blockchain is a revolutionary technology that since its inception has caused great controversy, but above all, progress within the Internet world.
More and more people are taking advantage of the blockchain for both personal and business use; There are those who even generate money by mining within this P2P network.
The best thing is that it is a technology that is available to everyone and is very simple to use and understand, at least in the most basic aspects, since getting into the more technical aspects would make it more complex to understand what is really necessary , but with that you get the main idea of how it works. You have more than enough to take advantage of the Blockchain.