Introduction Blockchain Technology: The Lord of Secure Transactions
Did you know that Introduction Blockchain Technology that allows you to keep track of a set of transactions, in a decentralized, secure, and transparent way, in the form of a chain? Still don’t get it? Don’t panic, we can explain everything!
We could compare blockchain to a very large notebook, which everyone can read freely and for free, on which everyone can write, but which is impossible to erase and indestructible without full access.
What is Introduction Blockchain Technology?
Developed in 2008, blockchain is primarily a technology for storing and transmitting information. This technology offers high standards of transparency and security because it operates without a central control body.
More concretely, the blockchain allows its users – connected in a network – to share data without an intermediary.
Introduction Blockchain Technology: The Official Definition
In its report published in December 2018, the joint fact-finding mission of the National Assembly on the uses of blockchain and other registry certification technologies gives the following definition of blockchain:
A blockchain is a ledger, a large database that has the particularity of being shared simultaneously with all its users, all equal holders of this ledger, and who also all also have the ability to enter data, according to specific rules set by a computer protocol very well secured thanks to cryptography.
Introduction Blockchain Technology: How Does It Work?
In practice, a blockchain is a database that contains the history of all the exchanges made between its users since its creation. Here’s how it works:
- the identification of each party is carried out by a cryptographic process
- the transaction is sent to a network (or storage “node”) of computers located around the world
- each “node” hosts a copy of the database in which the history of transactions is recorded. All stakeholders can access it simultaneously
- the security system is based on a consensus mechanism of all the “nodes” with each addition of information.
- Data is decrypted and authenticated by “data centers” or “miners.” The transaction thus validated is added to the database in the form of a block of encrypted data (this is the “block” in blockchain)
- decentralization of security management prevents tampering with transactions. Each new block added to the blockchain is linked to the previous one and a copy is transmitted to all the “nodes” of the network.
- The Integration is chronological, permanent and cannot be hacked or forged.
How Is Security Ensured Within the Blockchain?
One of the great advantages of blockchain is the security it provides for transactions made in the network. This security is ensured thanks to three elements that make up the blockchain: an asymmetric cryptography system, the mining process, and finally the existence of nodes.
An Asymmetric Cryptography System
All actors participating in the blockchain have two keys: a private key that allows them to digitally sign their transaction, and a public key generated for each new exchange. This allows users to protect their identity while remaining transparent about the nature and quantity of the exchanges made.
In 2013, the FBI had to shut down an online illicit drug sales site that accepts bitcoin transactions, which uses the platform as a way to hide the identities of the actors.
Introduction Blockchain Technology: Mining
Mining is the process by which the different blocks are validated and therefore secured. To this end, the so-called “miners”, perform with their computer equipment mathematical calculations to verify and then validate the blocks of transactions.
In addition, it should be noted that most miners join “mining pools” which are groups of people who combine the processing power of several computers to verify transactions.
The block validation process may take some time depending on the block. For example, when it comes to bitcoin transaction blocks, miners bundle the last transactions into one block every 10 minutes and then validate them.
Introduction Blockchain Technology: Nodes
Nodes are computers connected to the network. Each node has a copy of the database that traces the history of all transactions made. Thus, is formed a chain of blocks connected to each other, which makes the blockchain unfalsifiable.
Thus, if a third party wants to hack the network, it is necessary for this hacker to corrupt more than half (more than 51%) of the nodes simultaneously. The number of nodes being very large, in case of attempted fraud, this would be detected very quickly.
What are the Advantages of Introduction Blockchain Technology?
The use of blockchain has many advantages, including:
- The speed of transactions thanks to the fact that the validation of a block takes only a few seconds to a few minutes
- System security, which is ensured by the fact that validation is performed by a different set of users, who do not know each other. This helps guard against the risk of malevolence or hijacking, as the nodes monitor the system and control each other.
- The productivity and efficiency gains generated thanks to the fact that the blockchain entrusts the organization of exchanges to a computer protocol.
- The protocols mechanically reduce the transaction or centralization costs existing in traditional systems such as open ones with no encryption.
For the Industries: What Are the Applications?
Blockchain represents a major innovation that is particularly used in the banking sector. Indeed, historically, blockchain technology has developed to support transactions carried out via cryptocurrencies/crypto-assets (including bitcoins which are the most well-known form) and which have as their main characteristic that they do not depend on a centralizing body (such as a central bank) and are international.
But its use is not limited to cryptocurrencies. Many fields and sectors of activity, merchant or non-market, public or private, are already using blockchain or plan to do so in the coming years.
In the banking sector, this technology opens up the possibility of validating transactions without the intermediary of a clearinghouse, which should make it possible to certify transactions in a much shorter time. Blockchain can also promote the sharing of information between competing players in a financial center while respecting the secrecy of their commercial data. In doing so, it facilitates the management of common structures or institutions by reducing contact costs and administrative costs.
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In the insurance sector, the contribution of the blockchain is for example due to the automation of reimbursement procedures. The reduction of formalities at the expense of companies and their customers occurs. Assumptions and conditions of compensation and damage are clearly established.
In the logistics sector, blockchain has two advantages:
- to ensure product traceability, as well as the records of the various involvements on a production and distribution chain
- lighten formalities and create the conditions for cooperation between the actors of a sector, particularly in terms of information exchange
In the energy sector, by allowing the exchange of services and values outside a central management body, blockchain potentially creates favorable conditions for the establishment. Furthermore, it creates local networks for the production, exchange, and resale of energy to balance supply and demand at all times. This is a strong constraint of electricity networks globally.
Besides, other sectors health, real estate, luxury, aeronautics, NFT Markets are also potentially affected by the use of blockchain technology.
Introduction Blockchain Technology: A Summary
- it is a technology for storing and transmitting information, taking the form of a database.
- It has the particularity of being shared simultaneously with all its users and does not depend on any central body.
- Has the advantage of being fast and secure.
What’s Next after Introduction Blockchain Technology?
With many practical applications for the technology already being implemented and explored, blockchain is finally making a name for itself at age twenty-seven, in no small part because of bitcoin and cryptocurrency. As a buzzword on the tongue of every investor in the nation, blockchain stands to make business and government operations more accurate, efficient, secure, and cheap with fewer middlemen.
As we prepare to head into the third decade of blockchain, it’s no longer a question of “if” legacy companies will catch on to the technology—it’s a question of “when.” Today, we see a proliferation of NFTs and the tokenization of assets. The next decades will prove to be an important period of growth for blockchains.