Do you know what Blockchain is and how exactly does this digital technology that everyone talks about work? If you are part of the average Internet user, you surely know the famous cryptocurrencies, whose flow is based on this system, which is revolutionizing the way we carry out commercial transactions.
These represent in a “virtual” way a type of money generally remote from any government and bank , which means that in this blockchain technology, the only two protagonists of such transactions are the sender and the receiver, causing them to be eliminated 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 what is so widely used in the digital economy and in the cryptocurrency sector.
What is Blockchain?
The Blockchain is a non-centralized P2P encrypted transfer network, which works through a technology that allows data to be transferred more securely and which 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 novel technology, and the reason why it is widely used in the virtual economy, is its security , as it is intrinsically resistant to individual changes or modifications to 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 a ledger:
In it, a company records movements in a linear way, recording one transaction after the other, but on a much larger scale, since the transactions carried out on the blockchain include millions and millions of people or ” Nodes “, as they are technically called.
Why Does The Blockchain Eliminate Intermediaries?
As I already mentioned, it is millions of people who make up this “blockchain” and, in fact, they are the ones (whom we will call “nodes”, assuming that each person uses a computer or equipment to connect to the network) that do such blocks may exist.
This is so because a large number of nodes are required for transfers made on the network to be approved and recorded.
But, What Relationship Do These Nodes Or People Have In The Security Of This Technology?
Well, very simple: for a transaction to be recorded, 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 other nodes is required to be able to approve said modification, which is simply impossible.
I must clarify that this is not done manually, but happens automatically, so the only way a person could modify the blockchain is if they use equipment with incredible computing power, powerful enough as to overcome all 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 team with a computing capacity greater than that of millions of people.
What Advantages And Benefits Does 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 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 compromising 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, as long as 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 to expand your business outside of Spain and Europe .
While this is possible with other payment methods, it never hurts to have more alternatives. Furthermore, it is not only one of the freest methods, but also the most reliable.
3. Full Transparency
Another great benefit it offers is the possibility of implementing a completely transparent business system , and this is possible thanks to the fact that any change or registration 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 done.
4. You Decrease Commission Expenses
One of the inherent problems of using intermediaries in transactions is the cost generated by commissions, which, although not always high on their own, when multiple transactions are carried out, 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 Safely Store Your Important Documents
I already mentioned that this methodology does not only work to carry out economic transactions, and 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, have them modified.
In 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, which leaves you with a means to check the different transactions that are carried out within the company in a reliable and secure way.
That is why, among those knowledgeable in the matter, Blockchain technology is usually compared to an accounting book.
7. It Is A Completely Private Network
Unlike banking systems, with a network of this type you have complete privacy, since it works with cryptic encryption that allows you to maintain total anonymity , becoming one more node among millions, without anything that identifies you.
Even when making transfers in this P2P network, the only thing that is recorded is the transfer’s own data, such as the date and amount, among others.
This is another reason why people prefer to use cryptocurrencies, as they are a safe 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 ” illicit ” or that they were made for reasons of dubious 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 bitcoins began to be used more openly. To the point that more and more countries are making it easier for 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 from 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 makes the transaction, it will go to a block from which it will be sent to the different nodes that are also connected to that block.
These nodes will first check that A has enough bitcoins to carry out the transaction and then they will decide to approve it.
Once the majority of the nodes in the block approve said transaction, it will be registered in the block and B will successfully receive A’s bitcoin.
Throughout this process, none of the nodes knows 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 purse (Wallet).
Now, is it already registered and sealed?
Well no, another step is still missing, and that is to wait for the block where A sent money to B, enough transactions to saturate said block until no more transactions fit 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 miners or any other cryptocurrency.
What Are Miners?
The miners are responsible for transactions together in a block and then seal said block to add it to the block chain as a complete set without any future changes.
This is a very expensive process, generally because it requires powerful equipment and a lot of electrical energy , of course, the miners do not work for free, and that is that for each block they successfully seal they receive bitcoins or other cryptocurrencies as a reward.
It should be noted that each block is cryptographically sealed through a coding 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, in this way the connection between each block is created.
In summary, a block contains information about its own Hash that identifies it and about the Hash of the previous block to link to the blockchain.
What Would I Have To Do İf I Want To Modify Something On The Blockchain?
First, similar to what must be done to make a transfer, if you wanted to make a modification, more than half of the nodes belonging to the network must approve the modification .
Of course, this will not be possible, since there are no reasons why the record of a transaction made should be changed.
What Assures Me That Blockchain Technology Cannot Be Corrupted?
This P2P network works exceptionally and is very secure thanks to the fact that all the records that pass through it are copied to the hundreds of millions of nodes connected to it.
In short, it would be like trying to damage or delete a file on a computer, when that file has been copied to hundreds of millions of computers around the world, to which you must also add that you need the permission of all these computers to even delete the file.
How Long Does İt Take To Complete A Transaction İn This Type 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 done imperceptibly.
Therefore, it is impossible to even notice when the whole process occurs. As a result, you only see that you ” made a transfer, ” and everything that happens 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 ” office hours “, they constantly work 24/7 without a single break, something that many will love, considering that some bank transfers can only be made during on business days.
As you can see, Blockchain is a revolutionary technology that since its appearance has caused great controversy, but especially progress within the world of the Internet.
More and more people are taking advantage of blockchain for both personal use and business; there are those who even generate money by mining within this P2P network.
The best thing is that it is a technology that is within everyone’s reach 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 than is really necessary. , but with you grasping the main idea of how it works you have more than enough to take advantage of the Blockchain.