By chuy Cepeda
The objective of this post is not to technically explain what blockchain is, but to provide an understanding, understand its benefits, know in which processes it adds value, and how it can impact on improving our lives.
This post is intended for decision-makers who have a general knowledge about technology, but still do not know how to apply it or have not found the way to start implementing pilot projects.
What are Blockchain networks?
The concept of a blockchain, better known as blockchain, was presented in a paper by "Satoshi Nakamoto" in 2008 as the underlying technology for Bitcoin, today's most popular cryptocurrency.
Blockchain is a registry or database that has attributes that make it unique and preferred in many of its applications, which include:
Less vulnerable than any other database to attacks, almost considered "fraud-proof" or "unhackable."
It is practically impossible to reverse, change or manipulate records once a transaction is completed, that is, once the information is recorded in a block.
The complete history of a record is available in a blockchain, hence the name of this technology.
No third-party trust or centralized database owner is needed, as the information is transferred over the internet once all parties agree on a transaction.
The basic components of blockchain architecture include:
a 'block': it contains data, and the identifier of itself and the previous block.
a 'node': user or computer within the specific blockchain network,
the 'chain': sequence of blocks in a specific historical order.
'Transaction': digitally verified and signed records that represent the writing of information to a block.
the 'consensus': a set of pre-established rules to carry out each operation in blockchain (agreement to add data to a block, or to verify a transaction on the network),
The 'miners or validators': specific nodes that perform the process of verifying transactions in exchange for rewards on the network.
The unique components, characteristics, and functionalities of blockchain can be leveraged to meet the need for secure, authentic, and trustworthy information exchange in various fields and to promote transparency, efficiency, and good data management practices, which are basic components for modern institutions and societies.
The adoption of blockchain should be approached with an open mind and a healthy dose of skepticism, considering that it can guarantee the following properties or services:
Shared record-keeping: enables sharing an authorized set of records among multiple parties.
Consensus between parties: allows all parties to agree on the set of shared records without a central authority.
Independent validation: allows each party to independently verify transaction records on the chain.
Evidence of manipulation: allows each party to detect any unilateral or non-consensual changes to transactions.
Resistance to manipulation/censorship: prohibits a single party from easily or unilaterally changing (or deleting) the transaction history of the chain.
.If you want to delve deeper into the question of what is blockchain, I recommend you go to this video by Lucas.
What do blockchain networks look like?
Translation: First of all, it is necessary to say that blockchain is a "chain of blocks", not a "change of blocks". It is common to hear the word "blockchange" incorrectly used. But that is not the case.
Then, there are multiple blockchain networks, differentiated by their protocols and smart contracts. Some are specific-use, like Bitcoin, which was created as an alternative to traditional finance. And others are multipurpose, like Ethereum, which is currently the largest ecosystem built on blockchain technology.
Zooming in on any of these networks allows us to understand what happens inside each block. For example, in the case of Ethereum, since its migration to the PoS consensus protocol, we can roughly generalize that up to 1400 pieces of information (transactions) can fit inside a block, which must go through a review (attestation) process by validator nodes before being written to ensure compliance with network rules. Every 12 seconds, a new block is added to the chain, and the larger it becomes, the more complex it is to hack or alter.
Now, zooming in further on one of these blocks allows us to understand what a transaction contains. In a basic sense, each transaction has a decentralized identifier (DID) to know who the recipient (also known as the holder) is, and another DID to know who the sender of that transaction is (for a better understanding of this relationship, see Trust Frameworks). After the DIDs, the content of the transaction is required, and this can vary. It may contain economic value like a cryptocurrency, a unique or collectible item like an NFT, or represent information between the sender and the holder, commonly called verifiable documents or credentials. Finally, a 'fee' variable is kept to pay the reward to validator nodes and to write our transaction and add the qualities and capabilities of blockchain technology to it.
Here I explain this same thing in a video if you prefer.
From here on, the possibilities are very extensive, "world-changing" as they say in English. We can rethink people's identity, their official documents, the way they carry them, the way they share them to access products and services, and even create new digital economies in a more equitable, private, and secure internet.
Although the future of blockchain is uncertain, this technology is considered the cornerstone for the rise of Web 3, which is becoming more and more present in our daily lives. This evolution of the web will be characterized by mitigating data monopolies, manipulation, invasion of people's privacy, and unauthorized or unethical uses of our personal information. To learn more about it, I recommend this other video by Lucas.
Jesús Cepeda, CEO at OS City