It means Blockchain. It is a database or public registry that can be shared by many users in a peer-to-peer model (P2P or peer network) and that allows the storage of information in an immutable and organized way.
It is a term associated with cryptocurrencies because, apart from being the technology that sustains them, it was born with the first virtual currency in history in 2009, Bitcoin. In this case, the data added to the Blockchain is public and can be consulted at any time by the users of the network.
However, it is essential to remember that cryptocurrencies are just that, coins! As with the euro, the dollar, or any paper money. Each one is a simple material with a printed value, but the economic laws that support it allow its use and generate value.
Something similar happens with virtual currencies. In this case, it is blockchain technology that allows its operation. Its main objective is to create an unchangeable record of everything that happens on the Blockchain, which is why we are talking about a secure and transparent system.
Bitcoin (BTC), Ethereum (ETH), or any other cryptocurrency is simply a virtual currency built on the Blockchain and used to send or receive the amount of money each participant owns. This technology is what keeps the transactions publicly registered but keeping the identity of the participants anonymous.
However, although it was created to store the history of Bitcoin operations, over the years, a great potential has been identified to be applied in other areas and sectors due to the possibilities it offers.
“The Blockchain is the technology. Cryptocurrencies are simply the first manifestation of their potential.”- Marc Kenigsberg
Four sectors that the Blockchain revolutionizes
All this, in theory, looks very good, but is there a company that has already “got down to work” to unleash the power of the Blockchain?
Of course, the financial sector, which it was designed for, is not the only thing. Here are three examples:
- Distributed cloud storage
Cloud storage services such as Dropbox or Google Drive are centralized, and by using them, you trust that a single provider “answers” for the data you store on it.
Storj is a startup that is beta testing a service that allows this to be done in a distributed way using a network based on the Blockchain to increase security and make the service less dependent.
Its users will also be able to rent the space they don’t use to others, just like Airbnb does with accommodations.
- Patents / Property Registry
One of the first non-financial services that have been given to the Blockchain is the inclusion of encrypted information within transactions.
In this way, an impossible-to-replicate hash can be created associated with a unique document stored outside the Blockchain.
Imagine the implication this has for the registration of patents or intellectual protection.
A company like Google, for example, could prove that it has created technology on a specific date without having to make a formal application to register the patent.
It could link those internal documents to the hash of a transaction carried out at that moment and thus prove that they were the first to develop it.
Services like Proof Of Existence allow you to do this.
- Electronic voting
As you can imagine, the cost of creating ballots, organizing all the necessary infrastructure to manage the vote, and the subsequent counting, has a very high cost.
Electronic voting systems have already been tested but have been unable to withstand hacker attacks and fail to count accurately.
The Blockchain can solve this since it would allow a voting system in which the voters’ identities were protected. It would be unforgeable (a hacker would need more computing power than the 500 most powerful supercomputers combined, 256 times) at virtually zero cost and public access.
This system could put an end to the shadow of “pucherazo” that flies over every election, especially in countries where corruption is the order of the day.
- Transparent government
With blockchain technology, any city council or government could reflect the status of their accounts in real-time.
With a network such as Bitcoin or Ethereum, a city councilor government should only indicate the address they manage.
From that moment on, we could all see the status of the accounts, what goes in and what goes out: down to the last penny, in real-time, and at a meager cost.
If at any given time there is a payment that goes to an address that cannot be justified with an invoice, the auditors and the population enter to see it instantly.
Also, remember that Blockchain is a chain, so you cannot put something in it a posteriori to try to falsify the accounts of the past.
Imagine this in a town hall, institution, or the Spanish government (which has been corrupt at all levels since the distribution of powers after the Franco dictatorship).
Of course, this from the hand of those who manage democracies as if they were dictatorships is not going to come out. So, despite the technological capacity to be implemented tomorrow, we have a long way to go.
Blockchain technology features
The advancement of this system has been unknown since its inception, but little by little, we are learning more details of its operation:
Cryptography is a fundamental pillar in the operation of the Blockchain, which provides security on the data stored in the system and the information shared between the nodes of the network. When we are going to carry out a transaction, we need a set of valid asymmetric keys to carry it out on the Blockchain. It is also known as public-key cryptography.
By representing a shared record of events, this technology builds trust with users. And not only that, but it eliminates the possibility of manipulation by hackers and generates a ledger of operations that all network members can access.
When information is added to the distributed database, it is virtually impossible to modify it. Thanks to asymmetric cryptography and hashing functions, a distributed ledger can be implemented that ensures security. In addition, it allows reaching a consensus on data integrity among network participants without resorting to an entity to centralize the information.
It is one of the basic requirements to build trust. In Blockchain, transparency is achieved by making the software code to run the chain public and generating a community of nodes that apply it. Its application in different activities, such as supply chains, allows the traceability of the product from its origin.
It allows the knowledge of all the operations carried out and the review of the transactions made at a specific time. Traceability is a procedure that allows you to follow the evolution of a product in each of its stages, as well as who, how, when, and where it has been intervened. This is one of the main reasons why many sectors are beginning to apply blockchain technology.