Since its launch with Bitcoin, blockchain technology has become a true revolution for the security of transactions and production chains, among other applications. In this post we want to share with you the main steps that make up the blockchain process and how it works.
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Blockchain technology, what is it?
It is a revolutionary system that consists of a databasecomposed of a blockchain where: new and indelible information organised in blocks is added, verified by cryptography and the new block is added at the end of the existing chain. In short, it is a distributed database that is impossible to modify, efficient and permanent, making it very transparent and secure.
The public blockchain acts as a peer-to-peer network programme, where not only do data files move between them, but it ensures that everyone has exactly the same information. Moreover, it is not just that everyone shares the same database, but that everyone has a space on the chain that only they can access. There is no central authority that manages the keys and data, but it is done through cryptography.
It is essential to record medical records, transactions, identities, production processes, events, etc.
how does blockchain technology work?
Below, we are going to show you the key points necessary to understand how it works:
- Origin.
Blockchain first appeared in an article published by Satoshi Nakamoto in 2008, which explained the protocol used by the bitcoin cryptocurrency. At first, its operation was 100% focused on cryptocurrencies, as part of a system for processing electronic transactions in a way that did not require a central authority or a trust system. Over time, it has seen great potential to be applied in other areas and sectors, due to the properties it offers (immutable database, growing block sequence, security and transparency ....).
- Pseudo-anonymous character.
As they are public blocks, they constitute an open system where trust and transparency are enhanced. In other words, their information can be traced, but not identified. Users can identify themselves with public keys, but not with their real identities. We therefore find a close relationship between the blockchain and big data, underlined by the need to ensure a legal and fraud-free payment environment.
- It can be shared.
The blockchain is a database capable of being shared by different users in a peer-to-peer manner and allows information to be stored in an orderly fashion. Its size grows over time and it is advisable to have some kind of mechanism to make queries, rather than downloading all the stored information. For this reason, in some systems it is proposed to use the Merkle hash tree.
It consists of storing different data independently in the leaves of a tree structure. To do this, a hash of the information contained in each node is created, and to generate the nodes of each higher level, different values of the lower level must be concatenated. If we repeat this process several times, we will arrive at a level where there is only one node or root.
- Stored information.
We can find different types of information: candidate to be added (the nodes send it to the rest of the nodes through the peer-to-peer network, but it has not yet been validated in a block), confirmed (it is validated by the network and it is added to the next block) and stable (it is part of the blockchain in an immutable way).
- Mining.
These are network nodes that participate in writing data to the blockchain in exchange for money. They are responsible for validating the writing of a block, which is then agreed by the other participants. In this context, a process is carried out to reach consensus among the miners for the writing of blocks, known as Proof-of-work (PoW).
- Availability and persistence.
These are the two fundamental properties of the blockchain, as they ensure that an issued transaction ends up being added to the blockchain and that when a node gives a transaction as stable, the rest will validate it.
- Multiple applications.
Although blockchain technology was born as part of cryptocurrencies, its application is being studied for other areas and actions. For example: it can serve as a centre for the exchange of trust between entities. Traditionally, the figure of an intermediary has always been necessary to verify an action in exchange for X. In the case of blockchain technology, everything changes.
Conclusion on blockchain
In short, blockchain technology is helping society to implement distributed, public and immutable databases capable of providing robustness against possible manipulation and fraud. It is a secure and reliable method that is marking a before and after in many sectors.
It is possible that in the future we will find the presence of blockchain in many systems. Tell us all your doubts about this technology.
