What is Blockchain?
Focus on Cryptocurrency Technology
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What is blockchain technology?
How does blockchain technology work ? If you want invest in
bitcoin or any other cryptocurrency, it is interesting to understand why this
technology could revolutionize the worlds of economics, banking or even
insurance through its different uses:
The transfer of assets of all kinds,
The registers to trace products as assets,
The smart contracts autonomous.
Who invented the blockchain?
In 2008, the stock market crash and the ensuing global
economic crisis exposed the flaws in the banking system as we know it. Many
detractors of the banks have pointed out the lack of trust that citizens now
feel in these institutions.
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In this context, a person, or a group of people, answering
the pseudonym of Satoshi Nakamoto conceptualized the first blockchain (or chain
of blocks in French) in November 2008, with the primary objective of creating a
network of peer-to-peer exchanges. to-peer without having to go through a
trusted third party, in other words, the banks.
In 2009, Nakamoto's first blockchain was implemented and at the same time gave birth to the most famous cryptocurrency and the most popular: Bitcoin .
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► Read also: Bitcoin Cash: simple foil or real
cryptocurrency?
How does the blockchain work?
The blockchain technology - technology or chain blocks in
French - to store and transmit information in a transparent and safe. When we
talk about Bitcoin, and more generally cryptocurrencies , we often find the
blockchain at the center of attention. As a database, it records all the
transactions carried out : it is a register that contains the complete list of
all the transactions that have existed on its network. We speak of a
decentralized database , since it does not call on any central control
institution.
Imagined in response to a problem with the current system, which is the obligation to trust a third party to manage your money, in this case the banks, the blockchain is a system where it is possible to transfer money without go through his banker… but by managing ourselves a register containing each person's transactions .
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Forget the wiki and other books “for dummies”, the
explanation of the blockchain, it's right here:
Take as an example a group of 5 people who want to become
independent from banks to manage their money transfers. Each of these people
knows how much money each person has, but does not know their identity, since a
number serves as their name. In our example, we will therefore have five people
with the numbers 1, 2, 3, 4 and 5. Each of these people has access to a blank
page and must note each transaction carried out . For example, if N ° 2 wants
to send € 10 to N ° 4:
N ° 2 announces that he wishes to transfer the sum of € 10 to N ° 4.
N ° 1, N ° 3, N ° 4 and N ° 5 verify that N ° 2 has indeed
10 €.
If so, they will all write down on their blank page the date
and time of the transaction, its amount, the number of the person sending the money
- No.2 here - and the number of the person. who receives the money - No. 4
here.
The transaction is then completed, and N ° 4 will receive
the € 10 from N ° 2 after a short delay.
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The more time passes, the more the members of this group will send each other money: each transaction will continue to be listed on the page. But there is a maximum number of transactions to note per page. In this example, we will say that a maximum of 10 transactions can be noted on a blank page. What to do when it is full? Each member of the group must seal the page with a key . This key is a value which must be searched by each member of the group and must be common to all pages.
Once the key is found, we seal the page to ensure that no one can modify its content, and we store it in a folder where it will remain indefinitely. In our example, the white pages are actually blocks , and the file, a blockchain .
Note that there are two types of blockchains: public ones which are open to all Internet users, and private ones whose access is obviously limited.
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► Read also: Ripple: the neutral agent of cryptocurrencies
A reward system
To seal a page, you have to use what is called the hash .
Indeed, before this blockchain system, banks were the ones who had to ensure
that the transaction register was untouchable so as not to alter the data
present on it. In blockchain technology, all users of this system help to
secure the network .
Hashing works at proof of work , and the goal here will be to determine an input value that generates an output value. When a page is full, all users must search for the key to seal the block. This key is actually a value to be added to the number of transactions on the block which allows to obtain a certain output value.
The first person to find this key announces it to other users so that everyone can verify that the calculation is correct. If this is the case, everyone will write this key on their page (therefore their block) to seal it and store it in a file (therefore in a blockchain). If a person in the group obtains a different result from the others, it is because an error has occurred on his page, he must therefore delete it and copy someone else's, since it is mandatory to have a valid block in a blockchain to be part of the network.
Finding this key takes a lot of work, time, and computing power . What motivates the researchers of this key, which is also called minors, this is the reward offered! The first to find the key earns fractions of cryptocurrency , Bitcoin or otherwise, as a reward to help secure the network. This is how Bitcoin is mined and created.
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Blockchain in cryptocurrency
Who uses blockchain?
Unveiled in broad daylight thanks to Bitcoin, blockchain
technology is initially based on the use of a virtual currency: Bitcoin,
Ethereum, Ripple, etc. But its primary strengths (decentralization, security
and transparency) allow it to be applied to a wide variety of areas today:
Insurance , with in particular AXA which offers delay cover via an automatic transfer,
Investment in the stock market , with the ST8 platform which
offers crypto assets to start-ups,
Food , with the Carrefour brand in France which uses
blockchain for better food traceability,
Art , with the digitization and division of work into tokens
of all sizes,
Video games , with the digitization of equipment
exchangeable via tokens, used in particular by Ubisoft.
Many cryptocurrencies are traded on their own blockchain
network : we are thinking in particular of Ethereum, the main opponent to
Bitcoin on the cryptocurrency market, which revolutionized the use of
blockchain.
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► Read also: Invest in cryptocurrency with
Coalhouse
Although relatively recent, blockchain technology already
has several applications today. As mentioned previously, the food traceability
used by Carrefour makes it possible, via a QR code, to know the origins of the
products. On the insurer side, automatic compensation is made possible by the
blockchain while the security of commercial transactions and disintermediation
in advertising are constantly evolving.
The Bitcoin blockchain is obviously the best known: it is public and therefore allows Bitcoins (BTC) to be mined. Or buy some, sell, or store. Besides blockchain, investors crypto monnaie must also use a wallet (wallet) to store their assets crypto, and then share with other users, or in exchange for goods or services.
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The Ethereum blockchain and its Ether cryptocurrency (ETH)
are also on the rise, since it makes it possible to set up smart contracts , or
autonomous programs, which will automatically carry out certain pre-validated
actions.
For more information on this subject, you will find many websites on the principle of blockchain, “info” sections to explore the cryptocurrency market, and examples of use. The blockchain.com website also allows you toto buy, sell or exchange cryptocurrencies by creating a personal space for you using a login and a password.
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