Blockchain, this time you'll understand it.

This article is not aimed at expert technologists, but it does intend to go a bit further than a simple definition. We're going to delve into the guts of technology blockchain thanks to a fantastic tool provided by Anders Brownworth, with which anyone can easily understand the basics and workings of this technology that is set to transform the world. I say this with complete conviction, and I'm sure that by the end of this article, you'll think the same. In fact, at INVERSA, we have been committed from the outset to the advantages it offered in terms of security by incorporating it for the registration of all contracts. 

Let's start by explaining what Blockchain is.

It is a technology based on a chain of blocks that contain encoded information. All recorded information is immutable and perpetual, making it a kind of virtual notary. It is, therefore, a means to certify and validate any type of information through a reliable, decentralized, and tamper-resistant data registry.

The first to work on a cryptographically protected blockchain in which no one could manipulate the timestamp of the documents were Stuart Haber and W. Scott Stornetta in 1991. But the takeoff of this technology was in 2008 with the Bitcoin project thanks to the work of a person or group of people, this aspect is unknown, named Satoshi Nakamoto.

Over time, blockchain technology has been separated from cryptocurrencies and is being used in multiple applications. To understand how it works, we must know two key figures:

• The nodes. This role can be performed by anyone with minimal computational capacity. The nodes maintain constantly updated copies of that enormous ledger.
• The miners, are machines that actually perform the operations.

It will be better understood through the images of Anders' Demo:

The first screen shows a box where we see that all the data entered is automatically transformed into a specific hash. The hash or hash function is a special cryptographic function that is used to generate unique and non-reproducible identifiers. For example, if we enter the word "Hello," it will transform it into a hash, and if we enter "Hello INVERSA," a different one will appear.

The data will be collected in blocks of information. To generate a block, a miner must be able to solve a mathematical problem based on parameters provided (including the target) by the network itself to all nodes. The target indicates the value that a block hash (block ID) must have to be accepted by the network.

In each attempt, a miner generates a nonce (random number for single use) that will be used to generate the Block ID or block hash through Proof of Work. Through a random number generator, a nonce is obtained and then used in a specific cryptographic function. Predicting which combination of bits will translate into the correct block hash is not an easy task and will require calculating billions of hashes different, which will require generating the corresponding billions of nonces until the correct combination is found. Achieving this means obtaining the Golden Ticket, that is, they have generated a block that will be identified with the nonce of the function that has solved the problem, in other words, they have generated the correct result (block hash) that will be validated by the rest of the nodes.

Next, a new Block 2 will open that will collect new data, and so on, creating what is known as a Chain of Blocks.

In this chain, each block is connected to the previous one, each block in a blockchain is organized in such a way that it refers to the content of the previous block. Thus, in addition to the new generated hash, it will also contain the hash of the previous block. In this way, any modification or manipulation will require changing all previous blocks, a highly difficult task.

Are you starting to see it? Well, it adds yet another layer of security. Because there are machines with great mining capacity, a distributed network is built, that is, blockchains are replicated to thousands of nodes so that everyone knows and has a copy of the information collected in each block.

We have seen that the content will be validated by majority, everything works by consensus of the parties. Therefore, a chain modified by a few will not be accepted because it does not match that of the other thousands of nodes, and it is impossible to modify the thousands of nodes worldwide. To this day, no one has succeeded.

Now that you understand it, do you see its possibilities? They are enormous, both at a public and business level.

In the public sector:

It can be applied in clinics and hospitals to create a record with patients' data and medical history.

In the military sphere, one of the aspects that can be worked on is creating a secure messaging service.

Within the various public administrations in all document management as a kind of virtual notary etc...

Not to mention what it could mean when it comes to elections, a matter that is currently very topical, by making it possible to vote online in a completely secure manner.

At the private level:

In the financial world to speed up payments or transfers or in the automatic execution of contracts avoiding intermediaries, reducing costs, and with less bureaucracy.

For the traceability of products allowing tracking of the supply chain and as proof of origin. Currently, there are already large food chains using it for the traceability of their products.

It also allows users to create their own manipulation-proof digital identity replacing usernames and passwords. Goodbye to racking our brains with our password list.

It will also be possible to have a much more secure distributed cloud storage, storing an identical copy on each node of the network compared to current centralized systems (Amazon, Google Drive...) where information or files are stored in the same space.

Or the automatic execution of contracts. An example of this can be seen in the insurance sector where, upon registering the contract with certain conditions, it is automatically executed when those registered conditions are met. Another example would be rental contracts, etc.

And what about the electricity market. The future speaks of homes that can generate their own electricity and sell the excess without intermediaries. Through a distributed network, energy could be bought from the grid or excesses sold, with transactions verified by network members.

Another use is in the Internet of Things where blockchain allows an immutable record of all messages exchanged between the various connected smart devices. IBM together with Samsung has already created a platform of this type.

As you can see, the list is very long, and there are many examples, and we cannot list them all here. In fact, many applications are still unknown. We are facing a real revolution with endless possibilities.

Finally, it should also be noted that although the Demo is based on the Bitcoin blockchain, today there are multiple blockchain networks, both public and private.

The recent inclusion of INVERSA in ALASTRIA brings to the table our commitment to this technology and everything it can offer us in the future to provide value to our clients.

 

 

 

 

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