2. What is Blockchain Technology?
“Internet commerce has come to rely almost exclusively on financial institutions that serve as trusted intermediaries to process electronic payments. While the system works relatively well for most transactions, it still suffers from inherent weaknesses generated by such a trust-based system. “
- Satoshi Nakamoto
This is the phrase that mentioned a group of people (or person), known under the pseudonym of Satoshi Nakamoto, in the introduction of the article that later served as the basis for the creation of Bitcoin.
The Blockchain, or also known as DLT (Distributed Accounting Technology) is a trend that now allows us to solve real business use cases, in different sectors, not only in the financial sector. Moreover, the most popular domain at the moment are logistics, supply chain management and IoT.
Without entering into technical specifications, Blockchain is a protocol that guarantees the security of economic transactions and data without any intermediation from third parties, such as banking. Technically, the Blockchain consists of a protocol formed by a set of technologies based on P2P, public key cryptography and time stamping.
The Blockchain technology allows users to re-trust the system, without the need to place full trust in other people or in a central authority. One important characteristic is that it is a database that only allows writing. You cannot modify or delete any of it, just add, and all this under consensus.
It is a distributed and immutable registry of transactions between entities. This record stores account balances, the owners of the assets and messages between them. It is distributed because the information is shared by all the nodes that make up the network. It is reliable and uncensored since there is no central authority that can be prone to errors or fraud. Finally, it is immutable since once a transaction is recorded, it cannot be altered nor can it ever disappear.
The word Blockchain refers to the way in which this technology stores information.
It basically eliminates intermediaries, decentralizing the entire management. It is, in other words, a distributed and secure database (thanks to encryption) that can be applied to all types of transactions that do not necessarily have to be economic.
In the words of Marc Andreessen, creator of Netscape and partner of one of the most important Venture Capital funds in Silicon Valley:
For the first time in history a book is being written collaboratively by thousands of parties. Imagine any great book, for example the bible for Christians or any other, written collaboratively, by consensus, without informative dictators saying what to put and what not. Imagine how good a transparent planet would be.
Imagine that you like to buy a newspaper. Serious weekly publication that records events, statements by politicians, job opportunities, inventions, artistic novelties, etc. The peculiarity of the Blockchain is that in each copy, under the title, appears the summary or “hash” of the previous one, which contained both the previous hash and so on until the first copy.
But that’s not even the best part, any event registered in that medium has legal validity, so it’s like a notary. But let’s face it, almost no one stores all the newspapers from the beginning of history except the newspaper archives and large corporations. What is clear is that the vast majority of the population retains at least the publication of the last week.
Properties
Thanks to the concept of distributed consensus, an incorruptible record of past and present events in the digital world can be created. Also, it would do this without compromising your privacy.
Another of the most important properties is that it solves the problem of double spending of digital assets without depending on a central authority. For example, if you have a song or a text file on my computer, you can create copies of them and share them. However, if you create a file that represents a virtual currency, who prevents creating multiple copies of my digital money?
The Blockchain guarantees through its protocols the unique transfer of a data set (any) between 2 pairs, since it avoids through cryptography that the same sequence of zeros and ones can be distributed more than once. Perfect solution in the world of payments: you cannot pay twice with the same ‘currency’.
Sectors that will be impacted by Blockchain technology
Banking and payments are no longer the only sectors that are being affected by Blockchain technology. In the near future many other industries will work with this technology
• Real-estate market
Blockchain offers a way to create a more efficient ecosystem in the registration, tracking and transfer of title deeds, ensuring that documents are accurate and verifiable by the parties.
The cryptographic registry will speed up the process with a reliable means and very difficult to manipulate
• Retail
Several projects are beginning to work in the block chain in order to connect buyers and sellers without intermediaries, without associated fees or restrictions on what can be sold.
Customers can use virtual currencies and sellers receive payment with all associated data distributed through the global network instead of being stored in a central database.
• Health area
Blockchain may provide medical information in a cryptographic database accessed by anyone running linked software.
Now it will be possible to share the records in a safe way, to link to hospital information by running a software with a decentralized medical database.
• Human Resources
With the information available in the Blockchain, the recruiters will access the academic records and verify the credentials and background. This technology reduces the risk of falsification of university degrees, while reducing the costs of issuing and storing them.
Applications
• Storage system
Several projects are building a distributed storage system that makes it possible to rent storage. It also allows hard disk rental to host information from other users.
• Registration of properties
The Japanese government has initiated a project to unify the whole register of urban and rural properties with block chain technology, which would allow for an open database in which the data of the 230 millions of properties and 50 million buildings could be consulted, numbers estimated to actually exist in the Asian country. In Dubai they are planning something very similar.
• Registration of births, deaths, marriages, divorces…
• Notary services
Some projects already offer notary services that use Blockchain technology to verify all types of information. Through these services you can “attest” to the creation, modification, change of owner, etc. of a digital good.
• Digital identity
The last and gigantic security failures and data theft have made the management of our identities a very real problem. Blockchain could provide a unique system to validate identities in an irrefutable, secure and immutable way.
• Electronic voting.
As you can imagine, the cost of creating ballots, organizing all the necessary infrastructure to manage the vote and the subsequent count, has a very high cost. In addition, current systems have been unable to withstand hacker attacks and have failures when counting with total precision.
The Blockchain can solve this because it would allow a voting system in which the identities of the voters were protected, unforgeable (a hacker would need more computing power than the 500 most powerful supercomputers combined, 256 times) at a practically zero cost and access public.
• Social Security and Health
Although it could be encompassed within the aforementioned public services, public health could undergo a real revolution with a block chain system that would serve to record all types of medical records and solve one of the classic problems of management of health.
The Blockchain goes beyond the economy, although it is closely related to the new cryptocurrencies, it is logical to ask if this system would be valid for other types of transactions, and the answer is a resounding YES.
