Understand the "Blockchain" in just 3 minutes

Understand the “Blockchain” in just 3 minutes

While this concept may seem somewhat nebulous to some, it is nevertheless a term among the most fashionable in recent years with the advent of cryptocurrencies. This decentralized ecosystem enables the storage and transmission of information, while ensuring the transparency and integrity of the network.

However, this term “blockchain” is very often considered a misunderstood generic term. So what is it really and what are its possible applications?

What does blockchain terminology mean?

Blockchain can be defined as “the” technology that keeps track of a set of transactions, in a decentralized, secure and transparent way, in the form of a chain of blocks.

Giving a more graphic definition, the mathematician Jean-Paul Delahaye considers that the blockchain is ” a very large notebook, which everyone can read freely and for free, on which everyone can write, but which is impossible to erase and indestructible “. By extension, it must also be understood that each page of this book is a block, all connected to each other.

How does it work?

Rather than having a centralized registry by one entity, person, state, the blockchain is a collection of decentralized ledgers. Anyone can therefore be an actor in this network by writing to one of the nodes.

Technically, the blockchain uses a mathematical algorithm which is the Proof-of-Work (PoW). It is this algorithm which will make it possible to select the legitimate register and to validate the block. As such, the operation is done in two stages on the blockchain:

  • Blocks are first “pending validation” : new incoming information is stored. They are checked to ensure that there are no contradictions with information already existing on the network.
  • The blocks are “validated” : the information is encrypted. Modification becomes impossible, which prevents the manipulation of transactions. Indeed, the integration is chronological, indelible and tamper-proof.

What is this technology for?

While blockchain technology was originally developed to support transactions carried out via cryptocurrencies/crypto-assets, blockchain is a major innovation that can be applied in many fields.

Here are some of the blockchain usage fields:

  • In the economy, with major central banks intent on using blockchain to develop their digital currency. We are talking here about CBDC (Central Bank Digital Currencies).
  • In the field of logisticsit facilitates the traceability of products and food, while reducing formalities.
  • For real estate dividing ownership into digital shares to facilitate and secure transactions.
  • In politics with the implementation of electronic votes secured by the blockchain.
  • In legal mattersto authenticate and secure certain acts such as wills for example.
  • On the insurance sidethe blockchain promotes the automation of reimbursement procedures and the reduction of certain formalities for companies and their customers.
  • For the banking sectortechnology makes it possible to speed up the processing of operations as well as their certifications.

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The common denominator of all these possible applications is to avoid fraud and ensure transparency.

What are the benefits of blockchain?

The use of blockchain has several advantages:

  • System security thanks to the validation of the blocks carried out by a set of users around the world.
  • Very low transaction or management costs since the organization of exchanges on the blockchain is done exclusively via a computer protocol.
  • The validation of a block only takes a few seconds or even a few minutes. Enough to ensure the speed of transactions on the blockchain.

Conclusion: The Heart of the Crypto Ecosystem

You would have understood it, the blockchain is a revolution whose field of application is potentially infinite. Its use will govern a multitude of aspects of our daily lives in the future. Blockchain has proven itself with crypto by being a trusted infrastructure.

Ultimately, as crypto-fans like to remind “Code is law”. The only rule is the code itself. Computer code that makes no distinction between individuals and works fairly for all.

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