The truth about Blockchain: What you need to know

Did you know that blockchain is a technology that keeps track of a set of transactions, in a decentralized, secure, and transparent way, in the form of a chain of blocks? Still don't get it? Don't panic, I'll explain everything to you!

Blockchain: how does it work?

In practice, a blockchain is a database that contains the history of all exchanges made between its users since its creation. Its main characteristics:

-The identification of each party is carried out by a cryptographic process.

-The transaction is sent to a network (or storage “node”) of computers located around the world.

-Each "node" hosts a copy of the database in which the history of the transactions carried out is recorded. All stakeholders can access it simultaneously

-The security system is based on a consensus mechanism of all the “nodes” each time information is added. Data is decrypted and authenticated by “data centers” or “miners”. The transaction thus validated is added to the database in the form of a block of encrypted data (this is the “block” in the blockchain)

-Decentralization of security management prevents falsification of transactions. Each new block added to the blockchain is linked to the previous one and a copy is transmitted to all the “nodes” of the network. The integration is chronological, indelible, and tamper-proof.

Blockchain: what are its advantages?

Decentralization

A fundamental aspect of blockchain technology, decentralization comes from the absence of a trusted intermediary during transactions, but also from the fact that each node in the network has a copy of all the data in the chain.

System security and stability

The security of a blockchain is ensured by its users themselves, in particular through the mining process. This consists of controlling and validating the transactions carried out within the network, thus creating new blocks. Mining requires complex mathematical calculations, involving particular hash functions, which require a great deal of computer power.

Therefore, blockchains are deemed perfectly inviolable; Bitcoin has never been hacked since its creation. To achieve this, hackers would have to take control of 51% of the network, which in practice is almost impossible. Moreover, given that each node in the network can store all of the blockchain's data, it is particularly stable. The failure of one or more users cannot lead to the crash of the entire chain.

Data reliability

Finally, one of the major advantages of blockchain technology is its tamper-proof aspect. Once data is entered in a block after it has been validated by minors, it is in practice impossible to modify or delete it. The information contained in a blockchain is thus highly reliable, in addition to being perfectly traceable.

This immutable register function can again find many applications in the future when reliable and inviolable data are necessary; for example to seal property deeds, or to keep financial records.

Productivity

The productivity and efficiency gains are generated by the fact that the blockchain entrusts the organization of exchanges to a computer protocol. This mechanically reduces the transaction or centralization costs existing in traditional systems (financial costs, control or certification costs, use of intermediaries who are remunerated for their services; automation of certain services, etc.).

The speed of transactions

Blockchain technology makes it possible to carry out monetary transactions between two parties much faster than in the classic framework of fiat currencies. Indeed, due to the absence of passage through a third party, the validation, as well as the execution of a transaction, does not take more than a few minutes; 10 minutes exactly on the Bitcoin blockchain. In a classic fiat currency transaction, the transaction may take several days to finalize. Very low transaction times are therefore one of the major advantages of blockchain technology.

The blockchain: what are the possible applications?

Money transfers and payments:

With bitcoin leading the way, blockchain was quickly used as a currency transfer method. Thanks to this technology, which allows transactions to be carried out in seconds, money can be exchanged at an alarming speed with minimal costs. According to ComputerWorld, by eliminating bureaucratic intermediaries and reducing third-party fees, blockchain could save large financial institutions between $8 billion and $12 billion a year.

Chainalysis is a company that has built tools to help financial institutions monitor the exchange of cryptocurrencies. Their software can quickly detect fraudulent transactions and compliance violations and alert customers when a problem arises.

Health:

The healthcare sector is perhaps one of the segments where the most inefficiencies can be eliminated. Providing a secure database with clear rules about what information can be shared – and with whom – could significantly speed up processes and reduce costs. For example, you could visit a new doctor or a clinic that could access the necessary data within minutes, and they could in turn make sure that any pharmacy knows what they are authorized to give you for treatment. your disease.

As mentioned above, one of the biggest problems in healthcare is the fragmentation of data across many providers and hospitals. Patientory offers a solution in the form of a blockchain-based medical record system. This would ensure that the file is always complete and up to date and that it is only accessible to authorized persons, be they patients, doctors, pharmacists, and other healthcare professionals.

Bank:

In the banking sector, technology opens up the possibility of validating transactions without the intermediary of a clearinghouse, which should make it possible to certify transactions in much shorter timeframes. The blockchain can also promote the sharing of information between competing players in a financial center while respecting the secrecy of their commercial data and, in doing so, facilitate the management of common structures or instruments by reducing contact costs and administration fees.

Insurance:

In the insurance sector, the contribution of the blockchain is due, for example, to the automation of reimbursement procedures and the reduction of certain formalities at the expense of companies and their customers, if the assumptions and conditions of compensation and damage are established.

Logistics and Supply Chain Tracking:

Logistics could benefit greatly from the help of the blockchain Indeed, one of the biggest ills of this sector is the lack of communication and transparency, whether within a company or between the different service providers. There are hundreds of thousands of shipping companies around the world, giving rise to recurring bottlenecks and information loss. Blockchain could enable the precise identification of items in the supply chain, removing any need for paper-based information transfer. Combined with the IoT, it could track each item while assessing its condition and quality in real-time. Not only would this be safer, smoother, and more automated, but it would also save the industry billions of dollars.

Some large logistics companies, such as DHL, have already opted for blockchain. The company maintains a digital log of shipments and logs each transaction. DHL is at the forefront of blockchain adoption, ensuring more traceability, transparency, and greater process automation.

In conclusion, Blockchain technology, therefore, has many advantages, which largely explain its popularity for more than ten years now. Decentralized, stable, secure systems, allowing rapid peer-to-peer exchanges, blockchains are not flawless; their energy consumption is a prime example. The future will tell us in which sectors of activity this technology will find new applications.