The blockchain is an opportunity slowly becoming more popular among companies and individuals, representing an innovative solution to numerous needs and difficulties. Born with a bit of mistrust and initially linked only to the world of developers, it soon revealed its potential from a financial and technological point of view, introducing concepts rarely associated with digitization, such as transparency and sharing. Let’s see in this article what it is, what advantages it brings and in which areas it can work successfully.
Blockchain What It Is: Let’s Give A Definition
Blockchain is a set of technologies called a subfamily where transactions can be more easily recorded and assets tracked in a trading network. The accounting register is structured as a chain of blocks and is always immutable and shared: consents are distributed, and validation is based on a specific mechanism. The blockchain is public or permissionless when the consent is distributed on each network node and all the nodes participate in the transaction validation process.
Instead, it is called private or permissioned when consent is distributed only among nodes authorized to participate. This type of technology is still very young and full of potential: born in the field of cryptocurrencies and Bitcoin, it is slowly expanding into more and more sectors, affirming its role and attracting greater interest every day. What characterizes a blockchain are the principles that distinguish it, unpublished in the digital world and promoters of a new concept of trust. A blockchain introduces a concept of sharing – based on transparency and traceability – useful for guaranteeing total control over the acts and decisions then recorded in the archives in an unalterable and unchangeable manner.
This ensures a high level of security – also possible thanks to encryption – and a significant risk reduction. To summarize, therefore, we can say that a blockchain is a technology based on a decentralized network with which to manage databases in a distributed way and in which it is possible to trace and exchange everything that has value. It represents an alternative to centralized archives and does not require central control or verification.
How Does Blockchain Work?
As we have seen, a blockchain is a database that acts as a distributed database that functions in all respects as a communication protocol. The data, therefore, is not stored on a single computer but on several different machines – called nodes – connected to each other. More specifically, the blockchain stores transactions – tangible as a product or intangible if they are intellectual property – validated in blocks where all the necessary and desired information is recorded. These blocks are linked, forming a data chain, and the owner changes when an asset moves from one block to the next. The blocks are uniquely identified to create links with the previous unions through the identification, and the sequence and time of the transactions are always attested.
It is impossible to insert a block between two existing blocks: the chains are irreversible, and indeed, each additional partnership reinforces the previous one, reducing the risk of exposing oneself to malicious people. The blockchain, therefore, allows accessible data to be distributed among the participants and shared; it will enable it to manage its updating automatically and benefits from the collaboration between all the users involved in the network. Each node must also confirm the operations performed through cryptographic software that verifies the data packets.
The Components Of A Blockchain
What are the elements that make up a blockchain? Here are the main ones:
- Blocks: are a set of transactions grouped to be verified, approved and archived by all participants in the blockchain.
- Nodes are the participants’ servers that make up the network by connecting to each other.
- Transactions: these are the exchanged data stored in the blocks and must be validated, approved and archived. They are related by a timestamp called Timestamp.
- Ledger: is a public register where transactions are recorded, ensuring transparency and traceability. The data is immutable and entered in an orderly and sequential manner. Each log is made up of blocks chained together thanks to encryption techniques and the use of hashes.
- Hash: is a non-invertible algorithmic function that allows you to map an alphanumeric string of variable length into a single line with a specific size. The hash identifies each block safely and without the possibility of error, allows you to determine the previous blocks, binds the blocks together and prevents you from returning to the text from which it was generated.
The Concept Of The New Internet
The blockchain has the particularity of introducing concepts entirely unrelated to digital transformation, focusing on the principles of sharing, transparency, collaboration, trust and responsibility. But that’s not all: the blockchain is often placed alongside the Internet of People, an innovative phenomenon that involves people and processes in the network. For this reason, it is reductive to consider the blockchain as a simple set of technologies. Still, it is correct to consider it the symbol of a new Internet generation. It is, in effect, a New Internet that represents the Internet of Transactions and is characterized by seven specific values:
All The Main Advantages
By relying on a blockchain, the advantages you can count on are:
- Trust: Blockchain data is only accessible to authorized network participants. The information, therefore, remains confidential and shared only with other members and is always accurate and timely.
- Security: each member of the blockchain is asked for consent on the accuracy of the data, and transactions are recorded immutably without the possibility of modification. Even administrators cannot delete a validated transaction.
- Efficiency: you can automatically store an intelligent contract – called a smart contract – that speeds up transactions, and you can eliminate record reconciliations that become unnecessary thanks to the distributed ledger.
- Reliability: the network is decentralized, and each participant can control the entire chain, making the system more secure and reducing the risk of intrusion by malicious people.
- Transparency: transactions are always visible to all blockchain members, ensuring maximum operations transparency.
- Convenience: Unlike conventional transactions, users outside the network, such as banks or other organizations, do not intervene.
- Solidity: the data in the blockchain is immutable, thus becoming more solid and reliable.
- Digitality: in a blockchain, every element is virtualized, and the application areas become innumerable.
The Most Important Fields Of Application
Thanks to the high level of virtualization that characterizes the blockchain, the application fields in which this technology can be implemented are numerous. Among the most important are the following:
- Cryptocurrencies are digital currencies created through a system of codes and independent of any banking or government system. They work virtually and leverage encrypted cryptographic transactions to ensure security. It is where the blockchain is most used, so much so that the two concepts are almost always automatically associated.
- Finance And Insurance: in the world of digital finance, blockchain is excellent for managing payments and financial documents, ensuring traceability, simplifying identification processes and improving the exchange of financial securities.
- Marketing: thanks to blockchain technology, users can be actively involved in the advertising chain, promote crowdsourcing activities, identify fake news and better manage intellectual property.
- Health: It becomes easier for patients to have complete control over their health information through verifiable consent. Furthermore, clinical data can be aggregated, replicated and distributed among researchers and professionals, ensuring total traceability.
How Much Does It Cost To Build A Blockchain?
The cost and investments required to create a blockchain depend on various factors, including the type of blockchain you are interested in, the complexity, the resources involved, the desired platform and other technological components. Processes are also crucial because they imply that part of the budget is diverted to consulting, design, development and quality assurance. In particular, project management is of great importance because to keep track of progress; it is necessary to use specific software that must be implemented in addition to the blockchain.
Added to this is the need to ensure quality code for each developer to write and check in a common repository through an automated process: to do this correctly, it is necessary to use additional tools that affect the total costs. Finally, it must be considered that the blockchain is a new technology and updates are released annually, which is why maintenance can be expensive but essential for the project’s success.