What Is Blockchain And How Does It Works?
What Is Blockchain And How Does It Works?

We all know very well that people talk a lot about Bitcoin, as the Bitcoin is like the tip of the iceberg of what this technology is. However, for this cryptocurrency to exist requires the existence of Blockchain, and not everyone knows what it is, nor is aware of all the potential it has.

What Is Blockchain And How Does It Works?

You have probably heard someone talking about Blockchain or Bitcoin, and you did not give it much importance. Maybe a friend recommended you to buy cryptocurrencies to make you a millionaire and decided to try your luck, or you were always interested in knowing a little more about all this, but you were procrastinating it.

However, our primary goal with this article is to try to give a glimpse into the potential of this technology that comes to revolutionize the digital world as we know it today. And not only that even many people say that it is a “new generation of the Internet.”

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As we all know very well that people talk a lot about Bitcoin, as the Bitcoin is like the tip of the iceberg of what this technology is. However, for this cryptocurrency to exist requires the existence of Blockchain, and not everyone knows what it is, nor is aware of all the potential it has.

Basically, the Blockchain is the technology behind Bitcoin, but it does not only serve to make this digital currency work, but it can have many more applications and impact.

Hence, to begin to define what Blockchain is about, we can say that it is a distributed database among all the computers that are part of a network. But to understand this in more detail and why it is so revolutionary, it is important to know why it arises and what problem it intends to unroot.

Internet: Centralization of power in a few mediators

Think of the Internet, which came to revolutionize a lot of aspects of our lives and brought a great democratization of knowledge, information, and access. However, if we start thinking, in this new context, new companies emerged that came to monopolize a lot of information and decisions as well.

While before all power was in the hands of the states, now new players like the tech giant Google and the social network giant Facebook are emerging that are virtual empires and also centralize power.

These are in control of the information, of our data, and are in charge of huge communities of people (think of Facebook and its more than 2 billion users). These companies know who we are, they control what we read, they are mediators in everything we do through the platform, threatening a large number of rights, especially privacy.

The same goes for all companies in what is called the collaborative economy, whose goal is to connect people: Uber, for example, connects people with cars, but always with the intermediation of the company, which defines the rules and keeps a commission, not to mention all our private information.

The problem of trust in the Internet

We all know very well that it is not by chance that we have intermediaries and this is due in large part to the need to build trust in the internet. When we make a purchase through Amazon, we do not trust the person to whom we are buying, as we simply trust Amazon. The intermediary company gives us security, it is an entity in whom we can trust, and to whom we can claim in case of having an inconvenience.

When we pay in cash, that is offline, there is confidence given by the physical object (banknote/coins), even if it is a person you do not know. We do not need to know who the other person is, or have an intermediary that we trust, as the object has a value that we all know and share. Hence, the advantages of cash payment are the anonymity and trust given by the object that can not be duplicated.

However, if we want to make a remote transfer, through the Internet, two conflicts arise. First of all, we can not trust the identity of third parties through the Internet without the intervention of an intermediary.

Secondly, bits have as property the fact that they can be copied infinitely, so that, by their property, we could give the same ticket to many people, as in the traditional internet it can not guarantee the scarcity of a digital good.

Before blockchain, the role of intermediaries in the exchange of goods digitally was essential and essential. An example of this is the digital banks, who must keep records and control of how much money each person has at each moment, and that if a person pays an amount to someone else, they stop having that amount of money. Therefore, the payment is made first to the intermediary, and then to the next person. However, this generates a cost of information and high commissions.

Blockchain

As we said before, Blockchain is a distributed database where all the nodes have a record of the information all the time. We go from a centralized logic, where someone controls all the information, to a distributed one, where the information is divided among all the computers. Hence, nobody can monopolize the contents.

Blockchain does not belong to anyone, nobody can modify it by itself. If one of the computers stops working or is hacked, there are all the others to watch over the recorded information.

It is basically known as Blockchain, as it is just a chain of blocks in which the information is stored in a chain in blocks of transactions linked to the previous block through advanced cryptography.

Hence, this allows you to know in which order the transactions were verified. In this way, the registry remains to know that if I transfer a bitcoin, for example, I stop having it and now it belongs to someone else. This solves the problem of bit copying in the online payment.

The Blockchain can be imagined as if it were a large spreadsheet where we can all add columns, but nobody can modify the rows that were already written. If someone wanted to change some data, they would have to hack all the other computers, which is really impossible due to the level of energy they require.

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Hence, we can think of how blockchain has the potential to generate a revolution in the logic that dominates the internet today, dominated by powerful intermediaries who use the personal data of their users. Hence, we should thank this technology, as with this technology only the people will be able to regain the power of their information.

So, what do you think about this? Simply share all your views and thoughts in the comment section below. And if you liked this post then simply do not forget to share this post with your friends and family.



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