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 Bitcoin is the tip of the iceberg of this technology. However, for this cryptocurrency to exist requires the existence of Blockchain, and not everyone knows what it is, nor is it 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 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.

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

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

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 impacts.

Hence, to define Blockchain, 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 essential to know why it arises and what problem it intends to unroot.

Internet: Centralization of power in a few mediators

Please think of the Internet, which revolutionized many aspects of our lives and brought 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 as virtual empires and centralized power.

These control the information of our data and are in charge of vast communities of people (think of Facebook and its more than 2 billion users). These companies know who we are, control what we read, and are mediators in everything we do through the platform, threatening many 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 we have intermediaries, not by chance, mainly due to the need to build trust in the Internet. When we purchase through Amazon, we do not trust the person to whom we are buying, as we trust Amazon. The intermediary company gives us security; it is an entity we can trust and to whom we can claim in case of an inconvenience.

When we pay in cash, that is, offline, the physical object (banknote/coins) gives confidence, even if it is a person you do not know. We do not need to know the other person or have an intermediary 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 thing that can not be duplicated.

However, two conflicts arise if we want to make a remote transfer through the Internet. 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 that they can be copied infinitely, so that, by their property, we could give the same ticket to many people, as the traditional Internet 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 is the digital banks, which must keep records and control how much money each person has at each moment, and if a person pays an amount to someone else, they stop having that amount. 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. We go from a centralized logic, where someone controls all the information, to a distributed one, where the data 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 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 lets you 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 online payment.

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

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Hence, we can think of how blockchain has the potInterneto 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 it, only the people will be able to regain the power of their information.

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