What is the blockchain? You’ve heard this word a lot in recent months, but you’re still not sure what they’re talking about, well, the chain of blocks poses a huge revolution not only in our economy, but in all kinds of areas.
Understanding what the blockchain is is not that difficult, and given that this concept is being used more and more, we wanted to explain what it is, how it works and what is the revolution that the chain of blocks poses.
Goodbye, to the banks as intermediaries
Let’s sit down, the normal thing is that if a person named Paco wanted to send 1,000 euros to another person called, for example, Maria, it is normal for the operation to be done through a bank. This bank acts as an intermediary of this and many other transactions </ strong>, effectively centralizing the movement of capital from one side to the other.
Paco would ask his bank to withdraw 1,000 euros from his account and transfer them to Maria’s account: in just a few hours (depending on the bank, of course) that bank will have written down the transaction in his account, subtracting 1,000 euros from his account and communicating to the other bank that you must add 1,000 euros to Maria’s account. Someone in María’s bank (at this point, we already know that someone is a computer program) will note that in María’s account there are 1,000 euros more coming from Paco’s bank account.
This management has not required a transfer of banknotes from one place to another, but there have simply been one or two banks that have been responsible for making the money pass from one to another with a simple change in the balance sheets of your accounts </ strong>. Everything great and fantastic, except for one problem:
That neither Paco nor María have any control over the process, of which only those banks have all the information. Both depend on those banks and their way of doing things to complete that transaction. They are subject to their conditions (and their commissions, of course).
What will happen to the Blockchain? </ h2>
That’s where the chain of blocks comes in, which basically eliminates intermediaries </ strong>, decentralizing all the management controlled by the banks. With the chain of blocks, the control passes to the users </ strong>, and it is they who become part of a huge bank with thousands, millions of nodes, each of which becomes a participant and manager of the bank account books.
These nodes (users), which must be several who are responsible for verifying those transactions to validate them, are linked and encrypted to protect the security and privacy of transactions. It is, in other words, a distributed and secure database (thanks to encryption) that can be applied to all types of transactions that do not necessarily have to be economic </ strong>.
How a transaction works in the block chain </ h2>
The process is relatively simple, but as we say it involves more people. Now Paco and Maria are not alone, and will be part of a large group of users (nodes) </ strong> who are responsible for checking that the entire process occurs as it should occur.
For example, if Paco wants to withdraw a bitcoin from his account to give it to María, he first tells everyone anonymously: nobody knows that Paco is Paco and that María is María. They only know that from a digital portfolio (what would be a bank account) you want to transfer that amount (which is known) to another.
Paco, therefore, warns of his intentions, but without revealing his identity: “Hello nodes, I want to send a bitcoin from my portfolio to this other, please update your account books!”. When sending that message, all the users of that network first check that Paco, the originating portfolio, has enough money to send it to the destination portfolio. If so, they all write down that transaction </ strong>, which happens to be completed and to be part of the transaction block. That’s right: they are not yet registered in that database in a definitive way.
In any case, with the use of a common block chain that is synchronized between the nodes, the irreversibility of transactions is achieved, which allows no one to “trick” the system or make frauds </ strong> to benefit.
As the process progresses, more and more transactions are completed and passed to that block, which has a limited capacity that depends on the structure of the block chain and the volume of each transaction. When a block no longer supports transactions, there comes an important moment: that of “validate” or “seal” </ strong>, which is what users do when doing bitcoin mining.
That account book is no longer just distributed and safe: the linked blocks have a hash (encoded) pointer that links to the previous block, plus a timestamp and transaction data, and that information is public. What does that mean? That the chain of blocks, although it protects the privacy of its users, yes that allows to control totally the trazabilidad </ strong> of those transactions.
Or what is the same: it allows to know all the way that the bitcoin of the portfolio that belongs to someone has followed (in this case to Paco, although his identity is not known by the rest of users) before arriving at the portfolio of another someone (from María, although her identity is not known by the other users).
Now, imagine the applications that can be transferred to different sectors, not only the economic ones.