Understanding the Blockchain Technology
When we talk about blockchain technology, many people wonder what it is. Indeed, this is a new technological revolution that the financiers are constantly talking about. In the midst of a boom since its inception, this technology is likely to radically change economic exchanges in the future. But, in the meantime, it is important for everyone, financial or not, to know what a blockchain is. This is what we propose to see in this article.
What is the blockchain?
First introduced in 2008 with bitcoin, the blockchain is now a great help to financial transactions. It is indeed a technology that can store and transmit digital currencies. It operates without a central control body but allows exchanges to be seamless and in the most secure way. It will be said that a blockchain is a database. It can perfectly contain the history of all transactions that have been made between its users since its creation.
Generally, a blockchain can be either private or public. In the first case, its use is limited to certain numbers of actors. They are the only ones who can access it thanks to the bitcoin address they share. This is the case when you use it to buy bitcoin for example. Moreover, you will soon be able to buy Bitcoin with Paypal.
But, when it comes to a public blockchain, everyone can access it. It is then compared to a very large anonymous account book whose transactions cannot be falsified.
How it works ?
Whether public or private, a blockchain necessarily works with bitcoin or other programmable currency. So you can understand that the two terms do not mean the same thing.
In this case, transactions between two network users are grouped into blocks. Each block is actually made valid by miners of the network that are the nodes. The operating mode sometimes varies depending on whether you are using a private or public blockchain.
When you validate a block in your network, the time and date of the operation are automatically added to the blockchain. In this way, the exchange is made visible to all users of the network. Remember however that the execution time of the transaction may also vary depending on your blockchain.
What is the interest of the blockchain?
The usefulness of the blockchain is still dark in the eyes of some. However, it represents a true revolution whose time will spread all its benefits. Indeed, the fields of exploitation of this technology are immense. These include:
- insurance companies
- land titles
- pharmaceutical industries
- social networks
Overall, blockchains could replace most central “trusted third parties” with distributed computing systems. This will be a way to secure financial exchanges. But, this means of security can at the same time constitute risks for certain sectors.
For the bank, for example, the blockchain is both an opportunity and a threat. Indeed, it offers a more secure register and eliminates any recourse to intermediaries in financial transactions. In this way, it directly poses great competition to the activity of swingers and banks.
On the other hand, the blockchain makes it possible to reduce considerably the costs of the financial exchanges. Users will also be able to better secure their registers. As for the banks, there will be an automation of all the back office functions. In this way, there will be a considerable gain on the transaction time. Similarly, the history of interbank transactions can be made public for rights holders. Thus, investors and regulators can better control the risk of exposure of banks.