What is blockchain?

The first implementation of blockchain as the underlying technology of Bitcoin has led many to associate blockchain with Bitcoin. However, the potential use of blockchain goes far beyond the world of cryptocurrencies. For some it is a technology that will change our lives, while it is a dream for others; no technology has released so much discussion since the advent of the internet. Despite the many headlines on blockchain, however, technology remains difficult to grasp for many.

A blockchain is a decentralized, distributed record or 'ledger' of transactions in which the transactions are stored in a permanent and almost invariable manner using cryptographic techniques. Unlike traditional databases, which are managed by a central entity, blockchain rely on a peer- to - peer network that no party can control. Authentication of transactions is achieved by means of cryptographic means and a mathematical 'consensus protocol' which determines the rules by which the general ledger is updated, so that participants can work together without any particular trust without being dependent on a single trusted third party. So, blockchain is, as The Economist calls it, a 'trust machine'. Participants in a blockchain can open and check the general ledger at any time.

What is decentralized?

Blockchain is decentralized. This means that the data is not stored in one place but in several places. With a public blockchain, everyone can save and control this data by downloading a software. You then become a so-called 'node', or components in the network with the task of checking and keeping track of the general ledger. In addition to full transparency, this also makes it more difficult for hackers to adjust data, for example. There is no so-called single point of failure. This is because each node has a copy of the ledger, for example the hacker changed data on one node, the data no longer matches the data on the other nodes and shut your ‘’computer’’. Moreover, it sometimes happens that central systems are offline, this can have several reasons. With a decentralized system, this is virtually impossible, if one node fails, the rest will continue to work. The applications of blockchain are extremely wide and new applications are being developed every day. The invention of blockchain is compared with the invention of the internet.

Different Blockchains

There are different ways to categorize blockchain. Blockchains are often classified as public (no specific entity manages the platform), private (the platform is controlled by one entity) or managed by a consortium of organizations . Another frequently used classification is permission-less (the blockchain is open to everyone - the most famous example is the Bitcoin network) or authorization (restrictions may be imposed on who can read and/or write on the blockchain). There are in practice many variants of blockchains, depending on the intended purposes .

Public Blockchain

Private Blockchain

Features Blockchain Technology

• A decentralized, distributed and transparent architecture of trust: information added to the blockchain is immediately visible to all participants in the network and distributed - that is, each peer maintains a full copy of the data, and updates, if present, are shared with the entire network without anyone having to trust a single central third party. Blockchain ensures immediate transparency - although in the case of consenting blockchains trust is more centralized and the readability of some information can be restricted to participants with permission to better align with the objectives of the blockchain. 

• Security, immutability and traceability: the simultaneous use of different cryptographic techniques and the decentralized and distributed nature of blockchain platforms make such platforms highly resistant to attack compared to traditional databases.

• The unchanging nature of blockchain makes it possible to easily verify products and documents - however, it is important to note that while blockchain can help prevent fraud in the general ledger, the manipulation resistance of the technology can not prevent false information in the ledger is entered. 

• Automation: to describe the use of smart contracts, as self-executing computer programs, for example, allows automating processes and payments, thereby increasing efficiency.