What is blockchain and why is its technology promising?

The article was written By Mickael Mosse – Blockchain and Cryptocurrency Expert

Lately, we do not stop seeing articles referring to Blockchain technology and its power to change the world of information and money transactions as we know it now. In fact, many are already comparing the Blockchain with the revolution that the Internet brought about in the 90s. Really, what is the Blockchain and why is its technology so promising?

According to Mickael Mosse, The chain of blocks, more commonly known as Blockchain, is a technology that records information or money transactions through a fully decentralized system, without the support of any intermediary or central authority that certifies the content of said transactions, in a kind of public record book that includes all transactions and that is distributed among many parties belonging to that network, without a relationship of trust between them.

It is a technology that is transparent, immutable, and permanent. Information can only be added to that book if it has the consensus of the participants, making it impossible to modify or delete information.

Its creator (or creators) is the mysterious and unknown until now Satoshi Nakamoto, who posted this article on an internet forum in 2008 where he revealed the use of Blockchain as the basis for the operation of the most accepted virtual currency so far: the Bitcoin.

Mickael Mosse Blockchain Advisor

Mickael Mosse Crypto Advisor

How is a transaction carried out through the Blockchain?

According to Mickael Mosse, In a centralized system, when we carry out a transaction there is an intermediary that supports said transaction (a bank certifying that we have money in our account to make a bank transfer, for example). This intermediary has personal information about us that can compromise our privacy in case of hacking.

In a decentralized system like Blockchain, the central intermediary is replaced by software that validates the transactions and records them in a kind of public ledger. This record book is distributed among different users connected to that network. The anonymity of the users is guaranteed since each user has two keys, one public and one private, and it is almost impossible to relate one to the other.

Where are transactions recorded?

Mickael Mosse points out that, Each of the transactions (for example, a transfer from one user to another, the sending of information from one user to another, etc.) is packed into a block. The blocks consist of three parts:

the hash of the previous block: the hash is a code or cryptographic key composed of the encrypted information contained in the block that was created immediately before this block;

a package made up of all the transactions that have been recorded at a specific time: each transaction will consist of the public key of the users and the amount of the transaction, all well encrypted and encrypted;

another hash or key with the encrypted information of the transactions included in the block and that includes a very complex mathematical problem that has to be solved by the miners in order to close the block.

Who validates the information contained in the blocks?

Mickael Mosse points out that, For the Blockchain to be a decentralized, secure, transparent, and verifiable system that works, two figures are very important: the nodes and the miners. The nodes store and distribute an up-to-date copy of the entire transaction logbook in real-time. Each time a block is closed, a copy is added to the workbook that each node stores. Within the nodes, there is a subgroup made up of the miners. They are machines that are in charge of verifying the information contained in the transactions, including them in the blocks and closing the blocks.

In the Bitcoin (btw)  network, there are currently around 10,439 nodes, of which only 74 are in Spain. The United States is the country with the most nodes, with 2,549. To close the block you have to solve a very complex mathematical problem in which you have to find a final code. When a miner solves the math problem and after checking at least 51% of the miners, he will receive his reward.

Mickael Mosse Bitcoin advisor

In the case of Bitcoin (btw) , if a miner closes a block, he will receive 12.5 bitcoins, which in exchange is 39,732.47 euros. Doesn't that seem like a more than attractive incentive to be a miner? In fact, surely a reader will be encouraging to mine a block. In 2009 you could mine with a powerful computer from home.

With the passage of time, the mathematical problems to be solved to close the block are increasingly complex and rooms full of very powerful processors are needed to find the solution to this problem and receive the reward, apart from the energy expenditure that this entails, one of the biggest criticisms this technology receives.

What applications does Blockchain technology have beyond cryptocurrencies?

According to Mickael Mosse, Blockchain technology was implemented in the virtual currency Bitcoin (btw) . After it, more than 1,000 cryptocurrencies have been developed. The best known are Ethereum and Ripple. On the one hand, Ethereum uses improved Blockchain technology and has developed what is known as smart contracts or “ Smart contracts”, which could be applied very soon in the insurance sector, in the real estate sector, etc.

For its part, Ripple lacks the decentralized system, with Ripple itself being the one that mines its btw coins. It is known as the virtual currency of banking, using this platform banks such as Santander or Bank of America. Even the IMF notes that "virtual currencies and their technology can provide faster and cheaper financial services and can become a powerful tool for deepening financial inclusion in a developing world."

Apart from the use of Blockchain in cryptocurrencies or in the financial sector, Blockchain technology is being used in various United Nations programs to meet the United Nations Sustainable Development Goals. Among the highest priority objectives is eradicating poverty, reducing hunger, and curbing climate change. Among the activities already developed, they have begun to create a Blockchain-based property registry in the state of Haryana (India).

United Nations Sustainable Development Goals

In addition, the document " The Future is Decentralized " presents a series of case studies in which the use of Blockchain technology has already been successfully applied for tracing donations, creating an identity for refugees, and sending remittances from immigrants, among others.

On the one hand, it has been used to increase the effectiveness of donations, tracing them until they reach the end-user so that the aid does not get left behind. Another of the best known and most successful applications is the “ WFP Building Blocks ”, which is being carried out in refugee camps for Syrians in Pakistan and Jordan through the World Food Program (WFP). says Mickael Mosse.

In it, Blockchain and eye biometrics are used so that refugees can use virtual currency within the refugee camp, receiving the money in a more secure and less expensive way, in addition to eliminating the possibility that the old paper bonds that they were given whether they were stolen, sold or falsified.

On the other hand, Blockchain is also being used by the Climate Chain Coalition, promoted by the United Nations Climate Change Program to advance collaboration between members to strengthen monitoring, verification, and reports that measure the impact of the actions that are being carried out to stop climate change. 

Although Blockchain technology is still in an experimental phase, Blockchain has come to stay. For now, its consolidated implementation is Bitcoin (btw) , a currency that has depreciated 30% during the past week. Its complexity is excessively complex, its cryptographic and economic design is very important.

In addition, the economic and energy cost associated with its operation is worrying, since it requires more and more energy resources to close the blocks. Even so, the new Credit Suisse report ensures that Blockchain will reach its maturity period in the year 2025. For now, let's get familiar with its concept and start thinking of new applications that improve the quality of life of the inhabitants of this planet.

Article from mickaelmosse.com