How does it work?
The operation of blockchain technology sounds complicated for those who are not experts in the world of cryptofinance and computer software, yet it is destined to have a great impact in the future
What is blockchain? You have probably heard this term before, but you may not really know what this complex technology consists of. Born on the web, blockchain is based on the ideas of collaborative economy and aims to create a global database that does not require an external regulator.
This is how the independent financial community Rankia explains it, having created a cryptocurrency manual detailing how this technology works and the services it can offer users both now and in the future.
The blockchain, or “chain of blocks” in Spanish, is a digital technology whose goal is to guarantee “the truthfulness of operations over the internet,” emphasizes Fundeu.
For Rankia, blockchain is an “intelligent arbitration system” that grants “validity and trust” to all transactions between individuals so that an external regulator “imposed by the system” is not necessary, neither governments, nor ministries, nor large corporations.
How does blockchain work?
The Spanish company Bit2me, dedicated to buying and selling Bitcoins worldwide, explains it like this:
“Imagine you are walking down the street and suddenly a flying meerkat of gargantuan proportions lands in a square full of people, eats all the ice creams of the children there, lets out two huge screams, and leaves just as it came. Without wasting a second, a lie detector is placed on the 1,000 people who witnessed it and exactly what they saw is recorded. Everyone tells the same story with identical details. Would there be any doubt about the landing of the flying meerkat?”
With this simple story, the company uses a metaphor so that the “flying meerkat” can be understood as any file or database shared by the computers of a blockchain network. That network of connected computers will validate the information, since if the number 1 is sent to the network made up of—for example—1,000 computers, all will store the information 1.
How does blockchain technology work?
But if someone tries to change the number and put, for example, 0, an arbitration system based on game theory would make the remaining 999 computers tell the changed computer that it is wrong and that the information is 1, causing the changed computer to give the correct information again, that is, 1.
This system thus becomes hard to hack, since it would be necessary to “change the mind” of all 1,000 computers, concludes Rankia, while emphasizing that there are transactions validated by more than 40,000 nodes.
This process of “distributed consensus” would be carried out without compromising the privacy of users or the computers connected to the network.
Furthermore, the chain of blocks is the technology that enables cryptocurrencies (bitcoins, Ethereum, or Litecoin).
Applications of blockchain
Although most experts agree on the importance of blockchain, its real applications in the market are still in their early stages.
How does blockchain technology work?
The “most immediate” possibilities, in fact, lie in financial transactions, document certification, digital identity, and cybersecurity, point out Rankia.
And in the near future, it is already being applied to processes such as the traceability of objects and people, intellectual property, and virtual banks.
Alastria Network
The Alastria blockchain network
This network is an example of a blockchain network born with the idea of speeding up the creation of digital ecosystems by providing a common collaborative platform.
The Alastria Network is defined as a non-profit multisector consortium; it is promoted by companies and institutions to establish a semi-public permissioned Blockchain network.
Additionally, it guarantees the identity of participants and the “indelible” record of operations carried out on it, which allows offering and receiving services with “legal effectiveness in the Spanish realm and in accordance with European regulation,” explain the promoters.
It is open to all actors, from small and medium-sized enterprises to large corporations from all sectors in Spain, and is made up of nodes hosted by various participants.
We do not know exactly which paths blockchain technology will follow, but projects like the Alastria Network are a sign of how a network will be built to serve as a base to apply its benefits of privacy and transparency.
