Blockchain

The Blockchain is one of the elements that seems the most complex in the constitution of a cryptocurrency. This technology seems rather difficult to complicate at first glance, but this is only an impression. This article offers you a clear explanation of its nature and how it works. Indeed, her understanding is not limited to reading the best book on her. So how does Blockchain work?

The Blockchain: What is it? Definition

What is blockchain? : this is a new technology initiated by Satoshi Nakamoto in 2008. It consists in optimizing the means of storing and transmitting information within different sectors (economy, finance, banking, insurance, etc.).

Furthermore, it allows the exchange of assets possessing value thereby reducing the costs of involving them in the transaction. It also offers great traceability since it contains all the movements executed in a register. Moreover, it is the technology that sits at the center of the decentralized web and decentralized finance or Defi.

For additional information on this concept, you can consult the article blockchain definition.

ISO code explanation

The popularity of cryptos like bitcoin, blockchain technology or block chain. A committee of experts was dispatched to rule on the first standards, but also supporting documents on this technology. The ISO 22739 standard is the one that served as the basis by clarifying the definition of this technology.

Other reports were added later to explain more complex concepts such as the use of smart contracts or smart contracts, the operation of the supply chain or data security.

How Blockchain Technology Works: How Does It Work?

According to the mathematician Jean-Paul Delahaye it is: “ a very large notebook, which everyone can read freely and for free, on which everyone can write, but which is impossible to erase and indestructible ". Here are the different steps retracing the operation of this technology.

• identification phase by means of a cryptographic process;
• validation of the transaction that is sent to a network or storage node of computers around the world;
• a node has the function of hosting a copy of the database of the history of exchanges made by users. The different parties involved will obviously be able to access it simultaneously;
• the implementation of the security system based on the consensus mechanism of all the nodes at each addition of information. The decryption and authentication procedure carried out by data centers or minors (use of the Proof of Work system or proof of work). Once the transaction is validated, it is added to the database as a block. These blocks of data after the storage and transmission of information constitute the chain of blocks;
• the application of the decentralization of the management of the security component. This makes forgery of transactions impossible. Thus, with the historical integration and the tamper-proof character, the presence of a central control body is no longer necessary.

Blockchain's Financial Application Areas

1. Cryptocurrency

In general, cryptos are based on a decentralized network of computers with nodes scattered around the world. And this with copies of all the transactions carried out. Indeed, this network in question is none other than the chain of blocks. It is these nodes, also called blocks, which, once linked and secured, become the solid foundation of all the essence of cryptos.

Other forms of tokens different from cryptos use the blockchain such as NFTs or “Non fungible tokens”.

2. The Exchange Idea

As an asset, crypto can be traded because of its value. It is here that this technology is exploited to the maximum. The storage of information and its transmission take on all their essences here. Indeed, in terms of exchange in the crypto sector with the evolution it is possible to carry out conversions. Indeed, the exchange enabled by the blockchain is not only limited to cryptos between them, but also to traditional currencies.

3 Wallet

The best solution to keep your crypto currencies is the wallet. The wallet serves as a storage and security system for cryptos. There are 2 types of wallets in the sector, namely the online one called hot wallet and the second cold wallet (offline). The opinion of the wallet on the security of the blockchain will depend mainly on the use of your cryptos.

Top Performing Blockchains in Cryptos

1. The Bitcoin Blockchain

As a pioneer, her blockchain served as an inspiration to all those who came after. She put her ideology on the Proof of Work during the mining of the chain of blocks. The performance of the latter allowed him to stand in first place.

2. The Ethereum Blockchain

This crypto, created by Vitalik Buterin, was launched in 2014. Its blockchain stands out from the leading provider due to its ability to create "smart contracts." This innovation focuses primarily on token issuance and direct fundraising via the blockchain.

Blockchain Performance of Bitcoin and Ethereum

Should You Invest in Blockchain?

Blockchain technology is a field that can weigh millions of dollars. The credibility of the blockchain comes from the trust granted by giants like amazon, Google, Microsoft, axa, BNP Paribas, Carrefour, IBM (with IBM food trust), etc. With the great popularity of cryptocurrency which is one of the applications of this technology its future is bright. In addition, the fields of application of this technology are quite numerous (Banking, election, control of the production chain, tracing of goods, etc.). The territory of its use has greatly increased as its establishment in general in Europe or focus in the field of finance in Canada.

The Different Types: Private Blockchain VS Public Blockchain

The Legal Framework of the Blockchain by the Different States

The situation of this technology is not the same throughout the world. Sometimes forbidden, or badly regulated. Here is some example:

1. EU Notice

• May 2016: Creation of a working group in charge of monitoring blockchain and cryptos by the European Parliament.
• February 2018: launch by the European Commission of the observatory-forum for blockchains.

2. Position of France

• December 2015: launch of the initiative on blockchain use cases by Caisse des Dépôts and under the impetus of major financial, institutional and start-up players (BNP Paribas, AXA, Crédit Agricole);
• June 2016: the National Assembly receives a request for amendment referring to the blockchain. This within the framework of the Sapin law on financial transparency and the fight against corruption;
• End of 2017: the Council of Ministers adopts an ordinance to facilitate the transmission of certain (unlisted) financial securities to this technology. This being considered to be the first on the European scene according to Bercy.
• Early 2018: the National Assembly set up an information mission on this technology.
• Year 2018: first work of art backed by the blockchain, but above all the evaluation of the knowledge of this technology on the population.

3. Status in Canada

In Quebec, an accounting firm launched cattallaxy in July 2017. It is a center of expertise on the blockchain, especially that of Bitcoin.

4. Notice in Germany

The first financial transaction executed with blockchain technology on June 28, 2017 between Landesbank Baden-Baden-Württemberg and car manufacturer Daimler AG71.

5. Position of ASIA

A consortium made up of the Monetary Authority of Singapore or MAS, along with eight other banks formed a platform project in November 2016. It was based on the idea of ​​decentralized digital transactions. Banks will be able via MAS to buy cryptos thanks to its control. These currencies can be exchanged for traditional currencies or used for interbank payments.

The A'svantages of this Technology

1. Great Speed ​​of Execution

This new technology offers great speed in terms of transactions. This extended high-speed validation of a block that only takes a very short time, between seconds or minutes. Thus, by coupling the blockchain to a payment method such as PayPal or MasterCard, the transaction speed is all the faster.

2. Strengthening Security

It offers a high level of security in the use of the system network. This security comes in particular from the validation which is carried out by a different user at each exchange of possession of the asset. Thus, we manage to stem the various attempts at falsification or other bad intentions. Indeed, system monitoring through nodes and mutual control are the pillars of this enhanced security.

3. Maneuverability and Adaptability

This technology makes it very easy to trace the various exchanges of the good. Example: in the event of a dispute before the court, the judge can rely on it and use it as evidence for the basis of his judgment. But this traceability can also apply to monitoring the evolution of a product. This is what led to his involvement in blockchain companies like Mcafee, Uber, Walmart, Fedex, BMW, Bosch, fintech, Unicef, Ubisoft, Vodafone, UPS, Baidu, Kodak…etc.

4. Means of Certification

As a means of certification of a company, for its product. Just as the introduction of the electronic signature did when it entered the sector, this new technology will revolutionize certification. Indeed, the fact that it cannot be modified makes it unfalsifiable.

5. Strong Gain in Productivity and Efficiency

It also offers access to a huge gain in productivity, but also in efficiency. This is the direct consequence of the organization of exchanges under the directive of a computer protocol. Thus, there is a mechanical reduction in the costs linked to the transaction, but also freeing itself from the centralization visible in traditional systems. The intermediate users of the chain ensure the validity of the whole.

6. New Decentralized Virtual Economic System

The establishment of a new, totally decentralized digital economy. This technology offers the possibility of freeing oneself from the strong centralization of the web. Indeed, the constraints imposed by giants such as Google or Bing, but also IOS or Android supports. It allows cryptocurrency to serve start-ups indeed offers various possibilities such as crowdfunding to start.

Disadvantages of Blockchain

1. High energy voracity

One of the major issues that have been raised regarding blockchain is ecology. Indeed, its energy consumption is very high. We can cite the example of the energy voracity of the transaction verification system in the blockchain of the BTC wallet as an example. This being in particular because of the verification with the PoW (Proof of Work).

Indeed, it is the escalation of security that is the cause of this excessive use. Certainly, the bigger it is like that of the bitcoin exchange the greater the environmental impact. Note that it is this reason that prompted Elon Musk to withdraw from the use of the Tesla company.

2. Absence of a Regulation on the Matter

The second problem linked to this technology is its direct application, namely crypto currencies. Indeed, the latter are not subject to any regulation, which opens the way to many risks. The recent example that we can take is that of the Onecoin crypto which was actually a Ponzi scheme. In addition, the security of the blockchain is far from being inviolable as proven by the various hacks.

3. Complexity of its Apprehension

The function of the blockchain is quite hard to understand for end users. Indeed, its complexity is a huge obstacle to the access of the general public. Its intangibility makes it an abstract concept that is difficult to understand. Added to this is a drip training in this area.

The Impact of the Block Network on the World of Investment

Blockchain is considered the third big new technology. It has brought great innovation in the field of finance and investment. Its high level of security and therefore the impossibility of falsification makes it a tool of choice in this sector. Fintechs being the pioneers in the use of this technology.

Thus, the digital summit set up by KPMG as a partner of the Paris Blockchain Week Summit. This demonstrates a little more the extent reached by the blockchain in the world.

Applying Satochi Nakamoto's Technology to the Real World

1. Within the Banking Framework

This technology offers the possibility of validating transactions without the intervention of a clearing house. Thus, the certification of operations will only require a much shorter period. In addition, it also helps to promote the sharing of different information for competing players in finance. All this while respecting the secrecy of commercial data. And finally, to reduce contact costs and other administrative costs, by facilitating the management of common instruments. But the real innovation is undoubtedly the transaction via technology crypto currencies like Bitcoin.

2. In the Security Field: Insurance

The contribution in terms of insurance takes place, for example, in the automation of reimbursement procedures. But also through the reduction of a number of formalities for the customer, but also for the company. Obviously, all this subject to assumptions or conditions of compensation, but above all that the damage in question is actually established.

3. As part of Logistics

In the field of logistics, two interests are raised by this technology. The first being the possibility of tracing products much more easily by going up the chain of the different blocks. Thus, monitoring from production to distribution is much simpler. The second being the reduction of formalities and allowing better cooperation within the sector of activity. The food industry seems to be a good application.

4. The Energy Domain

With regard to energy, the contribution of this technology is focused on the exchange of services and values, and this without going through a centralized management body. In short, this technology makes it possible to bring a certain fluidity to the supply network. This is made possible by working even on a fairly large scale by managing to balance supply and demand.

5. The Domain of Politics

Electronic voting for elections is a very promising option. Indeed, with globalization the limits of territories are open. And many citizens of certain countries have found themselves far from their legal residence on their territory. However, their Rights and Obligations towards their respective States remain in force although he is abroad. Thus, they in no way lose their right to vote, however exercising it via conventional means is not effective. Moreover, the use of e-mail undermines the secrecy of the vote. It is therefore almost natural that this technology finds its application there. Indeed, with this process the vote is encrypted, transferred quickly and cannot be falsified.

Recap: What to Remember About This Blockchain Technology

It is an IT infrastructure taking the form of an accounting book. Its main function being in the context of the storage and transmission of data. Regarding its application framework, it basically serves as a support for the cryptocurrency asset, in order to promote the Defi. And the main ideologies it defends are immutability and decentralization.

The fact that it is still recent is the biggest criticism leveled at it given that adjustments are still necessary. However, the performances that she has been able to demonstrate currently are more than encouraging. All this leads us to believe that its future is quite promising with its application with cryptocurrency.

How Does Blockchain Work?

In the blockchain, all transactions are grouped together in the form of blocks. Each block must then be validated by the network nodes using an algorithmic method. Once the block is validated, it is added to the blockchain and therefore becomes visible to all users.

Where is the Blockchain located?

It is the underlying architecture. If blockchain and bitcoin were built together, today many players (companies, governments, etc.) are considering the use of this technology for other cases than digital currency.

How to Implement a Blockchain Project in 5 Steps?

❔Who Uses Blockchain?

Unsurprisingly, there are a good number of American and Chinese companies there. Few European companies come to populate the ranking, however we note a few familiar names such as Credit Suisse, or Nestlé, which has started to use the IBM Food Trust's blockchain solution.

What is Blockchain Technology?

The blockchain is a shared, immutable ledger for recording transactions, tracking assets, and building trust. Find out why companies around the world are adopting it.