What is a blockchain and how does it work?

What is Blockchain

Blockchain definition

Simply put, a blockchain is a special kind of database. The term blockchain refers to the entire network of distributed ledger technologies.

As its name indicates, 'blockchain' is a chain of blocks, which contain encrypted information of a transaction on the network. And, being intertwined (hence the word chain), they allow the transfer of data (or value) with fairly secure encryption through the use of cryptography. To illustrate this idea, it would be convenient to imagine an accounting book where all the inflows and outflows of money are recorded.

What is truly novel is that the transfer does not require a third party to certify the information, but rather it is distributed among multiple independent and equal nodes that examine and validate it without the need for them to know each other. Once entered, the information cannot be deleted, only new information can be added, since the blocks are connected to each other through cryptographic encryption, so modifying data from a block prior to the chain is impossible, since you would have to modify the information in the previous blocks.

What applications does it have?

Blockchain technology has transformed processes in different economic, scientific and other sectors. In fact, there are platforms that use blockchain technology to make the supply chain of the products we consume visible, managing to follow the path that food travels from when it leaves a crop until it reaches our table.

Electoral processes can also benefit from blockchain technology, since the use of decentralized accounting for vote counting can be a good option to fill the gaps in existing auditing systems in elections. In Colombia, the possibility of using this type of technology to systematize property titles or validate studies abroad has been studied.

How did it come about?

Three elements influenced the emergence and rise of the blockchain. The first is the loss of trust, since any intermediary between two people occurs due to a lack of trust between the parties involved, who need a third party to carry out any transaction or transfer of value. Indeed, Satoshi Nakamoto talks about this aspect, in the 'Bitcoin White Card' that would start the use of cryptocurrencies: the first case -and best known until now- of the use of 'blockchain' technology.

Secondly, the birth promoted by the 'cyberpunks' was also a relevant fact for the birth of 'blockchain'. Due to the lack of privacy and insecure communications, in addition to the liberation of asymmetric encryption thanks to the first widely used encryption 'software', the movement was created that defends freedom of expression and resistance against the loss of privacy of the user in the digital age.

Finally, considered the key element of the 'blockchain' technology, cryptography helps the information shared, in the aforementioned chain of blocks, appeared in encrypted format by large computer networks, to protect it more effectively.