Blockchain is the mechanism behind Bitcoin and other virtual currencies. With the rise in the value of cryptocurrencies, interest in technology has grown in recent years what? how it works? but most people probably didn?t realize its possibilities. Able to verify and preserve transactions in a shared high security record, the tool can be used in health, Interenet of Things and even to fight fake news.
Blockchains are still very recent and somewhat complicated, but experts have significant expectations for their role in the future of the Internet. Check out five facts to understand technology and its potential below.
Blockchain technology goes beyond Bitcoin transactions Photo: Davidstankiewicz / Wikipedia Creative Commmons
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1. an extremely secure mechanism
Blockchain is a powerful security feature. The technology can be defined as a digital public record in which transactions are carried out, verified and kept permanently. Its main function is to validate transactions, whether financial or not. The exchange data is saved within cryptographic blocks connected hierarchically, creating a chain of blocks.
Thus, it is possible to track and verify all transactions already made. Each time a transaction is made, it is marked with information on who and when it was made. These data and the transaction are transmitted to a previous global and interconnected network, if there is a consensus between the participating computers.
Once a transaction is certified by this network and saved, it can never be modified again. as if each block carries its own digital signature plus that of the previous block, which generates the current characteristic. This process, which is fundamental for security, allows the validation of all transactions in an interdependent manner.
When a transaction takes place, its details are encrypted and a kind of address is generated. this address can be seen by the entire network, confirming the existence of the transaction, but only those involved can view its details.
To date, there is no news of blockchain hacking. Many experts consider this architecture to be the most secure electronic system today. For a breach to occur, the hacker would need access to all machines connected to the network worldwide at the same time.
Decentralized blockchain and cannot be traced Photo: Jaume de Oleza / Wikipedia Creative Commons
2. Decentralization is a key point
The distribution of transaction information between multiple computers is based on the blockchain. This inherent decentralization enables security and independence, as there is no administrator or superior who has all the power and responsibility. In fact, control is in the hands of users collectively. it is a transformation in the way we make money transfers or make contracts, for example, since transactions are secured without depending on traditional institutions, such as banks and government agencies.
3. Blockchain is not just about cryptocurrencies
The technology has a common origin in Bitcoin. It was created in 2008 by the mysterious Satoshi Nakamoto as the basis of the most popular cryptocurrency. However, the potential of blockchain was soon realized and it started to be applied for other purposes. Basically any business or organization that needs some kind of secure transaction verification can benefit from a blockchain-based system.
In addition to financial services, a wide variety of sectors are embarking on the novelty: journalism, law, health, energy industry, real estate, Internet of things, NGOs. The ability to guarantee a type of digital identity, for example, can be useful for medical records or copyright issues. Land and property titles can be handled more securely. Every penny of charitable donations can be found out.
The press, which is going through an economic and credibility crisis, is already experimenting with ways of financing and evaluating newspaper content through blockchain. In a world full of appliances, vehicles and other intelligent objects, technology can certify the authenticity of the information transmitted. These are just a few examples of the changes that blockchain is capable of bringing to everyday life.
4. There are public and private blockchains
Blockchains can be divided into two categories: public and private. The difference between the groups is in who is allowed to participate in the network, execute the consensus protocol to certify the transactions and preserve the shared record. In public networks, anyone can participate. There is usually some incentive mechanism to encourage new members. The biggest example is Bitcoin. An open and huge blockchain like this demands complex data processing, which requires high computational capacity.
Bitcoin is the largest public blockchain in the world Photo: Disclosure / Bitcoin
J a private blockchain restricted to invited or authorized persons. The entry needs to be validated by the person who started the chain or by rules predetermined by him. After an entity joins the network, it becomes part of the decentralized maintenance of the blockchain. This system can be used, for example, by employees of a company or members of an organization.
5. It can revolutionize the structures of the Internet
We have already seen that blockchain has multiple functions and affects various sectors. But do you know how and why this can be so important? Major technology enthusiasts believe it will be a historic breakthrough in software architecture. The promise lies in the power that these distributed trust networks have to change the foundations of the Internet, returning the online world to the most decentralized and egalitarian system it has ever been.
The idea is that this could be an outlet for those who are considered current digital problems: the monopolies of corporations like Facebook or Google, the corrosive incentives of online advertising and the misinformation spread over social networks. Today, the Internet can be understood as two fundamentally different structures, one functioning on top of the other, as layers.
The former is formed by software protocols created in the 1970s and 1980s that serve as a common language for communication between computers. They go unnoticed by users, but there are protocols to manage the raw flow of data, to send e-mails, to define the addresses of the pages. All are open and free, do not belong to a person or company.
On top, comes the second layer, composed of services supported on the web that have emerged and grown in the past decades Google, Facebook, Amazon, Twitter. Since the mid-1990s, new open standards protocols have hardly been adopted. The private sector then took charge of resolving our technological concerns. Facebook, for example, has hegemony over the standard that establishes who you are who you know, your social identity.
Blockchain to be used to revolutionize Internet structures in the future Photo: Divulgao / FISL
By founding a resource for consensus on the content of a database without anyone in particular being in charge and even including a way to reward those who add value to that database (see Bitcoin mining), blockchain shows itself as a solution to problems of distribution and financing in the universe of the Internet. The technology represents a new data sharing paradigm, especially for identity, community and payment mechanisms.
For example, a new protocol could define transport requests: I am here and I want to get there. A blockchain system would record past travel, credit cards and users' favorite locations. The standards for submitting a transport request over the Internet would be free, unrelated to any company or individual. Anyone wishing could create an app with services to serve people, whether they are drivers to take passengers by car as Uber does, bicycle rentals, air taxis or even a metro reminder with their alternative for the determined commute.
It appears that new foundations for economic and social systems are on the way. Forecasts for the future of blockchain also include, however, the expectation that changes will be slow, albeit progressive. A few years will be necessary for the model to become more efficient and accessible, until it reaches the population.