Let’s begin by giving some definitions, so as to frame the differences:
- Blockchain: this is what allows the existence of cryptocurrency (among other things);
- Cryptocurrency: it is a medium of exchange, like the dollar or the euro, created and stored electronically in the blockchain, but it is digital and uses encryption techniques to control the creation of monetary units and verify the transfer of funds;
- Bitcoin: it is the name of the most famous cryptocurrency in the world (and has led to the creation of today's Blockchain concept itself), a term often used incorrectly to speak of cryptocurrency in a general sense.
Therefore the blockchain can at the same time be defined as a consequence of the creation of cryptocurrencies and what allows the latter to exist, fascinating, isn’t it? The blockchain in fact, was created to have a secure information system linked to transactions and exchanges. It is a sort of "ledger" or public register in which the transactions that occur between users of the same network are stored in the databases in a secure and permanent manner.
How does this happen? The blockchain uses a peer-to-peer network, also abbreviated as P2P, in which each connected device, like a computer, is able to act as both a server and a client, making the various "nodes" (devices) of the network be in continuous communication and at the same time not force them to draw information from a single dedicated server (speeding up and simplifying communication between devices, thus allowing everyone to download and install something directly from the Internet itself). Once gaining access to this network the user becomes a "block" of the chain, the transactions are then saved inside the blocks and are then managed by encryption by all the participants of the network, who can then view and eventually approve every single change, transfer of money or information. At this point, it is therefore possible to state that the same information is now present on all the blocks and therefore it becomes impossible to modify it.
Because of the use of this peer-to-peer network, we are therefore witnessing a strong decentralization of these operations, in fact there is no institution or government that can intervene on the information that is stored within the blockchain and it is precisely what makes transactions carried out through cryptocurrency an extremely secure operation.
Making a brief summary the blockchain has several enviable features:
- Security: It is a secure database thanks to the encryption process that characterizes it. This model is based on the combination of the digital signature which guarantees that the sender and the recipient of the transaction are identified;
- Transparency: Transactions made through the blockchain are open and transparent. Participants can see everything at any time. In this way the transparency of the operations is guaranteed.
- Decentralization: Thanks to this decentralized system, transactions are cheaper than conventional ones because intermediaries like banks are lacking, making them certainly even faster;
- Immutability: The blockchain is an immutable database able to guarantee the irrevocability of information. This ensures traceability and so the transactions become traceable;
All these features make the technology certainly useful also for other purposes, which do not stop only at the simple security and reliability of the transactions made with cryptocurrencies. Startups like Bowhead Health have in fact proposed the innovative idea of implementing an application and a device connected to the blockchain that can monitor every physical parameter, saving the information in a safe place and allowing, subject to consent, hospitals or research centers to have immediate access to it. The fact that privacy is protected by encryption and a complex system of double security, which on the one hand allows us to view every single movement and on the other protects the identity of those who are using it, means that it can potentially be used in many other occasions: from the sale of a house, without having to go through notaries, documents or certificates of ownership, to the extended and complicated world of Insurance, where for example AXA has developed a service that allows customers to be automatically reimbursed in the event delay of a flight longer than two hours, without having to go through the ubiquitous and slow bureaucratic machine.
Unfortunately, speaking of all the countless present and future applications is practically impossible, given the amount of information and speculation that such a young technology can bring. However, the hope is that, after this brief reading, it will be clearer to you what is the blockchain, this mysterious and compelling technology.
Source: TeamWorld January 7th,2019, "Tutto quello che dovresti sapere sulla Blockchain" https://www.teamworld.it/tecnologia/come-funziona-la-blockchain/