Blockchain, or “chain of blocks”, relies on a distributed ledger system to store, transmit and update data over a private or public network. Bitcoin is the best-known public blockchain.
In the world of finance, Bitcoin has undoubtedly popularized the concept of blockchain (it is also for Bitcoin that the technology was created) and cryptocurrency in France and around the world. The Bitcoin network is defined, according to its creator Satoshi Nakamoto, as a “peer-to-peer liquidity exchange system, which would allow online payments between two parties, without going through a financial institution”.
The principle of blockchain is decentralization. It makes it possible to carry out operations, such as a transaction, or the recording of data, without the need for a central entity. The goal is to dissociate itself from any bank or currency to have a universal system linked to the Internet. However, blockchain technology does not only aim to disrupt banking players.
Permitted blockchain and public or open blockchain
Its uses are more extensive and today concern multiple sectors, such as logistics, insurance, energy, food and pharmacology. The blockchain, which can be compared to a digital database, makes it possible to store information, transfer it, and update it, all in the same place and in complete security.
And this knowledge is shared between the different members of the blockchain network, or even with all users, in the case of a public blockchain. There are indeed two main categories of blockchains: private (permitted and centralized) and public.
In both cases, the blockchain is based on a register where the recorded data and information are kept. The main difference is in the access to data. The private blockchain restricts access to only authorized members, such as participants in a blockchain consortium.
The public blockchain, on the other hand, like Bitcoin, Ethereum and the various cryptocurrencies, makes data available to everyone. And it operates in a truly decentralized way.
Thus, the validation of operations and the recording of data on the blockchain require the approval of a block by different actors. The blockchain takes its name from this system of blocks. The management of these blocks and their information by multiple users, or nodes, is therefore transparent and secure.
The definition of blockchain as explained by mathematician and computer scientist Jean-Paul Delahaye (author of numerous articles on bitcoin, Ethereum, cryptocurrencies and blockchains) is that it is a “very large notebook that everyone can read for free and freely, on which everyone can write, but which is impossible to erase and indestructible”.
Chronological, immutable and tamper-proof data
A block represents the combination of several “transactions”. Block size varies by blockchain technology. Bitcoin thus generates blocks that can weigh up to 1 MB every 10 minutes. Each block corresponds to a unique identifier, a “hash”.
Decentralization does not only rely on the participation of multiple block validators. Each, which constitutes a node, hosts a copy of the database. Consequently, to modify data, the agreement of different nodes is required. Blockchain data is thus said to be chronological, immutable and tamper-proof.
The integrity of the data is in this way guaranteed, in particular by their distribution among different minors (other name of the users). Miners, or stakers, or even bakers, depending on the type of blockchain and consensus, have the critical mission of validating the blocks generated before validating a transaction. The exchange processes, or transactions, are therefore carried out in complete security and confidence thanks to this multiple control of the users of the system.
The essence of the blockchain, its architecture and its multiple roles, is to help restore trust while freeing itself from a centralizing intermediary. The blockchain thus makes it possible to transfer assets between parties, to track an asset, for example for food traceability, and to automatically execute transactions.
The blockchain can indeed mobilize another technology, smart contracts. These programmable contracts execute automatically according to predefined conditions. Thus, for use in the insurance sector for example, it will be possible to automatically compensate its customers for plane delays exceeding two hours.
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The blockchain, a definition
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