Do You Know What Blockchain Is, How It Works?

Those who follow the technology world closely have probably heard of Blockchain. Still, it is certainly not a topic that everyone knows in-depth. Although it is something that should gain ground in terms of applications in several areas, it was born linked to a specific segment.

It involved rather complex concepts that escape traditional models. If you are here, it is because perhaps the answer to the following question is no. After all, do you know what Blockchain is, how it works?

We will try not to take a technical approach to the subject as much as possible; otherwise, many may leave here the same way they arrived, that is, without understanding why this technology is so important where it is already used and why it is so promising.

What Is Blockchain?

The first information you need to have about it has already been given; Blockchain is a technology. Okay, but what does it consist of, or what does it do? Being simplistic and answering in the most direct way possible is a technology that guarantees a high level of security of the data/information associated with it. But it is not just another technology; among some known and famous.

The first aspect that differentiates this technology from the others is its structure or topology, characterized by a distribution of several equivalent points forming a network, the so-called blockchain network, as opposed to centralized systems.

To put it better, when we imagine most of the structures we know (government, companies, banking system, etc.), there are always central elements that control and unite the participating components, in the same way as a flower that has all its petals linked together to the center in a structure attached to the stem.

In this centralized model, the government exercises many forms of control over citizens and is at the center of everything. The corporate headquarters controls and manages the branches and is also the central element.

Banks control the accounts and transactions of account holders and, in turn, answer to a bank that bears the term “central,” even in its name, and so on. All these examples are from centralized models.

Now imagine a structure in which all these points are interconnected, not by a central point, but diffused in space, similar to a fishing net, and where at each end where the filaments are tied, a knot is formed.

How Does It Work?

In this network of equivalent points, everyone has the role of control and verification, just as the government, the headquarters, and the bank do in centralized structures and communicate with each other so that all points have the same shared information. Thus, the model associated with the Blockchain is represented by several agents that verify and attest, under similar conditions, all actions or information that circulate in the system or the network.

Instead of a single central agent, the more participating elements, the more elements there are to control, audit, and ensure the integrity of everything on the network. The other differentiating aspect of Blockchain consists of the concept that gives the technology its name: the chain or chain of blocks, which is the translation of the word Blockchain.

The Blockchain is a linear sequence of blocks that have individual information associated with the league’s content, a unique identification, and information about the partnerships that precede it. Let’s imagine a chain with only four blocks to facilitate our explanation.

When created and included in the chain, the first block received different data and a hash (unique identification). The second, when inserted sequentially after the first, in the same way as the first, has its information, its hash, and the hash of the first block. The third, in turn, linearly after the second, contains your data, its hash, and the first and second hash.

As you can imagine, the fourth follows the same principle as the previous three, now containing four hashes. Another point worth mentioning is that all the information in each block is encrypted. Thus, only the members of the network, who own the encryption used, can perform the decryption and therefore know the content of each block. People or elements external to the network, even if they have access to the block’s data, cannot know its content due to the encryption that only the network members have access to.

Also Read: Blockchain And Asset Tokenization In Business

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