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In 2017, there was a huge increase in the value and price of Bitcoin, a digital currency based on blockchain technology. However, the feeling suddenly became acidic 2018 and now people are starting to question the true value of the blockchain. The problem is that the blockchain is often misunderstood, preventing companies from adopting them faster.
Let's solve it for once and all.
In short, Bitcoin is not blockchain. More precisely, Bitcoin works over it blockchain technology. If Bitcoin is a computer program, blockchain is the operating system on which Bitcoin is running.
Before immersing ourselves in the business benefits of blockchain, we must first understand what it is and what types of blockchain are available.
What is Blockchain technology?
Blockchain is a distributed registry technology that contains permanent and tamper-proof records. Its distinctive features is that it is decentralized, permanentand requires consent to validate the transactions. With low levels of trust in our societies, blockchain is an emerging technology that aims to restore confidence when doing business with others.
Imagine a worksheet that many people have access to. Instead of storing this spreadsheet on a single centralized server, access to this spreadsheet is distributed either decentralized-As each person has a copy of the same spreadsheet. If a person wants to update a spreadsheet entry, every other person with the same copy must reach consent and approve this update. This is done automatically without intermediate intermediaries.
The problem with the centralized storage of data or the use of third parties is that nothing prevents these brokers from behaving maliciously. A company that operates a centralized server could tamper with the stored data. An intermediary could play favorites or be bribed by the opportunists. It's no wonder many people have trouble trusting other parties when they do business.
Blockchain solves this problem by tampering all records, eliminating individual points of failure and removing the need for intermediaries. People could do business with one another using smart contracts on the blockchain. An intelligent contract is a digital contract that is automatically executed once the agreed conditions are met.
The exchange of data on the blockchain involves digital currency transactions, legal agreements or valuable information between two or more parties. Instead of a single authority, blockchain uses a peer-to-peer computer network (or nodes) to verify transactions using consensus mechanisms such as Proof of work (PoW), Punch test (PoS)or a hybrid between the two. The purpose of these consent mechanisms is to prevent tampering and to ensure that all nodes are synchronized.
There are several subtypes of blockchain:
- Public
- Private
- Consortium
Each has its pros and cons, with the blockchain of the consortium that incorporates the best features of both public and private blockchain.
