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What is blockchain and why it’s so important?

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The blockchain technology used by Bitcoin since 2009 has revolutionized the world of virtual currency.

Without a doubt the term blockchain has grown in popularity in recent months, associated with the cryptocurrency Bitcoin.

In a past article I already gave you a small introduction to the world of cryptocurrencies, but now in this article I am going to focus on how blockchain allows these cryptocurrencies to work properly.

Blockchain technology, like Bitcoin, was created by developer Satoshi Nakamoto with the purpose of solving the problem of “double spending” that affected the first digital currencies.

Basically, before blockchain a digital currency could be generated or spent more than once. This was definitely a problem.

Using blockchain, you can keep a perfect record of each transaction that is made with each Bitcoin, from its “mining” (or obtaining) to each of the subsequent sales.

How does blockchain work?

You can imagine blockchain as the “ledger” used by accountants, in which all transactions are recorded in the order in which they were made.

Blockchain is a distributed database, this means that the data is stored on different computers in different parts of the world.

“Blockchain is essentially just a record, a digital event ledger that is distributed or shared among many different parties.”

Marc Andreessen, creator of Netscape

By having the information distributed among many computers, blockchain prevents tampering and fraud.

This technology is resistant to synchronization, so even if you make a change in one of the copies, the others will not be affected. In fact, in order to update the database, you need the consensus of the majority of the participants in the system.

Another important feature of blockchain is that once you enter information into the database, it can never be deleted.

“Blockchain technology is a currency that combines two things: a perfect, forgeable record with a complete history of transactions.”

Amín Vera, chief economic analyst at Black Wallstreet Capital México

Thanks to all these features, blockchain allows public and totally transparent accounting of all network transactions.

Beyond digital currencies

In addition to its fundamental role in the world of cryptocurrencies, blockchain technology offers great potential that can be implemented in other areas and industries.

These are some examples:

  • Property registration

Japan has started a project to unify its entire property registry with blockchain technology. Dubai has also expressed interest in doing something very similar.

  • Cloud storage

Today’s cloud services, such as Dropbox or Google Drive, are centralized and therefore vulnerable to attack.

A new company, Storj, is testing a new decentralized cloud service, which uses a blockchain-based network to increase security and make the service less dependent.

  • Electronic vote

Electronic voting has already been tested in some countries, but until now it has not been able to protect itself against attacks by hackers.

Blockchain can offer a solution to this problem. With this technology, a voting system could be created that protects the identity of the voters and ensures that the votes are impossible to fake.

Conclusion

As you can see, blockchain technology allows us to have a totally secure and reliable cryptocurrency system.

Furthermore, this technology can also be used to solve problems in other areas and industries. Its potential is very great.

Did you have any questions about this topic?