What is Blockchain and What Are Its Advantages?

Since 2017, we have witnessed the speculative boom of cryptocurrencies and ICOs, driven by corporate interest in the technology. Blockchain is generally associated with Bitcoin and other cryptocurrencies, but these are just one example.

This technology, which originated in 1991 when Stuart Haber and W. Scott Stornetta described the first work on a cryptographically secured chain of blocks, did not become widely known until 2008, when it gained popularity with the arrival of Bitcoin.

However, today its use is being demanded in other commercial applications, and an annual growth of 51% is projected by 2022 in various markets, such as financial institutions or the Internet of Things (IoT).

What is Blockchain and How Does it Work?

Blockchain is a database that maintains a continuously growing set of data records. It is decentralized, meaning there is no master computer that holds the entire chain. Instead, participating nodes each have a copy of the chain. Furthermore, it grows continuously—only data records are added to the chain.

A blockchain consists of two elements:

• Transactions: These are the actions created by the participants in the system.
• Blocks: These record the transactions and ensure they are in the correct order and have not been tampered with.

What Advantages Can Blockchain Offer to Your Business?

Blockchain, also known as distributed ledger technology, has emerged as a significant topic of interest in the tech industry and other sectors. Blockchain technology offers a way to record transactions or any other digital interactions in a manner designed to be secure, transparent, highly resistant to disruptions, verifiable, and efficient.

As such, it offers the potential to disrupt industries and enable new business models. The technology is still in its early stages and evolves rapidly; however, large-scale commercialization will not occur for a few years.

Nevertheless, to avoid destabilizing surprises or missed opportunities, strategists and decision-makers in all sectors and business functions must pay attention and begin exploring technology applications.

1. The main advantage of Blockchain is its public nature. All participants can see the blocks and the transactions stored in them. However, this does not mean that everyone can see the actual content of a transaction, as it is protected by a private key. A blockchain is decentralized, meaning there is no single authority that approves transactions or defines specific rules for transaction acceptance. This implies a significant level of trust, as all participants in the network must reach a consensus to accept transactions.
2. Another important advantage is security.The database can only be expanded, and previous records cannot be changed (although, at a high cost, someone could alter previous records).

Why is it so secure?

1. Since it is a distributed technology, where each node in the network stores an exact copy of the chain, the availability of information is guaranteed at all times. If an attacker wanted to cause a denial of service, they would have to disable all the nodes in the network, as it only takes one operational node for the information to remain available.
2. Additionally, because it is a consensus-based ledger, where all nodes contain the same information, it is almost impossible to alter it, ensuring its integrity. If an attacker wanted to modify the information in the blockchain, they would need to modify the entire chain in at least 51% of the nodes.
3. Finally, since each block is mathematically linked to the next block, once a new block is added to the chain, it becomes immutable. If a block is altered, its connection to the chain is broken. This means that all information stored in the blocks is immutable and perpetual.

In this way, blockchain technology allows us to store information that can never be lost, modified, or deleted.