WHAT IS THE BLOCKCHAIN?

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WHAT IS THE BLOCKCHAIN?

« Blockchain », a real new word that everyone even connected all day long over the internet aren’t really familiar with. That is a new global system of recording conceptualized in 2008 by a certain person known as Satoshi Nakamoto. It is really near to the internet concept, but more efficient and create more value. This is a technology that helps to store numerical data for a low cost, decentralized and safe. This is such a big account statement or register that contains the list of all exchanges between all users. This register is spread out and stored on users’ server. It is clear that this concept is really new and present innovative characteristics.

WHAT IS THE REAL DESCRIPTION OF BLOCKCHAIN?

Concretely it is not easy to give this description because each of us has got his perception of something. But first we can emit that a Blockchain is a ledger open for all to write, to register, to read and that can be shared over many computers around the world. That is a kind of accountancy in global scale. Basically, the Blockchain is a software which stores and transfer value or data in the internet, transparently, with security and with no central controller organ. In financial system, a Blockchain is a technology for a new generation of transaction scheme, which with the help of a collective mechanism coupled with the use of a public account ledger, distributed and shared, set the confidence, the accountability and transparency, and restructured the business process. This register is a trust system protected from falsification by a consensus system among the members. We can thus declare that a Blockchain is an equipment that help to automatize the transactions by clearing the Third Party, from a shared consensus distributed trusting system and permit certification.

Sometimes, Blockchain is always taken by those who follow internet as Bitcoin. However it is an application software specific of Blockchain, which lay on monetary value: This is Cryptocurrency. The use of Blockchain is so large and find a lot of destination. So, for Bitcoin, the technology Blockchain is used to ensure the traceability of transactions, in that each Bitcoin has a specific encrypted code. Each users, thus are not allowed to use their Bitcoins but with only one addressee related to one given operation. But it seems still strange to hear this concept, so the next question is: Why is it useful for the public?

WHY DO WE NEED BLOCKCHAIN? IS IT NECESSARY TO USE IT? WE ALREADY HAVE INTERNET.

The main and first use of it, is crypto currencies, like the Bitcoin, but the Blockchain can also be used in many circumstances which we don’t think immediately, like land title for example. As it in Honduras where all land official titles are not registered for the half of lands – a little enterprise Factom Inc. has worked with the government to develop a protected land registration, based on Blockchain. After that intervention, this country is now able to guaranty at 100% that a property is owned by an inhabitant. In the field of education, Blockchain can act like, giving a Degree an encrypted code in a Blockchain in order to face up the increasing of false diplomas.

Firstly, Compared to internet Blockchain is a system that permit the automation of transaction without intercessor. That means that you won’t need any other broker to undertake your operation. Internet is just limited to the automation of the relation and the exchange between two entities. Intervention of some other part are still necessary. After that, internet is a decentralized publication system, against Blockchain which is a distributed consensus system. And at last Blockchain is a structure of certification not a publication. Blockchain intensify the confidence among all users. We can perceive this situation as an evolution of internet not as an opposition to the existing system.

THE PRINCIPLES OF BLOCKCHAIN: RESULT OF AN INNOVATIVE SYSTEM.

After a long application, experimentation, but less than internet, Blockchain has already set some principles. These are the proofs of the efficiency and the consistency of the system. After Bitcoins; smart contracts that allow all kind of exchange (goods and services); the use of Blockchain in the currency exchange, the development of peer-to-peers insurance and the traceability of alimentary products, these ideologies have been set. There are 5 principles.

First of all, the distributed ledger or register 2.0, built on the model, accountancy ledgers and shared among participants. That means, all users have got registration book shared with other users, after a consensus. After that, the decentralization and the disintermediation where any central authority control the Blockchain. Thus, there is no trustful third part. It is then an intelligent system which rise the speed of transactions. Thirdly, the system of consensus, which is the fact where the operation or transaction is accepted or rejected. This is the consequence of a distributed consensus but not a centralized institution. In addition, we got the principle of immutability when it is possible to modify or to delete entries. We are not then in static system but in dynamic system.

At the end, we can detect the principle of shared confidence and transparency. There will thus a distribution of data, operations and consensus. Nevertheless, this is not just limited to the Bitcoin. There are many other applications, so a Blockchain can have some technic specificities for particular use or bids. For financial institutions, this is at the same time a menace and an opportunity. By deleting the intercessor in operations and offering a safer registration system, the Blockchain challenge directly the traditional intermediary work of banks. In the other side, it extremely reduces the cost and increases the security of registers. It transforms thus the activity of banks by an automation back office system and publish the historic of interbank transactions. That is useful to control the movement of the bank and all operation undertook by them.

To sum up, Blockchain is a system based on decentralization, distribution, trust, and transparency.