The 5 Essential Points To Understand The Blockchain
Despite the extreme youth of this blog, I have already said and repeated: the blockchain is a complex technology . But internet is also a technology far from being accessible to everyone! Enter a URL, nothing more simple. But do a simple ctrl + U on the page and many are blocked just not the vision of HTML! It must be said that the blockchain is a bit the same thing: we do not need to master the technique to use it.
Technology is today only in its infancy. Aside from bitcoin, it has no concrete reality known to the general public and, as a result, it seems incomprehensible to the general public. There are however only 5 key points to know to master the purpose of technology.
The blockchain is a digital “super-revolution” within the digital revolution
This point is, at the same time, essential, simple and complex. It is essential because we would not talk as much about blockchain and bitcoin if they were only classic evolutions of technological progress. The invention of the smartphone was a very important evolution in the world of telephony but, in my opinion, it is not a revolution because the apps are only websites adapted to the phone. For its part, the blockchain has the potential to revolutionize society as a whole, regardless of the sector.
The technology is simple because it would make it possible to dispense with the third party of confidence (one comes there). It would make life easier every day. But it is complex because it is based on an algorithm and a way of functioning that is not accessible to the general public. It is even more complex than the internet TCP / IP protocol that is intergalactic language for many. This is the reason why there is a certain mistrust around the concept and its spearhead, bitcoin.
The blockchain is not a new technology
As paradoxical as it may seem, the blockchain is not a technology recently out of the hat of developers.
The technique behind the blockchain is cryptography and the first works on secure block chains date back to the early 1990s ! A few years later, it was shown that it was possible to gather several documents in a single block thanks to the technique of the Merkle tree, also called hash tree.
I do not want to go further in a short article like this one, but also because I do not yet master these techniques well to allow me to write at length. Still, the bitcoin is none other than the implementation of these developments and the hashing remains a central technique of the blockchain. I promise one day to develop on this hash tree …
Trust is the main innovation brought by the blockchain
The blockchain does not revolutionize the currency itself: the currency remains a means of exchange between two entities, natural or legal persons, in order to validate any transaction. When A buys a phone from B and pays it in bitcoin, the currency exchanged has the same purpose as the euro or the dollar by allowing the exchange of the good against a predefined value.
The main innovation of the blockchain is that this exchange is revolutionized by removing what is commonly called the trusted third party. Today, by buying your phone, no matter the means of payment, there are always 2 banks behind the exchange: yours to validate the transaction and the seller to receive the transaction. With the blockchain, the transaction is validated using cryptography. The latter guarantees the security of the exchange. The transaction is then “placed” in a distrubuted register, accessible to all and deemed unfalsifiable . Anyone can then check the transaction from anywhere with an internet connection. So we go much further than decentralization because the latter assumes that there is always a central server. This small picture sums up well the difference between centralization, decentralization and distribution.
Basically summarizing too, I will surely jump at the same time technicians who say that I simplify too much and others who do not necessarily understand how it works.
The trusted third party brings … confidence in the transaction. Would you trust the seller if he had the power to debit your account when you buy a product? Not necessarily, and that’s one of the reasons banks exist. They are the intermediary between a buyer and a seller and ensure the validity and authenticity of the transaction. The blockchain removes this pitfall thanks to cryptography.
If the banking sector is the most commonly cited, others are also likely to evolve through the blockchain. I will just take the example of notaries responsible for, among other things, keeping the authentic deeds of sale of immovable property. The citizen therefore has confidence in his notary when he keeps the act. With the blockchain, a decentralized database, accessible to all and unfalsifiable, what would be the use of notaries to keep the acts? For these public officers, the blockchain is a source of concern but this old job, which some consider out of date in the world of the 21st century, has also taken the lead and wants to participate in its refoundation .
Trust is therefore the watchword of the blockchain because it validates transactions. I was a little fast on this point, I agree but I will have the opportunity to come back very often.
The blockchain is not the sequel of the internet
The facility would go towards this affirmation which, in itself, is not of an absolute incoherence. Internet was the first digital revolution, the blockchain is the digital “super-revolution”. We can find similarities and link these two technologies. Besides, without internet connection, it would be difficult to operate the blockchain. But the comparison stops there.
The blockchain is not the sub-branch of a branch, it is a new branch of a tree trunk or a new tree. Where the internet can store information, communicate more easily with anyone around the world, shop and exchange documents, the blockchain goes beyond that: it allows you to exchange value. Even if you are “rebellious” and you use TransferWise or Worldremit to send money to a foreign account to avoid exorbitant bank fees, the blockchain will invalidate disrupters like these two start-ups since the exchange will be only between A and B, without going through C to validate the transaction. Incidentally, C also passes through D and E, the banks of A and B. So, instead of 5 parties to the transaction, the blockchain can go to 2!
The Internet does not keep any authentic documents, unlike the blockchain. So when you pass on any document, it’s always a copy. The original is with you, in paper or on your computer. With the blockchain, everyone has access to the original and the authentic value is indisputable.
Bitcoin is just a blockchain among others
The currency created in 2009 is perhaps better known than the technology behind it. This is normal because the bitcoin is by far the most advanced blockchain. To put it simply, it is even the only one to be accessible to all with other cryptocurrencies.
Cryptocurrency? Bitcoin is a blockchain in its own right with cryptography, transactions validated by decryption keys, integrated in a decentralized database, secure, tamper-proof and accessible to all. The bank becomes unnecessary because the exchange is peer-to-peer (peer-to-peer or P2P for the purists) and validated by the blockchain (proof of employment, proof of challenge, mining, etc … we will return! ).
Bitcoin is not the blockchain but a blockchain.