In the last year, there has been a lot of talk about cryptocurrencies and, consequently, about blockchain. Although the subject is on the rise, the technical definitions of the subject have made it difficult for the public to access technology. As blockchains are the promise of a near future as financial and government solutions, it is worth understanding how they work.
What is blockchain?
Blockchain was born in 2008, being built as the foundation of bitcoin, the most popular cryptocurrency in the world. Basically, blockchain is a platform capable of recording transactions in a decentralized way. With records on different computers, the “block chain” identifies the sending and receiving of virtual currencies.
All this is possible because all transactions made on the blockchain are stored in blocks. In turn, the blocks are linked to each other by links, called a “hash”. The sum of these links with the blocks form the chain, ensuring the operation of the secure record system of transactions carried out by cryptocurrencies.
In other words, blockchains function as an accounting platform. Through strong encryption, the chains validate operations performed virtually. The big difference for a bank system, for example, is that the records made by the blockchain are stored on millions of computers, avoiding fraud and double spending with the same cryptocurrency.
Acting as a ledger, where all the accounting records of a company are kept, blockchains have the advantage of being publicly shared with the participants of the system.
Safety
All the interest in investing in blockchains does not exist for nothing. As any transaction made in the system is only validated when the entire block is filled by the operations, the coins arrive at the correct destination and the transactions made previously cannot be changed. In addition, each block is closed with encryption, forming a chain of records that is practically impossible to change.
Blockchain areas of activity
The financial applications of blockchains are, today, the most explored. Its decentralized system has aroused the interest of financial institutions for securities registration, contract storage, customer data privacy and transaction tracking.
Although blockchains are mainly used for the financial market, the chain also began to draw the attention of governments and large companies. Currently, there is a lot of research being done on the possible applications of blockchains. In order to have a dimension of the matter, the stages of sending agricultural cargoes have already started to be recorded on blockchain.
Even with all these benefits, blockchain technology still needs to overcome some challenges. Among the main difficulties for the wide dissemination of the system are its regulation, the high energy consumption of the machines, the cost of implementation and the public’s confidence in the novelty.
Be that as it may, blockchains are already a reality. The expectation is that in the coming years the financial and corporate markets will adopt the technology, transforming various sectors on a global scale.
