How does Blockchain work?

Surely you've heard about it many times, but you still do not know how Blockchain works. Do you remember the last time you consulted ...

Surely you've heard about it many times, but you still do not know how Blockchain works.

Do you remember the last time you consulted a physical encyclopedia? Right now, using Wikipedia or any global web on the Internet seems obvious to you. However, it is a recent change in our lives that we have adopted naturally and that has no turning back. If our well-being improves ... Why not adopt these changes in other areas of our lives?

From the next paragraph, we explain exactly how Blockchain works. Surely, you already know that Blockchain is not the same as Bitcoin - Blockchain is a technology that uses Bitcoin to function. In any case, if you want to support this page and are thinking about investing in Bitcoin, Ethereum or Litecoin, you can subscribe to Coinbase from this link. With the first $ 100 (or € 84) you invest, you will get $ 10 in extra Bitcoin for you and they will also give us $ 10 extra in Bitcoin. Coinbase is the largest Bitcoin Exchange platform in the world.

Blockchain What is it?
The Blockchain or chain of blocks is a public and distributed database in which all transactions are recorded. It is a public accounting that works through a distributed network of computers, that is, it does not require any central authority or third parties to act as intermediaries. It works just like a ledger book but in this case, the notes are public and decentralized. Blockchain consists of a chain of blocks designed exclusively to avoid their alteration once the data has been published.

The concept and technology of Block Chain were created in 2009 with the appearance of Bitcoin virtual currency. Its author, Satoshi Nakamoto, of unknown identity, published an article in the network that described a Peer-to-Peer system and a digital money protocol. In turn, it launched the Bitcoin Software, creating a network with the same name and the first units of virtual currency, Bitcoins.

Currently, there are many kinds of virtual currency. Some will survive, others will not. However, the real potential is the technology behind Bitcoin, the BlockChain technology.

Think that if the only thing that exists are countable notes, virtually incorruptible entries, and exits, and everyone agrees that a certain amount of money is yours, this is automatically accepted.

If you want to know more about the huge revolution that Blockchain will bring, we recommend you read The Blockchain Revolution, by Don and Alex Tapscott. It is surely the most complete book that has been written so far about this technology.

In any case, here below we explain in detail how the Blockchain system works.

And how does Blockchain work?
Everyone talks about it, but few people are able to really explain how Blockchain works. Until now, we had always needed a third party in which both parties would trust to guarantee the authenticity of the transactions, be it a bank, an auditor, a notary or Paypal, for example, that had a record or seal of truthfulness. The Blockchain solves this double-spending problem by combining the P2P technology of peer-to-peer exchange with cryptography and thus creating a new form of communication and digital exchange.

The transactions included in the blocks are created by the members of the system. All transactions are recorded and transmitted to all nodes in the network. Thus, all members have constantly updated information with all transactions.

A node is a computer connected to the network that uses software to store and distribute an updated copy of the chain of blocks in real time.

Imagine for a moment that the network disappeared, if that happened, Bitcoin would cease to exist, that is why the Blockchain is spoken of as the truly revolutionary advance that lives in each of the nodes that form the network, giving rise to an extremely robust system. It is enough that there is a functioning node so that the entire network works and can be recovered in case of any eventuality.

Transactions are made from electronic wallets or wallets, which are encrypted files that work similar to a bank account. All wallets have a public key and a private key. The public key is an alphanumeric string between 26 and 35 characters. This is the Bitcoin address and acts as an account number. In this way, in order for someone to send you bitcoins and reach you, you must previously give them the public key. The private key is used to authorize operations from your wallet. This process is what is known as asymmetric cryptography.

New transactions are constantly flowing through the network from all types of wallets and other applications and, when the nodes locate them, they are added to a temporary pool of unverified transactions. The miners will choose the transactions of these Pools of unconfirmed Transactions to create a new block of transactions.

A block is a set of confirmed transactions. Each block is a part of the chain with the following elements:

An alphanumeric code that links to the previous block.
A package of transactions.
Another alphanumeric code that will link to the back block.
A block must be added to the chain by means of a hash, that is, a part of the code generated from a series of mathematical operations.

The miners are a key figure in the process that is dedicated to verifying the transactions that are occurring at the moment. The miners have two functions:

Create new bitcoins for each block that is mined.
Ensure that transactions are real and legitimate
They check that the time series is correct, that the proposed block is at the top of the main chain and that all transactions within the block are valid.

The mining groups are groups of miners who work together to solve a block and divide the rewards granted to the miners. Currently, without a mining group, it is difficult to win a reward. It is much more convenient to share the work and divide the bitcoins with a much larger group of miners.

Genesis Block, Main Block, and Orphan Block
The Genesis block is the first block created in BlockChain. The successive worked blocks will be incorporated into the spine of the chain, called the Main Block.

When two miners are sent to the Pool of unconfirmed Transactions and manage to resolve the same block of transactions with a few seconds of difference, both emit their valid blocks to the network and, therefore, both can receive the corresponding reward.

However, some nodes will receive one block before the other (Block 1) and will begin to solve the next block (Block 1.1, Block 1.2, Block 1.3 ...) based on the hash of the block they received first. On the other hand, other nodes will receive a different block before (Block 2). And they will use its hash to solve the next block. It is at that moment when the rest of the nodes discard one of the blocks, the one with the fewest blocks ahead. These blocks are called orphan blocks.

The next technological disruption?
Now that you know how Blockchain works, you will be beginning to realize the infinite possibilities that it brings.

Bitcoin is a revolutionary breakthrough with the ability to transform the way audiences around the world interact and carry out operations. Sectors such as Financial, Legal, Energy, Health, Industry, Commerce, or Intellectual Property can be profoundly altered.

The Blockchain is already seen by many experts as the next great technological disruption of the second decade of the 21st century.

Does it sound like science fiction or will it be closer than we think?

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