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Contents of the article
- 1 . What is blockchain technology?
- 2 . blockchain in cryptocurrency
- Frequently Asked Questions
Whether you are a cryptocurrency enthusiast or simply looking to diversify your assets through virtual currencies, you have most likely heard of blockchain, the technology used by Bitcoin and company. What is it really for? Who invented it? Could we extend its use to more areas? Tacotax takes stock!
What is blockchain technology?
How does blockchain technology ? If you want to invest in Bitcoin or any other cryptocurrency, it is interesting to understand why this technology could revolutionize the worlds of economy, banking or insurance through its different uses:
- transfer of assets of any kind,
- products as assets,
- Autonomous smart contracts
Who invented blockchain?
In 2008, the stock market crash and the global economic crisis that followed brought to light the flaws in the banking system that we know. Many critics of the banks have pointed to the lack of confidence that citizens now feel for these institutions.
In this context, a person, or a group of people, answering to the pseudonym of Satoshi Nakamoto conceptualized the first blockchain (or chain of blocks in French) in November 2008, with the primary objective of creating a peer-to-peer exchange network. to-peer without having to go through a trusted third party, in other words, the banks.
In 2009, the first Nakamoto blockchain was implemented and at the same time gave birth to the most famous and popular cryptocurrency: Bitcoin
How does blockchain work?
Blockchain technology - or blockchain technology - makes it possible to store and transmit information transparently and securely. When we talk about Bitcoin, and more generally about cryptocurrencies , we often find the blockchain at the center of attention. As a database, it records all the transactions carried out : it is a register that contains the complete list of all the transactions that have existed on its network. We speak of a decentralized database , since it does not involve any central control institution.
Imagined in response to a problem of the current system, which is the obligation to trust a third person to manage your money, in this case banks, the blockchain is a system where it is possible to transfer money without ourselves register containing everyone’s transactions
Forget the wikis and other books “for dummies”, the explanation of the blockchain, it's right here:
Let's take as an example a group of 5 people who wish to become independent of banks to manage their money transfers. Each of these people knows the amount of each other's money, but does not know their identity, since a number serves as their name. In our example, we will therefore have five people with the numbers 1, 2, 3, 4 and 5. Each of these people has access to a blank page and must write down each transaction made . For example, if #2 wants to send $10 to #4:
- N°2 announces that he wishes to transfer the sum of €10 to N°4.
- N°1, N°3, N°4 and N°5 check that N°2 does indeed have 10 €.
- If so, they will all note on their white page the date and time of the transaction, its amount, the number of the person sending the money - No. 2 here - and the number of the person who receives the money - #4 here.
- The transaction is then complete, and N°4 will receive the €10 from N°2 after a short delay.
The more time passes, the more the members of this group will send money to each other: each of the transactions will continue to be registered on the page. But there is a maximum number of transactions to note per page. In this example, we will say that a maximum of 10 transactions can be noted on a blank page. What to do when it is full? Each group member must seal the page with a key . This key is a that must be searched by each member of the group and must be common to all pages.
Once the key is found, we seal the page to ensure that no one can modify its content, and we store it in a folder where it will remain indefinitely. In our example, the white pages are actually , and the folder, a blockchain
Note that there are two types of blockchains: public which are open to all Internet users, and private ones whose access is obviously limited.
A reward system
Sealing a page requires using something called hashing . Indeed, before this blockchain system, the banks were the ones who had to ensure that the transaction register was untouchable so as not to alter the data present on it. In blockchain technology, all users of this system help secure the network
Hashing works in proof of work , and the goal here will be to determine an input value that generates an output value. When a page is full, all users must search for the key to seal the block. This key is actually a value to be added to the number of transactions on the block which makes it possible to obtain a certain output value.
The first person to find this key announces it to other users so that everyone checks that the calculation is correct. If this is the case, everyone will register this key on their page (therefore their block) to seal it and store it in a file (therefore in a blockchain). If a person in the group obtains a result different from the others, it means that an error has occurred on his page, he must therefore delete it and copy that of someone else, since it is mandatory to have a valid block in a blockchain to be part of the network.
Finding this key takes a lot of work, time, and computing power . What motivates the seekers of this key, also called , is the reward offered! The first to find the key earns fractions of cryptocurrency , Bitcoin or otherwise, as a reward to help secure the network. This is how Bitcoin is mined and created.
blockchain in cryptocurrency
Who uses blockchain?
Brought to light thanks to Bitcoin, blockchain technology is initially based on the use of a virtual currency: Bitcoin, Ethereum, Ripple, etc. But its primary strengths (decentralization, security and transparency) allow it to be applied to a wide variety of fields today:
- Insurance , with AXA in particular, which offers late payment cover via an automatic transfer,
- Investing in the stock market, with the ST8 platform which offers crypto assets to start-ups,
- , with the Carrefour brand in France, which uses blockchain for better food traceability,
- , with the digitization and division of work into tokens of all sizes,
- Video games , with the digitization of equipment exchangeable via tokens, used in particular by Ubisoft.
Many cryptocurrencies are exchanged on their own blockchain network : we think in particular of Ethereum, the main opponent to Bitcoin on the cryptocurrency market , which has revolutionized the use of the blockchain.
More and more applications
Although relatively recent, blockchain technology already has several applications today. As mentioned above, the food traceability used by Carrefour makes it possible, via a QR code, to know the origins of the products. On the insurers' side, automatic compensation is made possible by the blockchain while the securing of commercial transactions and disintermediation in advertising are constantly evolving.
Bitcoin blockchain is obviously the best known: it is public and therefore makes it possible to mine Bitcoins (BTC) or to buy , sell or store them. In addition to the blockchain, cryptocurrency investors must also use a to store their crypto assets, and then exchange them with other users, or in exchange for goods or services.
Ethereum blockchain and its cryptocurrency Ether (ETH) are also on the rise, since it makes it possible to set up smart contracts , or autonomous programs, which will automatically execute certain pre-validated actions.
For more information on this subject, you will find many websites on the principle of blockchain, “info” sections to explore the cryptocurrency market, and examples of use. website blockchain.com also allows you to , sell or exchange cryptocurrencies by creating a personal space using a login and password.
Frequently Asked Questions
?? When was Bitcoin created?
It was in 2009 that Bitcoin (BTC) first appeared in the world, resulting from the work of one or more developers under the pseudonym Satoshi Nakamoto . This virtual currency was a dazzling success and remains today the most used and most invested cryptocurrency in the world.
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