Blockchain, or Distributed Ledger, is a technology that allows the reliable and secure realization of any type of transaction between two or more people without the need of intermediaries, through the Internet. His introduction to the world was through Bitcoin cryptocurrency, the first blockchain platform. Originally, Bitcoin was created as an electronic payment system between peers (A Peer-to-Peer Electronic Cash System), for what is known as “digital money”.
Blockchain is an articulation of structured technologies in a naturally encrypted system, which provides the users involved with protection of their identities and the data of their transactions.
A digital ledger where all the transactions that occur in the network are recorded, grouped in blocks that are continuously linked linearly with each other, that is: the first block with the second, the second with the third, and so on (from there the name of ‘block chain’).
Digital portfolios, graphical interfaces to interact with the blockchain network that allow users to make transactions and manage their digital identities.
The miners, computers that are responsible for authorizing the addition of the blocks of transactions carried out by the digital wallets to the chain of blocks, by solving the mathematical conundrum of the consensus protocol, receiving in return rewards in the digital currency of the blockchain network .
The nodes, guardians of the network, are computers that are responsible for storing an exact copy of the accounting book and enforcing the rules of the network. Some, known as mining pools or mining groups, are also in charge of listening to new transactions and grouping them in blocks to propose them as works to the miners, who after being confirmed are propagated to the network and added to the chain.
A common blockchain transaction begins with sending a digital asset from one digital wallet to another. This transaction is listened to by several nodes (depending on its latency with respect to the issuing portfolio) and grouped with other transactions that said nodes have listened to. This group of transactions is then sent to the miners as a work to be solved. The miners take the work, which may be different for each group of miners depending on the node that has proposed the work, and compete with each other to get a value (nonce) that solves a mathematical puzzle that authorizes the miner who finds him to propose his block, with the transactions in it, to be added to the chain. The proposed block, in addition to containing the transactions, also contains the identification of the previous block and a coin emission value by the network (the reward), which are routed to the winning miner’s portfolio.
All this process, which is known as mining, happens ‘after cameras’ in a blockchain transaction. For users, the only thing visible is the number of confirmations that their transactions receive and the time they take to complete them.
The blockchain technology guarantees that the records of the transactions made are valid and unalterable. We can see each block as each of the pages of the same book practically infinite, only that here what has been written can not be erased or repeated: each transaction or data is protected with a unique fingerprint. This is known as immutability. However, there are initiatives to create blockchains that can be altered by an administrator, Accenture is responsible for the best known.
The first and best known blockchains, up to now, are maintained by many nodes and miners around the world and none have the power to control and approve or disapprove transactions according to their own criteria, which is called decentralization: Power is not focused on a single part, but distributed among many parties that must reach an agreement.
The decentralization feature is optional depending on who develops its own platform with blockchain technology. Several private companies, such as banks, are creating their own distributed accounts, which distribute their copies between different parts, but all are controlled by the same institution, so this feature is lost. In this way, the blockchain will always be distributed, preventing it from being hacked, but it will not always be decentralized.
TYPES OF BLOCKCHAIN
Although in principle the blockchain was created to be a great public accounting book and accessible to anyone, the development of this technology by different entities and companies around the world has given it a private nuance that has essentially divided it into two categories and four types
Based on access to stored data, we can find it public or private. In the first, there is no restriction for the reading of data or the performance of operations by users; On the other hand, in the second, both the reading and the operations are limited to specific participants.
On the other hand, based on the capacity to generate blocks, it is divided into those without permits (permisionless) and with permits (permissioned). In the first there are no restrictions to be able to carry out transactions and create new blocks, so that coins or digital assets native to the network are offered as a reward to users who want to maintain the network. It’s decentralization, such as Bitcoin. The latter are developed by generally private entities, in many cases for internal use, and the users of these need permissions by network administrators to interact with the protocol. This is the type of blockchain that banks are testing: they are centralized, that is, controlled by the entity and not by the users.
SIMILAR, BUT NOT EQUAL
The terms that allude to this technology as a whole as a database organized in blocks, encrypted and distributed among many users, tend to be three: Blockchain Technology, Distributed Ledger Technology and Bitcoin Technology. However, even though they all mean essentially the same thing, they are also used to mention certain specific types of blockchain. That is to say, they acquire their more precise definition according to their context, since it happens, for example, as the name of ‘Salvador’: this can both refer to the whole country and only to its capital.
In the same way, simply saying Blockchain can allude both to the technology as a whole and to the original Bitcoin platform. Accompanying the word with Technology is usually appropriate for a broad context, and this, in turn, is a term that is often used in public channels, as there is some controversy whether or not it should be called ‘blockchain’ to private platforms . However, this use is not limiting, since many banks use it to refer to their tests and, in general, it is the most used by all developers and users.
Distributed Ledger Technology or DLT (Distributed Ledger Technology) is also the same Blockchain Technology. Usually used, however, in the field of private development and rather away from Bitcoin as cryptocurrency. Unlike ‘Blockchain’ does not have double meaning, it is only able to allude to technology completely.
Finally, Bitcoin Technology is the most ambiguous term of the three. You can refer to three concepts: the accounting technology distributed as a whole, the blockchain of Bitcoin in particular or even the protocols that have allowed the development of all cryptocurrencies. Because of this, it is not often used too much.