What do the explosion of the cryptocurrency markets that we have experienced in recent years, the purchase of a pixel of NFT for 1.36 million dollars, and the recent comments of a “worried” Elon Musk about Bitcoin have in common? All these points have blockchain technology behind them. It is important to understand that blockchain technology applies to the world of cryptocurrencies and encompasses other areas since decentralized systems apply to various sectors and areas, which are currently being widely used, such as smart contracts—logistics systems, among others.
How does blockchain technology work?
To better understand what they are about and how decentralized systems (on which blockchain technology is based) benefit us, we must know well how a decentralized system works; for this, we will use an example: when there is a WhatsApp crash or some other social network, we are cut off because these platforms work centrally, that is, all users send requests to a single platform or server, if this server has a failure, all users who connect to it will be affected.
The solution to this problem is what is obtained with blockchain technology and the use of decentralized systems, which propose that instead of a single node or central server, there are as many nodes as participants have the network; thus, if some of them fall, the others can continue to operate without any inconvenience because they are interconnected with each other.
Peer to Peer networks (P2P)
This is another concept that has been around for some time, and that consists of a type of network where the participants work or interact as equals; this type of technology is what is behind the operation of such popular networks as a torrent. In this network, we do not download the files from a specific server, but many users are interconnected and download “parts” of the main file, coming from the different users that are connected.
Emergence of Bitcoin as a decentralized system of the financial system
As in the Torrent network, users exchange parts of files with each other; Bitcoin proposes that what users exchange is the information on all the economic transactions they are carrying out between them. When talking about the Bitcoin blockchain, we talk about the record of transactions that indicate how users transfer that digital currency to each other; if we send an amount of money to a person, that operation will not only be registered on our team but must also be replicated on everyone else’s teams.
Blocks as a solution for the synchronization of transactions
It is tough to keep all the “member nodes” of the network synchronized with the same transaction time; that is why the solution proposed by blockchain technology was to make blocks to group the transactions that are carried out within the same period of time.
This facilitates the tracking of transactions to be able to validate a specific operation, previously the task had to be done by a central bank, but now that task belongs to all network users who must have their own records and validate that a user can make a transfer to another, only if you actually have the funds.
The possible attacks that can be suffered
This type of “power” that is given to users precisely puts them all at a “relative” risk because there is never a lack of people with bad intentions who become malicious points that generate thousands of IP addresses from the same computer to have “greater participation” when making decisions. This type of attack is known as the “Sybil Attack.”
To prevent these attacks came the Proof of Work. Each person who wants to participate in the vote has to “win” by solving a series of cryptographic algorithms, which implies investing many of their computational resources.
Importance within the day to day
All the above may seem like something that only “affects” the people involved in this cryptographic world; however, it goes a little further than what appears at first glance since the application of blockchain technology with its proof of work has begun. To produce some effects on the environment due to the high demand for energy resources, which is why many activists have begun to give their opinion on the matter.
This technology is becoming more and more involved in things that we do every day, situations as simple as downloading files from the internet, sharing information between users until reaching more complex situations such as the electoral system of a country or Artificial Intelligence supported by this technology, all of this could represent changes in the way we think about the world today.
What do you think about this topic? What other important aspect of blockchain technology could you highlight?
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