What is Blockchain? For most people, Blockchain is still synonymous with Bitcoin or cryptocurrency. However, despite being the most famous application of technology today, the Blockchain is not restricted to just financial transactions.
In this way, we will present an overview of Blockchain technology.
The progress of cryptocurrencies enabled the notoriety of this technological framework.
However, its broad applicability ranges from notary offices, logistics, and intellectual property, to voting systems. We will cite more examples later in this article.
Bitcoin and the Blockchain
Notably, applications aimed at the financial system have given the technology incredible notoriety and popularity.
Bitcoin, a pioneering technology-based platform, is the most notorious example in this context. However, several other platforms emerged after the rise of Bitcoin.
The Ethereum coin has held the second position according to Coin Market Cap for some years.
However, the applicability of the Blockchain is not restricted to just cryptocurrencies. This technology is so versatile that it covers most areas of knowledge.
Where to use the Blockchain
So what is the Blockchain? We can exemplify it as a public record book that can have its data accessed and verified by any system user.
Ok, but what is so innovative about Blockchain? Firstly. It brings no need for a trusted third party.
However, several types of transactions, financial or not, need a reputable third party to provide reliability to the process.
The role of this third party, or third trusted party, is to ensure that the parties honor what was agreed upon when entering into the transaction.
For example, in the case of financial transactions like banks, transfer of ownership of cars, broker, recognition of a contract, notary, provision of public services, governments, and the list goes on.
At this point, it is possible to measure the breadth of applicability of the Blockchain.
Blockchain Applications
Critical factors in the success of this technology have been the exclusion of trusted third parties and its broad applicability.
To adequately illustrate the technology’s versatility, we will describe an example.
An example of Blockchain application
Starting with another hot spot today, IoT. A type of fraud that can affect car buyers is odometer tampering.
A malicious user can circumvent a car’s odometer by reducing its mileage to gain some advantage.
Some locations have inspections and update the vehicle information in each review. However, these reviews take place annually, making this inspection process inefficient.
In an internet of things scenario, smart cars connected to a blockchain could be updated more efficiently.
This improvement happens because each vehicle would have an associated certificate and its history published in the ledger with no likelihood of alteration.
Blockchain Actors
What are the main actors within a Blockchain-based system? Common users and miners.
Regular users create the transactions that are part of the data that will make up the blockchain.
Miners are responsible for validating this data from the instructions of an algorithm.
The adopted algorithm will depend on the consensus mechanism used by Blockchain. This mechanism defines the guidelines for carrying out data validation.
In the case of the famous Bitcoin, the consensus mechanism used is the PoW – Proof of Work, based on competition.
Another article on our website will cover technical details about the technology. However, the purpose of this article is to provide an overview of the technology.
Understanding usage in tracking
The reader can see that the Blockchain is suitable for tracking data within the system over time.
Other possible applications are Intellectual property, patents, authenticity verification (notary offices), and voting system.
Blockchain has challenges considering how applications maintain identity without affecting privacy, especially on public Blockchains.
In addition, a DoS attack can severely affect the network, particularly in large mining pools.
Blockchain Challenges
Also, we have general problems like high energy consumption, even more in networks that use PoW (Proof of Work) as a consensus mechanism, such as Bitcoin.
Public blockchains are vulnerable to a 51% attack. In short, if 51% of the network decides, it can rewrite history and change the lead chain.
Privacy is compromised by those who use Public Blockchains. However, the proposal of data verifiability without the centralizing entity depends on this transparency.
Furthermore, the initial cost is a factor related to who wants to implement a system of this type.
As miners depend on computational power to validate data, the grid (mining computational structure) becomes costly.
This innovative technology solves an old third-trusted party problem. However, most of the population still doubts its long-term use.
Juliana Mascarenhas
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Juliana Mascarenhas
Data Scientist and Master in Computer Modeling by LNCC.
Computer Engineer
