Blockchain: what it is, meaning and simple explained applications

Blockchain

If you are here reading this special, there could be two reasons: you know what a blockchain is and you can't wait to tell us in the comments, or you are interested in giving shape to one of the most redundant buzzwords of recent years. There is also another reason: you have read, or bought, Bitcoin or Ethereum or some other altcoin but without knowing what is behind it.

With the blockchain, we are in a curious mix between technology, geek world, finance and the web, condensed into a tool that seems complex, but is nothing more than a data domain: if the card falls, you can't put it back on its feet. You can look at what was written, but don't pick it up again, as long as you don't do it with all those that fell after her.

The simplicity of our comparison is clearly aimed at telling the common thread that binds the famous "blocks of the chain", that is a flow of writing (and reading) of non-modifiable data of this digital ledger - or ledger - called blockchain. What does this register do? It stores the transactions - or data sets - making sure that they are permanent, of course, but above all no longer modifiable due to the encryption applied. Thanks to the structure of the blocks, you can travel between them to see the information entered or see when they were formed, but without being able to get your hands on them: imagine the blockchain as the wagons of a train, inside which you can only peek.

What is the Blockchain, a distributed technology

The Bitcoin blockchain is a sequence of blocks with data, immutable, distributed, defined by the principle The blockchain is a distributed block chain, as it is based on cooperative processes of validation, synchronization and control of non-reproduction: a huge data matrix in which all of us can contribute to the advancement of the block chain, without central bodies, thus avoiding the risk of single flaws. It is called decentralization on purpose, precisely because the constant flow of information in this distributed ledger introduces total emancipation from classical intermediation entities, be they a central database, a bank, a server. The validator nodes, better known as miners, validate the new transactions, allowing the creation of new blocks along the chain.

Now, having done this little preamble to tell you about the first guidelines of the blockchain type, what are the advantages of using this technology? Traceability and immutability are among the most important: the chain allows you to read the blocks but not to modify them, becoming the perfect tool for processes in which the transparency of information must be key. The absence of central bodies gives an enormous breath to the reliability of a flow on blockchain: without control cores, a validation relegated to single anonymous entities working for the same IT objective is the key to being attractive to anyone - individuals or companies. - we want to break away from traditional validation mechanisms.

It is programmable on a conditional basis, with events that can be activated when a certain condition is reached, opening the doors to an exponential use of cause and effect on the blockchain. It is solid and incorruptible: by its very nature, a decentralized blockchain cannot be changed on a consensual basis of the network because the network is made up of anonymous individuals who continuously generate hashes, or fingerprints of the newly created block.

Up to now we have talked about the archetype of the blockchain, that is the public, distributed one, born with Bitcoin, but it was inevitable that over time some types of control were born: we are talking about private blockchains and partially decentralized ones. Private blockchains are quite curious, as the write and access control is handled by a private organization, which equates them to some sort of corporate database. The partially decentralized ones, on the other hand, are always private, but based on a consortium system in which some more or less public entities act as supreme validating nodes, bringing some stability and credibility to the usual transparency of the public blockchain.

DeFi or Decentralized Finance

Ethereum is the symbolic blockchain of DeFi, with over 90% of Decentralized Finance projects developed on the platform Although not officially, blockchain has become the word of luster; it is so associated with business that it is natural to project it into economic contexts, some of which are already reality. Let's start with the most recent one in terms of projects and application contexts, Finance, specifically DeFi, or Decentralized Finance, or Decentralized Finance.

Let's start from here because in the last two years there has really been a tsunami in the fintech world thanks to hundreds of projects created to bypass traditional finance made up of brokers and banks, using smart contracts instead of old mechanisms of money lending and risky investment. The blockchain thus becomes a technology for lending money, borrowing it thanks to borrowing, speculating at high risk, buying insurance or maybe staking, or blocking funds and earning passive interest generated by the transactions of others. To buy a house today, you go to your bank and beg for a loan; one day you could use a smart contract to build your online mortgage. Let's go on with the whole titanic supply chain of logistics, which cascades over like a sprawling octopus worlds that make traceability their mantra: food, fashion, art, beverage and transport, just to start. | Start. Even in digital advertising we are starting to open up to the certainty of the impression acquired with advertising campaigns tracked on blockchain. The convenience of the programmability of the chain of events ensures the execution of the smart contract when precise conditions are determined, such as losing a plane and having the money returned on the blockchain or making a return and receiving automatic credit, obviously tracked and immutable.

Internet of Value and Bitcoin

The blockchain represents the best way to transfer values ​​on the web in a decentralized and anonymous way You have heard of the Internet of Things or IoT, an acronym that is actually a little out of the radar : it is even more present in our lives, but it is no longer spoken of as an alien. It has entered everyday life and we use it without knowing it. Here, the blockchain and more generally the transactions on blockchain contribute to create the Internet of Value, that is the substructure of the web dedicated to collecting, transmitting and distributing values ​​in the digital world. Money, signatures, properties, tokens, data with a precise, assignable economic value, recognizable by the actors of the network themselves. In this sense, it is no coincidence that the blockchain was born with Bitcoin, or vice versa: the blockchain was born as a technology to clear the payment system from controllers, or currency issuers, or banks or any company that operates in the exchange of currency.

Currency, by definition, is a currency issued and held by an entity, generally a state or a communion of states, which writes the printing and injection of liquidity into the system on a physical register. There are pairs, the so-called exchange rates, which determine the exchange value with other currencies, all maintained by the economic macrosystem that governs the world. The blockchain was born to go against all this and in 2009 a man known by the pseudonym Satoshi Nakamoto rewrites the rules of the game, putting a deflationary currency on blockchain technology: with a precise maximum value already written at the beginning of his block chain , in the following years Bitcoin would arrive as a tsunami on the world economy and finance.

Why are we talking about it now? Well, Bitcoin and blockchain have always been inextricably linked, both for the quintessence of decentralization they represent, and for the need for scalability that would have led to the creation of other blockchains on other protocols, such as Ethereum. Then hundreds, thousands of them arose, in the middle there were also stablecoins, currencies linked to the value of the dollar, useful for "going out" in stable currency, remaining in the blockchain world, without going out in traditional currency and thus fighting the enormous volatility that distinguishes the world of cryptocurrencies.

NFT on blockchain

In the last year, the explosion of NFTs has moved a tenfold volume, dramatically increasing the price of writing smart contracts on Ethereum The art world is not watching technological evolution: a well-established trend is that relating to NFTs, or non-fungible-tokens. What are? They are unique, non-fungible tokens, different from anonymous fungible tokens that you can buy and resell. You will understand for yourself that having a blockchain technology that certifies the ownership of a numbered, unique, non-replicable digital asset has made it possible for an artistic, graphic and creative market to explode. Thanks to the cornerstones of decentralization, countless artists can now exhibit their digital works in the form of NFTs in virtual galleries. It is no longer surprising to see NFTs of image collections flying high on OpenSea for a variety of reasons, sometimes difficult to label as "speculative".

The NFT blockchain is almost always Ethereum - see Pudgy Penguins, CryptoPunks or Bored Apes - which thanks to this new current is even richer in transactions that make the cost of registering smart contracts soar, even if new collections are being born on less expensive blockchains, such as World of V on Vechain Thor, an all-Italian NFT project that looks promising. In any case, from a purely commercial point of view, NFTs have been a godsend for artists or digital graphic designers, since finally having a web place capable of attracting people with money is a novelty that has given rise to the usual speculative paradoxes and usual questions: is the design of a graphic artist art that until yesterday did the same things for a web banner and now sells that design as an NFT for thousands of dollars in value? We don't have to say it, but the market does, and today it's responding with tremendous enthusiasm.

To give you an idea of ​​how gaming has also jumped on board, just look for what Square is doing -Enix with its fighting game Million Arthur, or the auction house of the Esport Fight Club, or even the retrogame console on-chain Supdrive, made by the creator of Vine, in which the games themselves are NFT, or maybe Axie Infinity, which rewards the player with NFT. Imagine the Collector's Editions of future AAAs that in a few years, perhaps, will not only be physical, but also on NFT. Or Kojima's autograph in the form of a non-fungible token, yours alone, to venerate on the occasion of his next project. The limit is the sky or, in the case of NFTs, the blockchain.

Blockchain for business

The realm of bureaucracy, dominated by lawyers, politicians, officials and notaries, could use the blockchain to make tons of documents immutable and easily accessible. The use of blockchain to track business-related processes is of course a very ambitious project and involves such a number of factors as to be frightening: imagine having to design a way to integrate your blockchain product with a production chain of a plant, composed of automatic controls, human personnel, margins of errors and respect for the supply chain.

We are talking about a complex ecosystem but potentially perfect for improving its yield, optimization, credibility, the coding of each step engraved in fire on smart contracts. Five years ago it was a revolutionary vision, today it is reality and already around you, in the supermarket, you can see different products labeled on various blockchains applied to business, both private and partially decentralized. Walmart, Carrefour, BMW, LVMH, Coldiretti and DNV are just some of the big names that have jumped on the blockchain train in recent years, each choosing the technology that best suits their needs or developing products in conjunction with cryptocurrency projects.

We could go on with the trends that have developed over the years of development of the blockchain, but for today we think we have given enough information to those who were dry; maybe we'll see you at the next episode. Ah, always remember that we are not here to give you financial advice and indeed, we invite you to always take with the pliers the gurus who promise you incredible gains on the most absurd currencies.

Have you noticed any mistakes?