How does blockchain work? Here is a simple explanation

Trust is not easy in the digital world. When we buy products labeled 'organic' or 'sustainable', we often wonder: is it real or just a marketing ploy? The same goes for companies that call themselves 'green' and fail to back up their claims with facts. 

This discourse becomes much more complex when we have to place our trust in intermediaries whose objectives are often more profit-driven than transparent. In this landscape, blockchain appears as a beacon that removes the shadows and offers clarity and security in areas as sensitive as economic transactions.

I can't go into detail about the many possibilities that blockchain offers, as the scenarios are still being developed, but to understand in broad terms what we're talking about, it's worth starting with a mini-glossary of terms that explain the process: 

• Transaction: Any action recorded on the blockchain that represents a movement or change of state of a particular value or data.
• Distributed Ledger: It is a digital ledger of transactions that is shared, replicated and synchronized between network participants. Unlike traditional, centralized ledgers, the distributed ledger is decentralized in nature.
• Miner: An individual or entity that uses computing power to validate and register new transactions on the blockchain. 
• Mining: The process by which new transactions are validated and added to the blockchain. 
• Hash: A function that converts an input of any size into a fixed-length string, often used to verify the integrity of data. Each block in the blockchain has a unique identifier called a hash.
• P2P (Peer-to-Peer) Network: A computer network in which each computer (or 'peer') has equivalent capabilities and can act as both a client and a server for other nodes on the network. This eliminates the need for a central server.
• Nodes: Computers or servers that are part of the blockchain network and have a copy of the distributed ledger. Nodes participate in the validation and recording of transactions.

So what is blockchain?

The blockchain is a digital ledger made up of 'blocks' of information, joined together in sequence through cryptography. Each block starts with a 'hash', a kind of unique fingerprint. When a new block is created, it contains both its own information and the fingerprint of the previous block, creating a chain of interdependent blocks. This structure makes the system secure: changing a block would alter its hash, causing discrepancies in the chain. An event that would immediately be reported by a miner as a possible corruption.

The real power of the blockchain lies in its distribution and transparency. The information is encrypted, but the passages are visible and verifiable by anyone with access to the blockchain. And because of this decentralized design, it is extremely difficult to hack, as it would require the simultaneous modification of most of the servers on which it resides.

What are the opportunities offered by Distributed Ledger Technologies? First and foremost, the possibility of tracking transactions and interactions between independent parties in a network, guaranteeing security, immutability and transparency. This makes blockchain one of the revolutionary technologies of the Digital Transformation. In fact, thanks to this mechanism, members do not have to trust each other and can carry out transactions without paying intermediaries as guarantors.

If you are interested in a practical example, I recommend reading the full article on DeltalogiX.

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Thanks for reading!