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October 13, 2022

Simply Put: What is Blockchain?

Simply Put: What is Blockchain?

Although people often associate it with bitcoin and cryptocurrency, blockchain is a flexible technology with a vast potential.

Nowadays, blockchain is being applied in contexts that would have once been considered unlikely – insurance, for example, is one of many industries which have been benefiting from its ability to streamline certain operations and offer digital versions of traditional processes, like smart contracts (discover more about it here).

Let’s dive in and find out what blockchain really is, why it’s a core part of SpaceDev and how it can change the world.

Simply Put: Blockchain is used to store and transfer data in a decentralized environment. A type of “distributed ledger technology” (DTL), it keeps records of whatever activity it’s employed to perform through cryptographic blocks of information, forming chains. Blockchain is typically used in peer-to-peer (P2P) computer networks, where algorithm protocols keep data safe from changes unless there’s consensus among everyone in it.

What are some of its key advantages?

Blockchain networks are constituted by nodes (most likely servers), which share authority on data-writing. That means that any operation carried out, such as bitcoin transactions –which can also be from one network to another– must have the approval of every node to be legitimate, making the technology natively safe and more egalitarian for its members. Some networks require the authorization of certain representative nodes instead of everyone – it all depends on the consensus algorithm particular to the network. This hard-coded, automatic process varies from network to network, but unlike traditional centralized systems, such as a bank, there’s never a single, all-controlling entity on which everything depends. Total failure, laggy operations or corrupt players are therefore more often averted.

In short, blockchain provides a transparent, democratic and cost-effective way to work with data. There are three main types of networks:

Public blockchain: This type of blockchain is accessible to any type of user in the world with an Internet connection. The best known examples are Bitcoin and Ethereum.

Private blockchain: This type of blockchain is not open to the general public – generally, you need to be invited to join. Example: Hyperledger.

Hybrid blockchain: As the name suggests, this combines characteristics from public and private blockchains – the participating nodes must have joined through referrals; however, the transactions are public. In other words, transactions are visible to everyone, but those who maintain the security of the blockchain are its members, who have been invited.

What are the advantages of blockchain for individuals and companies?

1. User Control: Transactions made from blockchain networks fall solely in the hands of users and developers. This means there’s no need for intermediaries or third parties who can access personal data to trade or transfer it for profit.

2. Decentralized Storage: The whole of a network’s data is stored in every node! This provides greater security since there’s no single holder of information and it is practically impossible to attack all the servers at the same time.

3. Reliability: Reliability is a direct consequence of the aforementioned feature. For example, Bitcoin, the world's most popular cryptocurrency, has been hosting its service without significant interruptions since 2009. In fact, most of the problems that have affected it were related to piracy or malpractice, rather than safety issues.

4. Transparency: Blockchain technology is almost entirely open source. This means that other users and developers can modify and improve it freely. In addition, altering data is very difficult, since any user can notice, report and correct suspicious behavior.

5. Cost Reduction: Blockchain operations can be completed without the need of a third party or bureaucratic red tape, so certain expenses are avoided. In the case of crypto transactions, the absence of intermediary fees makes commissions a lot cheaper. Even the largest banks can benefit from this!

6. Streamlining: Everything runs in a more agile fashion within a blockchain environment because it’s usually being managed by people all over the world with different time slots, 24 hours a day, 365 days a year. It is very common for a traditional bank to take from hours to days to complete a transaction, while its blockchain equivalent is practically immediate.

What are some of the most popular platforms in the market?

Whether we know anything about blockchain or not, we have all heard the word bitcoin enough to associate it with innovation. However, there are many other platforms that are impacting the market and the lives of millions of crypto users nowadays:

1. Ethereum: Blockchain Platform and Cryptocurrency (ETH): Fully decentralized platform that effectively complies with smart contract rules.

2. Hyperledger Fabric: Open source blockchain framework that provides versatile designs for users who want to develop software solutions using modular architecture.  Known as "the network of networks", it allows companies to keep their data private.

3. Cardano: Blockchain and Cryptocurrency Platform (ADA): State-of-the-art platform that is based on smart contracts.

4. Ripple (Blockchain Platform and Cryptocurrency (XRP): Currently, it focuses on the development of financial applications within its environment, but some time ago it worked as a link between crypto  exchanges, banks and payment providers.

5. Stellar: Considered one of the best options for fast transactions through a decentralized network. Focusing mainly on the financial sector, it is an open  blockchain network with which several financial institutions (including banks) have begun experimenting to improve the flow of their services.

 6. EOS: This platform has many features similar to Ethereum and Bitcoin. EOS is dedicated to the development of DApps (“Decentralized Applications”) and  provides smart contracts, DApp hosting and decentralized storage for companies with scalability issues.

 7. Corda: Open source platform where developers can create authoritative solutions. All applications built on Corda are known as CorDApps and are highly  scalable across sectors such as finance, insurance, energy, healthcare and more. Transaction and maintenance costs are reduced because all  processes are optimized.

Which domains or industries can blockchain be used in? 

And much, much more! So, are you ready to venture into this wonderful world?

If you have any questions about blockchain or how it might benefit your project, do not hesitate to reach us at info@spacedev.io

If you want to deepen this knowledge, below you can find the references used in this article:

https://hbr.org/2017/01/the-truth-about-blockchain

https://blog.ethereum.org/2015/08/07/on-public-and-private-blockchains

https://www.researchgate.net/publication/314213262_A_Taxonomy_of_Blockchain-Based_Systems_for_Architecture_Design

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