Blockchain and Its Applications

Blockchain is a technology that is still in its infancy. Perhaps many of us have heard of this Blockchain technology. If you know the crypto currencies, including the famous Bitcoin, it is with the help of this technology (the Blockchain) that they can work.

While it was originally designed for secure Bitcoin transactions, it is essential for other sectors as well. This is because it has the potential to simplify and further secure data management. It is now proposed to improve several sectors: governance, energy, music, etc.

Blockchain, however, remains a new and misunderstood concept.

What is Blockchain Technology?

Created in 2009 in the financial sector, the Blockchain (literally chain of blocks in French) is defined by the mathematician Jean-Paul Delahaye as: “A very large notebook that everyone can read freely and for free and on which everyone in the world can write but which is impossible to erase and indestructible.”

A Blockchain is a register, a large database, which has the special feature that it is shared simultaneously with all its users. All also holders of this register and who also all have the capacity to enter data according to specific rules. Created by a computer protocol that is highly secured thanks to cryptography.

It is more like a certain decentralized structure for storing information that must be tamper-proof, secure, transparent and not controlled by any auditing body.

This trust-based technology makes it possible, for example, to send money digitally and peer-to-peer without going through a bank. It’s a technology that helps cut out the middleman in many traditional industries: banking, insurance, entertainment, government, and more.

Although it is a technology that is still at an early stage of development, in reality it is already being used for crypto currencies, for storing government data, etc. The most popular Blockchain to date is Bitcoin.

The Origin of Blockchain

Blockchain was discovered as the technology that enables the exchange of Bitcoins. Bitcoin is a digital currency created in 2008 by Satoshi Nakamoto, an individual or group who remained anonymous.

It was the growing popularity of Bitcoin that brought the concept of Blockchain to light. But the Blockchain goes beyond Bitcoin’s simple framework. There are a large number of Blockchains, each of which has its own specific characteristics. However, there are common features that help to situate the concept.

How does Blockchain work?

The Blockchain is like a big notarized database that contains all the exchanges that have taken place since its existence. Each of the participants has access to a copy of this database. As well as to the complete history of all exchanges that have taken place between its users since its inception. These are the main features:

• The identification of each party is performed by a cryptographic process.

• The transaction is sent to a network (or storage node) of computers around the world.

• Each “node” hosts a copy of the database that records the history of the transactions performed. All stakeholders can access it simultaneously.

• The security system is based on a consensus mechanism of all “nodes” every time information is added. Data is decrypted and verified by “data centers” or “miners”. The transaction thus validated is added to the database in the form of a block of encrypted data (this is the “block” in Blockchain).

• Decentralized security management prevents transaction counterfeiting. Each new block added to the blockchain is linked to the previous one and a copy is sent to all nodes of the network. The integration is chronological, indelible and fraud proof.

The architecture is described as decentralized because it is not hosted by a single server but works peer-to-peer or user-to-user.

When a transaction is issued, it is immediately pooled with other transactions released at the same time: the latter are grouped into a block. Once created, this block must be managed.

In this way, the Blockchain registers every movement, transaction or event and this ensures traceability. Before:

• Each stakeholder is identified by a pseudonym or an identifier that would make it difficult or even impossible to trace the entity or person.

• Any transaction or information is sent through a network of computers located around the world.

• A history of all transactions is accessible to all actors of the relevant Blockchain.

• A consensus of all nodes secures the system every time information is added: the data arrives signed and then authenticated.

• Each transaction is recorded in a data block. When a block is ‘filled up’ a new block is created and it is directly linked to the previous one by its digital hash. It then automatically and immediately creates a permanent copy across the entire network. This is what makes the encrypted information on the Blockchain immutable and nearly impossible to change.

What is Blockchain used for?

Using the Blockchain has many advantages:

• Combating piracy of, for example, films, videos and music: with the Internet, downloading artistic works has become commonplace although regulated. Blockchain technology makes it possible to combat this piracy.

• System security and authentication of operations: The market for counterfeiting is prosperous and the Internet facilitates illegal trade because the validation of a transaction is carried out by a series of different users who do not know each other. This protects against the risk of malicious intent or hijacking as the nodes monitor the system and control each other.

• Archiving of medical records and parts of the medical record: the medical information of each of us from both very personal and intimate data that deserves confidential treatment. But the knowledge of which by third parties proves to be essential in case of emergency, accident, illness or any other situation of loss of consciousness.

• The speed of transactions: thanks to the fact that the validation of a block only takes a few seconds to a few minutes.

• Productivity and efficiency gains: generated thanks to the fact that the Blockchain entrusts the organization of exchanges to a computer protocol and which mechanically reduces the transaction or centralization costs that exist in traditional systems (financial costs, control or certification, use of paid intermediaries for their service, automation of certain services, etc.).

The Limits of Blockchain

Despite all its promises, Blockchain technology has its limits:

• A Blockchain does not completely replace intermediaries. For example, the Blockchain cannot itself certify the authenticity of a diploma: it can guarantee its permanent authentication if an institution registers it on the network. The promise of going without a supervisory authority is not desirable in all situations. On the other hand, the user remains dependent on the platform that provides a user interface for this Blockchain.

• Blockchain projects are not foolproof. The automation of operations recorded on a blockchain are guarantees of security and transparency. However, exploiting a flaw by a hacker is a risk that must always be considered.

• Some Blockchains are energy intensive. The Proof of Work validation system, which is used by many Blockchains (including Bitcoin), ensures the security of the registry and consumes a lot of energy.

• The Blockchain is theoretically not invulnerable to attacks. It remains extremely unlikely that a Blockchain will fail. Network architecture not only makes hacker attacks costly and complicated, but also limits the nature of possible hacks. However, the 51% attack (also known as the Gold Finger attack which consists of collecting more than 50% of the network’s total computing power) is not statistically impossible; it has already been extensively studied. Its action is limited to not validating transactions or double spending. Collecting more than half of the computing power (capacity or currency units) is a deterrent. Such an attack would require a huge financial investment to obtain the necessary computing power and it would be difficult for the attacker to remain anonymous. In addition, the hack would be identified quickly: users are unlikely to choose to continue on the hacked channel.