Much is said about Blockchain when it comes to trading crypto assets, but does everyone know what it is? Here the details of this technology ...
Much is said about Blockchain when it comes to trading crypto assets, but does everyone really know what it is?
As important as knowing about the best exchanges where to buy cryptocurrencies , it is also important to have a basic notion of the technology that supports the entire operation: the Blockchain.
On the other hand, there are those who have also raised the question of whether this year, with this global crisis, is it good or not to invest in crypto assets. In this regard, on the economiadehoy.es website it is possible to find cryptocurrency news that gives a much better understanding of the current investment landscape. Likewise, the BBC portal also presents some positive projections regarding the value of Bitcoin for this year.
Returning to Blockchain, the first thing to keep in mind is that it is a cryptocurrency block exploration technology that contextualizes and supports their exchange. However, and although it has been created to support cryptocurrencies, the Blockchain is also used to register documents, properties, smart contracts and patents.
Blockchain: the public ledger of online transactions
In more colloquial terms, we could define the Blockchain as a public ledger in which the transactions of crypto assets gathered in blocks safe against adulterations are sustained.
This technology is made up of certain elements that ensure its operation:
P2P distributed network
Private key cryptography and time stamping
Consensus mechanism
Shared ledger or database
Incentives for transaction processing, data storage and security.
Within the Blockchain ecosystem, each computer connected to the network is a node that has an identical copy of the blockchain. In the event that a node is compromised by hacking, hardware failure or some other cause, the book remains intact in the rest of the nodes.
Consensus mechanisms and smart contracts
The integration of the elements that make up the Blockchain is carried out by consensus mechanisms and smart contracts.
The main function of consensus mechanisms is to determine which block of transactions will be written in the ledger and make it unique, while preventing other adversaries from damaging the chain of blocks. One of the most popular mechanisms is the one called Proof of Stake- PoS, which serves as validator or miner nodes that invest in system currencies.
For their part, smart contracts are computer programs that execute registered agreements between people and organizations through the Blockchain. How do they work? When there is a pre-programmed condition, the smart contract is executed with the corresponding contractual clause, thus providing superior security to the law of traditional contracts, thereby reducing transaction costs. It is in itself, the law of exchanges.
These can be applicable to any transaction that requires the agreement of two parties, such as guarantee deposits, trading operations, and even the contracting of financial or insurance products.
Types of Blockchain
Basically, there are three types of Blockchain:
Public blockchain: allows you to read transactions, submit them and participate in the consensus process.
Consortium Blockchain: It is a consensus process controlled by pre-selected nodes.
Private blockchain: an organization is in charge of keeping the permissions to write transactions centralized. After writing, the read permissions can be restricted or public, depending on the manager's decision.
