When talking about cryptocurrencies, a popular subject in this era, another word joins the subject: Blockchain.
The Blockchain is a technological advance that can revolutionize the way of making transactions, but not only limited to money payments, but also to perform authentication processes of any type of information.
How are these transactions made?
Normally, if you want to make a payment via internet it is necessary to give certain information, such as your name, card number, social security number, and in some cases, and address. Once this information is given, payment is made, which is authorized by a financial institution (bank, financial institution, or even the government).
While this information is necessary to make the purchase of an item, for some people it may be unnecessary to give this much information and can even generate mistrust, due to the dangers of the information being abused or stolen.
This is when the blockchain comes into play.
How does the blockchain work?
It works in a very simple way. A group of computers, which the users themselves provide, are connected in a network, so when you want to make a transaction, all computers must verify that movement. All connected machines have all this information, but it’s nothing you should be alarmed of, because what’s so different about the blockchain is that it is completely anonymous.
Although it may seem very complicated, it is a technology that in essence has been with us for quite some time.
The bases for this technology exist since 1991, but it was in 2009, when Satoshi Nakamoto developed it more for the Bitcoin project, that the blockchain exploded in use.
An easier example of a blockchain are the programs to download music, movies, files, etc., such as Ares Galaxy, Napster, Kazaa and others. The mode of operation of these programs was with a Peer to Peer (P2P) technology, or also known as a peer network, where all the computers that are connected to the network are in communication.
These programs did not have servers to store all this information, each of the users who had the program made the storage server function, since having a file in a public folder gave the opportunity to others to download, but the result also depended on your internet speed.
To explain the validation of the information in the blockchain system, an example of everyday life is when you and other people save money in a group, all money must be given to the collector, and each of the participants should verify that the money is being delivered.
The same thing happens with the Blockchain, the computers are the assistants, then each of them validates the transaction or the documents that you want to see.
Not all cryptocurrencies use this technology, but those that do are Bitcoin, Ethereum, Monero, and others.
But what happens with the others? The Blockchain is used and fed by the same users, and some crypto have a company that supports them, as is the case of XRP, which is the currency of Ripple and has its own system to validate transactions. In the case of Bitcoin and other virtual currencies that do make up a blockchain, miners do the job, which is a group of people that provide computing power and keep the system flowing.
What are cryptocurrency miners?
As already explained, these are the people who lend their equipment to be able to validate the information, as a compensation, they receive a part of the currency they verify.
In the case of Bitcoin, it is as if it were a contest, each person who is mining validates transactions, and each time a block is validated and is made up of approximately 2,000 transactions, then the miner who does this faster, receives a Bitcoin as a reward ($7,500 dlls according to the conversion rate when this article was made).
But it is not as easy as it seems, because validating this amount of data is complicated due to the mathematical calculations that have to be made.
In conclusion, the blockchain helps speed-up the authentication processes in cryptocurrencies; but if we put it to work in day-to-day situations, it can be even used in the health sector by keeping clinical information that would help in categorization, anonymity and in the fast obtainment of information.