Born to support the cryptocurrency bitcoin (recently launched in bag), Blockchain technology is making a lot of noise lately and promises a faster, simpler, and more secure future.

Blockchain allows the elimination of centralized supervision and authentication and delegates that work to a distributed network, not only without compromising the security and integrity of the data, but strengthening them.

In the words of Don Tapscott and Alex Tapscott, founders of the Blockchain Research Institute:

“Blockchain technology is an incorruptible digital ledger of economic transactions that can be programmed to record not only financial transactions but virtually anything of value.”

What is blockchain?

Exactly what its name indicates: a blockchain.  

As in any chain, each block is linked to the previous block and the next block.

Each block carries the corresponding information (financial transactions in the case of virtual currencies) and a header information, which includes the identifier of the previous block.

How does this chain work correctly and safely?

Let's look at the characteristics of this technology.

Replicated database… across millions of nodes

The information contained in a blockchain is a shared database, replicated across multiple nodes (computers), which is continuously updated and validated. There is no centralized version of this information that anyone can steal or corrupt. The data is accessible and verifiable to anyone on the internet, or at least within each blockchain network, since there are both public and private blockchain networks.

An analogy between blockchain and traditional centralized systems can be drawn with Google Docs/Sheets and the classic text document or spreadsheet that colleagues email and that can only be edited by one person at a time. This is the same system banks use to manage balances and money transfers and sell airline tickets: access is briefly blocked while a transfer is made, then updated and access is reopened. With Google Docs/Sheets, all users have access to the same document simultaneously, and the single version of that document is always visible to everyone. In many work scenarios, this way of working with single, shared, and simultaneously editable documents greatly simplifies work and saves a significant amount of time. Obviously, we don't need a blockchain to share documents, but this analogy illustrates the advantages provided by the replicated database of blockchain.

A network of nodes… without a central node

A node is any computer that connects to the blockchain network (network P2P) using a client. Upon connecting to the network, a copy of the blockchain is automatically downloaded.

The nodes in the network perform two main operations:

• Validating blocks: the famous "mining". When a node validates a new block, it is rewarded; on the Bitcoin network, it earns bitcoins. Nodes do not mine by default; it is something they choose to do.
• Retransmit and verify transactions and blocks, thus ensuring that all nodes have the same information.

Each node is a blockchain administrator and joins the network voluntarily (in this sense, the network is decentralized because no one authorizes or denies access, and all nodes are equal). Each node has an incentive to participate in the network: the possibility of earning "rewards" by validating blocks.

In the case of Bitcoin, a global network of computers uses blockchain technology to jointly manage the database that records Bitcoin transactions. In other words, Bitcoin is managed by its network and not by any central authority. Decentralization means that the network operates on a peer-to-peer basis.

Blockchain is a decentralized network

Block validation: the proof of work

Once a node decides to mine, it can create a new block with pending transactions.

At that point, it competes with millions of other nodes to see if its local block will become the next block in the chain for the entire network. This competition is conducted by "rolling the dice," that is, by running an algorithm to find a random key that validates the block. This algorithm is known as "proof of work."

The fundamental idea behind this is that the nodes involved in a system must provide proof of their interest in the system. To do this, they must demonstrate that they have dedicated a certain amount of resources: in this case, computing time; this is the proof of work. The cost of verifying this proof for the other nodes must be low, and it is, since checking that the key is correct with respect to the block is very fast.

The work test is a distributed consensus protocol For distributed networks, finding the random key to validate a block is highly improbable by design. Miners must invest time and effort and rely on a great deal of luck. This prevents fraud and makes the network secure (unless a malicious user owns more than half of the nodes). Despite the random nature of the process, because many nodes are mining, there is a probability that one will succeed within a certain timeframe, and new blocks are published on the chain at a fixed interval. In Bitcoin, blocks are published every 10 minutes on average.

If a node finds the key, the block is confirmed and sent to all other nodes in the network. All nodes verify that the block is correct, add it to their copy of the chain, and attempt to build a new block with new pending transactions. Obviously, more than one node can generate a block at the same time and send it to the other nodes. This conflict is resolved by the rule of... longer chain:

• If a node receives block n and it is correct, it can start working on the next block n+1.
• If in a few seconds another block n appears, which also has a second block n+1, we select this second block n as the correct one (longest chain) and start mining block n+2.

Longest chain rule

Block validation is called mining by analogy with gold mining, where there was a random element in finding gold and also a reward upon success; Bitcoin block mining brings with it a financial reward in the form of bitcoins. The people who manage nodes on a blockchain are also called miners.

Is there really no danger?

From the point of view of network operation and information reliability, we have seen the robustness and security that this technology provides.

From the perspective of the user's valuable information, which is money in the case of virtual currencies, the user must indeed keep their wallet and their private keyThere is no "Forgot my password" button, and you can't knock on any doors. You must have backups of your digital wallet and never lose your private key.

We have recent examples of these human failings, from spending months of anxiety because of having lost the key even attempting to search a municipal landfill to find a laptop whose hard drive contains stored 100 million euros in Bitcoins.

Are we facing a new Web 3.0?

By creating a new way to verify transactions, traditional trading controls can become unnecessary. Stock market operations become nearly instantaneous on the blockchain, and decentralization becomes a reality. Bitcoin transactions in 2016 averaged over $200,000 per day.

The Web gains a new layer of functionality with Blockchain technology:

Users can make transactions
directly between them in a very secure system

With the added security provided by blockchain, new online businesses can emerge outside of traditional financial institutions. Blockchain technology promises a bright future, but it is already a reality.

• A pilot test BBVA and the Israeli company Wave have managed to automate international trade documentation processes with blockchain, drastically reducing processing times: from about ten days to just over two hours.
• directly between them in a very secure system seduce to large companies:
  “It’s not just BBVA. Ibex giants like Santander, CaixaBank, Repsol, Gas Natural Fenosa, Iberdrola, and Telefónica presented Alastria last month, the first multi-sector consortium based on blockchain, in which some 70 companies participate. This platform is also open to smaller companies, universities, and other entities joining.”
• Smart contracts: Ethereum It is an open-source blockchain project that was built specifically for smart contracts.
• Governance: Blockchain technology could bring complete transparency to elections or any other type of voting. Ethereum-based smart contracts help automate the process.
• The app Boardroom it enables business decision-making on the blockchain. In practice, this means that corporate governance becomes completely transparent and verifiable when managing digital assets, shares, or information.
• Multiple applications can be found in other sectors: public registries, intellectual property protection, identity management, tax collection, IoT (Internet of Things), supply chain traceability, and more examples in this page (in English).

The Soltel Group is also working on Blockchain technology through its R&D and Software Engineering Divisions. It currently participates in a national consortium of companies, universities, and research centers for the development of blockchain technology that will enable the creation of new services. Soltel will propose new solutions in the industrial and energy sectors for managing the identity, reliability, and traceability of transactions involving goods and services, offering significant improvements over other solutions based on previous technologies.

In addition, the consortium as a whole will address the following lines:

• To investigate how a disruptive technology like Blockchain can address the specific challenges and needs of different strategic sectors for the state economy.
• Industrial research into identity management mechanisms based on Blockchain technology that allows the coordination and exchange of information about clients in different domains: banking, insurance, energy, public administration, etc.
• Development of technology for the validation of the concept of traceability of industrial assets or digital copies thereof aimed at improving the transparency and visibility of the entire value chain.
• Industrial research into solutions for exercising the right to be forgotten on blockchain-based systems, offering mechanisms that allow Blockchain to be compatible with the new GDPR legislation.

It is difficult to say today whether blockchain will bring about the revolution it promises or end up being a speculative bubble, as some already suggest. voicesHowever, there are already many real projects, pilot projects, and, above all, a great deal of potential in multiple applications. Let's hope that the technology continues to take hold and allows us to perform faster, simpler, and safer operations.