Cyberspace is an artificial universe created by man and its inhabitants or netizens who need a secure way to authenticate assets in an environment where there is no regulator or centralised entity. Blockchain emerges as a technological innovation that solves the problem of providing security in a decentralised model, where the same users become validators and guarantors of the authenticity of the transactions.
We Could Summarise Three Reasons Why it Generates Trust in Users:
It uses a cryptographic function that is essentially a mathematical algorithm to store the data and metadata of a transaction, which is not only complex but also unique. That is, a data set will have a unique cryptographic code or “hash”, if data is altered, that code is changed accordingly.
The chain concept: each new transaction adds a new block that joins the chain and this, in addition to its information, contains information from the previous block.
In web3 future allows that if a user alters the information of a block, he alters all the following blocks, invalidating the chain. Correcting something like that would require huge computing power so it becomes expensive.
Although it may seem paradoxical, the fact that it is a model without central control, far from being a point against it, is what most strengthens confidence, since this allows two fundamental things:
Transparency, the same information is distributed among all users and authenticity is achieved by consensus, that is, everyone validates the chain of blocks and
Availability, if a network point is disabled, the network continues to function because everyone has the same information, which does not happen in a centralised network.
What are the Different types of Blockchains?
Currently, we can talk about basically four types of blockchains. Public blockchains, private blockchains, federated blockchains, and blockchains as services (in the cloud).
Other differentiations could be achieved due to their nature, that is, for what type of assets they are created, such as the original blockchain for cryptocurrencies such as Bitcoin or blockchain to handle other types of assets such as digitised contracts. But going back to the first classification we have:
Public Blockchains: as its name indicates, it allows access by anyone just by installing the application that allows interaction with it. It has no administrators, users are anonymous, and data and transactions can be maintained by anyone who wishes.
Private blockchains: access to the blockchain requires authorization. The chain belongs to an entity and therefore it is in charge of managing said chain, that is, registering transactions and accepting the blocks. A chain of this type can occur when an entity or a company decides to create its own blockchain to handle its transactions.
Federated chains of blocks: they correspond to chains where associations of companies or sectors, such as the government, establish a chain that is used by various entities within the said association, thus allowing access to members of associated entities and managing the chain among all, but restricting access to the general public.
In these chains, as well as in private blockchains, the concept of mining or chain management, as we know it in a public blockchain, loses all meaning since there is no remuneration for this activity.
Blockchains as a service (BaaS: Blockchain-as-a-Service): some companies offer the blockchain structure under a cloud concept allowing the development and hosting of blockchain applications.
What are the Different uses of a Blockchain?
The Blockchain is most commonly used for cryptocurrencies like Bitcoin, Ethereum, and Litecoin. These use Blockchain technology, however, there are more uses among which can be named mainly:
Control over sources: in supply chains Blockchain or the Block Chain can help organisations verify where products come from, track their movement, strengthen transparency, avoiding fraud and counterfeiting.
Financial instruments: Blockchain can improve the payment infrastructure by establishing, for example, more efficient compensation models, transforming cross-border payments, such as family remittances, reducing costs and streamlining transactions.
Identity Control: Blockchain can protect personal credentials online, such as personal identification, driver’s licence, educational certificates and professional certifications. Identity theft and fraud are decreased as a result.
Smart contracts: technology allows the implementation of contracts that operate digitally, gathering aspects such as accounting aspects or payments to third parties.
In line with what is established in digitised contracts in the chain of blocks, also keeping a detailed record that allows improving the flow of agreements and allowing the resolution of disputes in a transparent manner.
Loyalty Programs: Blockchain, through integration with Customer Relationship Management (CRM) platforms, can boost customer engagement by making it easier to manage and control loyalty programs through smartphones.
Like any other asset, using Blockchain technology has risks. Let’s remember that Blockchain creates digital assets or crypto assets.
Weaknesses in security around devices (hardware), networks or applications (software) could allow cybercriminals to appropriate assets, they can be stolen. A user could forget or lose her passwords or credentials and that represents the loss of assets.
Since the invention of the internet, blockchain technology has the potential to be the most revolutionary. In an increasingly connected world, this offers a significant problem for our clients.
Thus it is crucial for us to be able to assist them in comprehending how it affects them, preparing to incorporate this technology into their operations and fostering trust in the transformation process.
Clients at an early stage require support in education, accompaniment to evaluate their strategic possibilities with this technology, and evaluation of possible suppliers and solutions adapted to their operations.
Then in an already operational stage, transaction assurance is required, and support is provided in areas such as general IT controls, cybersecurity and internal audit on transactions and blockchain assets.