What is Blockchain?

It can be defined as a shared digital ledger comprising a list of connected and stored blocks in a distributed, decentralized, cryptographically protected network, serving as an irreversible and incorruptible repository of information. Recorded transactions, which can involve any kind of value, money, property or votes (Beck & Müller-Bloch, 2017, p.5390), cannot be retroactively modified without altering all subsequent blocks; in fact, new blocks are validated by peers in the Network, granting credibility and preventing malicious activities (Wright & De Filippi, 2015, pp. 8-9). 


Although the first blockchain came hand in hand with the bitcoin cryptocurrency, today this technology has spread, with public blockchains, private blockchains and hybrid blockchains. Public platforms operating in a decentralized framework allow anyone to join the network, read transactions, transfer assets and participate in the consensus process (e.g. Bitcoin and Ethereum). Private ones of a centralized nature and with certain authorization, are characterized by being faster, allowing only certain pre-approved members to operate, their main functions being auditing and management.

How are the blocks linked?

These blocks are interlinked by means of pointers or hash algorithms that connect the current block with the previous one and so on until the so-called genesis block is reached. Since this hash is unique and corresponds only to the file on which the algorithm has been applied, it will serve to determine whether it has been manipulated or not. In other words, if the algorithm returns a sequence different from the initial one, it means that the file has been modified.

What does each block contain? 
Each block belonging to the chain contains information about the transactions related to a period, the cryptographic address of the previous block (through the pointers) and an arbitrary unique number (nonce). Nonce is a random number issued by the miners through Proof of Work (PoW), which serves to authenticate the current block and prevent the information from being reused or changed without performing all the work again. Once the block to be closed has been formed, in order to proceed with the closure and incorporate it into an existing chain, it is necessary to find out the nonce by means of computer tests; by adding this numerical data, the resulting hash of the entire block will have the configuration determined by the system, and this block can be added to the existing ones. 

Does Blockchain Technology reduce risks?
Yes. Based on the above, it can be said that the use of Blockchain technology reduces risks, eliminates human error and promotes efficiency, leading to increased transparency and reliability, and reducing the possibility of fraud. These virtues stem from its unmodifiable nature, which makes it an immutable record.

 

 

Where are transactions recorded?
Transactions are recorded in a structure called Merkle Tree, which groups the blocks of information in pairs and generates a pointer (hash) for each block of data. Then the generated hashes are grouped again in a wall and configure a new hash, which in turn is grouped with another one and so on up the tree to reach a single block and reduce the space occupied by each block. In addition, this structure allows traversing any point of the tree to verify that the data has not been manipulated, if any block of data at the bottom of the tree is manipulated, the pointer or hash of the upper level will not match.

What is a token and what is its relationship with Blockchain?
Blockchain is not only used to generate bitcoins but also to acquire tokens. From a technical perspective, Blockchain can be used to manage the transfer of traditional assets such as stocks, bonds and even real estate, simply by correlating property rights with a token backed by a blockchain, and can be exchanged by anyone with an Internet connection in a matter of seconds.

The concept of token, in Spanish means token, but in the digital scenario it is defined as:
A unit of value that an organization (or private entity) creates to govern its business model and give more power to its users to interact with its products, while facilitating the distribution and sharing of benefits” (Mougayar, 2016, p. 24).

What is tokenization?
Tokenization is the process of abstractly representing a value in correspondence with the actual asset. Tokens represent a new way of building ecosystems, reshaping entrepreneurship (Chen, 2018, p. 568) and are a key element in the digital economy.

Where in the chain are tokens born?
They are not born from a blockchain, but are created at the top of the referred chain and are governed by Smart Contracts.

What is a Smart Contract?
Until now, contracts, agreements between two or more parties, have been mostly documented in writing. A smart contract is the autonomous and automatic version of executing a traditional contract. Without intermediaries or mediators, smart contracts reduce costs, time and interpretation errors. They are “scripts” or computer codes, written in programming languages. This means that the terms of the contract are purely sentences and commands in the code that forms it. It can be created and called by individuals and/or legal entities, but also by machines or other autonomously operating programs. A Smart Contract is valid without depending on authorities as it is a visible code that cannot be changed, thanks to Blockchain technology. This gives it a decentralized, immutable and transparent character.

Articles

What is Blockchain?

It can be defined as a shared digital ledger comprising a list of connected and stored blocks in a distributed, decentralized, cryptographically protected network, serving as an irreversible and incorruptible repository of information. Recorded transactions, which can involve any kind of value, money, property or votes (Beck & Müller-Bloch, 2017, p.5390), cannot be retroactively modified without altering all subsequent blocks; in fact, new blocks are validated by peers in the Network, granting credibility and preventing malicious activities (Wright & De Filippi, 2015, pp. 8-9).

Although the first blockchain came hand in hand with the bitcoin cryptocurrency, today this technology has spread, with public blockchains, private blockchains and hybrid blockchains. Public platforms operating in a decentralized framework allow anyone to join the network, read transactions, transfer assets and participate in the consensus process (e.g. Bitcoin and Ethereum). Private ones of a centralized nature and with certain authorization, are characterized by being faster, allowing only certain pre-approved members to operate, their main functions being auditing and management.

How are the blocks linked?

These blocks are interlinked by means of pointers or hash algorithms that connect the current block with the previous one and so on until the so-called genesis block is reached. Since this hash is unique and corresponds only to the file on which the algorithm has been applied, it will serve to determine whether it has been manipulated or not. In other words, if the algorithm returns a sequence different from the initial one, it means that the file has been modified.

What does each block contain? 
Each block belonging to the chain contains information about the transactions related to a period, the cryptographic address of the previous block (through the pointers) and an arbitrary unique number (nonce). Nonce is a random number issued by the miners through Proof of Work (PoW), which serves to authenticate the current block and prevent the information from being reused or changed without performing all the work again. Once the block to be closed has been formed, in order to proceed with the closure and incorporate it into an existing chain, it is necessary to find out the nonce by means of computer tests; by adding this numerical data, the resulting hash of the entire block will have the configuration determined by the system, and this block can be added to the existing ones. 

Does Blockchain Technology reduce risks?
Yes. Based on the above, it can be said that the use of Blockchain technology reduces risks, eliminates human error and promotes efficiency, leading to increased transparency and reliability, and reducing the possibility of fraud. These virtues stem from its unmodifiable nature, which makes it an immutable record.

 

 

Where are transactions recorded?
Transactions are recorded in a structure called Merkle Tree, which groups the blocks of information in pairs and generates a pointer (hash) for each block of data. Then the generated hashes are grouped again in a wall and configure a new hash, which in turn is grouped with another one and so on up the tree to reach a single block and reduce the space occupied by each block. In addition, this structure allows traversing any point of the tree to verify that the data has not been manipulated, if any block of data at the bottom of the tree is manipulated, the pointer or hash of the upper level will not match.

What is a token and what is its relationship with Blockchain?
Blockchain is not only used to generate bitcoins but also to acquire tokens. From a technical perspective, Blockchain can be used to manage the transfer of traditional assets such as stocks, bonds and even real estate, simply by correlating property rights with a token backed by a blockchain, and can be exchanged by anyone with an Internet connection in a matter of seconds.

The concept of token, in Spanish means token, but in the digital scenario it is defined as:
A unit of value that an organization (or private entity) creates to govern its business model and give more power to its users to interact with its products, while facilitating the distribution and sharing of benefits” (Mougayar, 2016, p. 24).

What is tokenization?
Tokenization is the process of abstractly representing a value in correspondence with the actual asset. Tokens represent a new way of building ecosystems, reshaping entrepreneurship (Chen, 2018, p. 568) and are a key element in the digital economy.

Where in the chain are tokens born?
They are not born from a blockchain, but are created at the top of the referred chain and are governed by Smart Contracts.

What is a Smart Contract?
Until now, contracts, agreements between two or more parties, have been mostly documented in writing. A smart contract is the autonomous and automatic version of executing a traditional contract. Without intermediaries or mediators, smart contracts reduce costs, time and interpretation errors. They are “scripts” or computer codes, written in programming languages. This means that the terms of the contract are purely sentences and commands in the code that forms it. It can be created and called by individuals and/or legal entities, but also by machines or other autonomously operating programs. A Smart Contract is valid without depending on authorities as it is a visible code that cannot be changed, thanks to Blockchain technology. This gives it a decentralized, immutable and transparent character.

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