Cryptocurrencies: do you know what blockchain is?

With the cryptocurrency market, several terms have emerged that are part of this scenario. Many derive from banking logic, such as cryptocurrency custody.

But, as it turns out that many of these terms are kept in English, it gets a little complicated for us Brazilians. Some are, for example: timestamps, proof-of-work, blockchain…

Today, we will start with this term that is very well-known in the world of NFTs and the digital market. After all, what is it? blockchain?

The blockchain process is so important today that it is beginning to be applied in areas other than the financial investment market.

There is a case for testing the use of this process in preventing fake news in Brazil and national projects that use the blockchain as a basis for converting CO² emissions from cars into tokens for environmental compensation.

Its applications are diverse and, above all, interesting for so many areas due to the level of security that it provides. blockchain guarantees for the processes. So, now let’s understand what it is and how it works.

What is it blockchain?

Enough of the chit-chat, let’s understand what it is blockchain indeed! Basically, blockchain is a large shared database that records users’ asset transactions within blocks that are organized in a chain format.

At blockchain Bitcoin, for example, stores several important pieces of information, such as the amount of cryptocurrencies that users transferred to each other, the identification (digital address) of those who sent and received amounts, and the date and time of these transactions.

The difference between this system and “traditional” databases is that it is not controlled by authorities, such as banks, companies, groups or governments.

The only people who control the system are the people involved in the transactions. Everyone is connected to a network and decisions are made jointly.

So whenever someone bought or sold cryptocurrencies, a copy of the blockchain of this asset was created on the computer of those involved, who are spread across the world.

All participants have access to the same information when they access the system and no changes can be made without everyone’s mutual approval.

Furthermore, the data of these transactions and assets that have been validated and recorded are eternal and can never be changed (immutable).

The mechanism that guarantees this is an algorithm. In Bitcoin the most traditional one is Proof-of-Work (proof of work) that guides the user on how and what to do when he receives information and how it is validated and organized. And to organize all of this, a system is in charge.

What is the process of a blockchain?

Now that you know what it is blockchainlet’s understand how it works. To make it easier, let’s look at the term literally: loosely translated, “blockchain” means “blockchain“.

Remember that, earlier, we said that data is saved in blocks and that these blocks are organized in a chain format? That’s right!

In traditional databases, blocks are organized like boxes on shelves. That is, when you pull one of these boxes, the others will not necessarily be affected.

On the other hand, thinking of a chain as a necklace, if there is an impact on any block in the chain, it will break and it will be easy to see that the data has been affected.

With this, consider that a block contains all the information of a registered cryptocurrency, such as its origin (digital address), date and time of transfer, including who sent it to whom.

So when a new transaction is made, a new block of information – who is buying – related to a “chunk” of information from the original block – who is selling – is created.

This new block is connected to the previous one, creating another link in the chain, in a logic similar to that of a thread from Twitter, for example.

And each block is “sealed” with a type of stamp that contains the date and time, called a timestamp (time stamp). Then it is “packaged” with an identifier, called a hash.

To visualize it better, think of the box (block) is marked with a label (hash) and a stamp (timestamp). Just like a pizza box that you order for delivery and comes with the seal “do not consume if this seal is broken”.

In the example, the pizza is the data. The box is the block in which the data is stored and transported. And the stamp is the hashwhich usually comes with an invoice (which would be the timestamp of cryptocurrencies in blockchain).

Of course, this doesn’t make it blockchain a resource that cannot be surpassed by hackers. But, certainly, this structure brings more reliability to the process and makes it possible to easily identify when there has been any type of breach of information security.

Are you now more comfortable understanding how cryptocurrencies can be secure? Was this content useful to you? Tell us in the comments.