Blockchains are all the hype right now. And there’s a good reason for that, it’s an expanding technology, filled with new solutions, that is still far from reaching its full potential.In some past articles, we’ve been expanding on the possibilities that Web3 has given us, but to truly do so, it’s necessary to talk about the spine that makes all these new resources viable. Don’t worry though, we won’t get on technicalities and complex terms, or at least will do it as little as possible.
Maybe you heard this before when you started to learn about blockchains: “Blockchain is a virtual, shareable, immutable, decentralized ledger”, or “Blockchain consists of blocks of information that are distributed into all members of the chain”, among several other definitions. They are all correct, of course, but maybe they weren’t clear enough for you and that’s fine.
Let’s try this: Think of blockchain as a book that records information. Not only transactions, as a ledger would, but all sorts of information, from contracts - not the smart variety, that’s for later - to medical exams, government-issued IDs, to a company’s inventory, banking data, land titles, anything really. The catch here is that the information is stored in order, one after the other, that’s why the ledger idea is so widespread. One may ask who has this book then, and the answer is: every one that participates in the blockchain, the so-called ‘nodes’. That is interesting because it’s the first differential about this technology.
Blockchains are, by nature, decentralized solutions, even those that are only partially decentralized. Nodes, the users, all support the blockchain by keeping a copy of all the information that it holds, that way when any new information is added, the chain system checks if the new information was added to the correct place, if the new block of data does not contradict any of the previous, it does that by checking the information that all the other nodes holds, hence the high level of trust one can have on the information stored. That being said, there are different types of blockchains out there, and it’s important to understand their differences.
Private, Public, Hybrid?
Public blockchains, also known as permissionless, are open to anyone that wants to participate in them. Bitcoin works like this and one can argue that public blockchains are the original vision of Satoshi Nakamoto, but the fact is that Web3 has come a long way since the “Bitcoin manifesto” was written.
Public blockchains defend the idea of anonymity, no one knows who you are there, but you also don’t know who you’re dealing with. They are very secure, since transactions can only be added, not edited, not removed. And in order to verify a transaction, it needs to be recognized by the majority of the members on the chain, which means that every node, everyone “holding the book that stores information” will confirm that the transaction is legitimate. The larger the number of members, the larger the security, since attacks would need to take place on a great number of nodes. On the other hand, this verification process can sometimes take a huge amount of energy, this is an issue that is being addressed with other solutions.
These blockchains are not only secure, but they are also transparent, because they use open source codes, everyone can see the transactions that happened there, even if they don’t really know who’s behind it or what was negotiated.
Private blockchains are managed by a network administrator who authorizes candidates to become participants, and determine what permissions they have, such as only buying or selling, adding entries, and being capable of mining, among other things.
They have inherent advantages, such as the speed of processing, since their size is smaller. A good example of solutions created by private blockchain is business-to-business networks such as Ripple and Hyperledger.
Hybrid blockchains are an interesting middle ground between public and private, such as IBM Food Trust, an incredible solution developed by IBM that you can learn more about by clicking here. Transactions on these blockchains are private, but can be checked if needed using tools like smart contracts to do so, at the same time that private information is kept hidden in servers. Users joining hybrid chains have complete access to the network and can enjoy privacy until they engage in transactions, when they will be known by the other party.
A solution for each need
The big thing to be taken into mind is that blockchains are way more than cryptocurrency or NFTs. They are a growing solution capable of providing trust to all sorts of transactions. They are a form to consolidate data in a way that is digital but incorruptible.
It is true that blockchains became a niche theme, but that is slowly but surely changing and the information is spreading on how this technology can change our lives. Be it on gaming, food chains, medical field, or the government, there’s a lot to be explored each day.