Blockchain technology, a kind of free-to-use and transparent account book, makes crypto-currencies work. But, it also has other daily applications, more and more numerous.
The blockchain, or block chain in French, is still a relatively recent technology. However, it is increasingly used, whether to store information, to exchange NFTs, or to operate cryptocurrencies.
Some companies are even considering using the technology in areas other than cryptocurrencies, such as in the luxury and gaming industries. But, how do blockchains really work? We answer your questions.
What is Blockchain?
First of all, it is important to clarify that the term blockchain refers to a technology, it does not refer to a single blockchain in particular. There are also a very large number of blockchains, each of which meets specific needs. In this article, however, we will focus on public blockchains, used for cryptocurrencies and which are the most popular.
A blockchain is a kind of huge public ledger, where all the transactions made in a network are recorded, and which everyone can consult. These giant notebooks make it possible to keep accounts, as in the case of a crypto-currency, but also to record information in blocks in a permanent and inviolable way.
The other main characteristic of blockchains is that they are decentralized: the register does not only exist on a single server, because it is shared with computers connected to the network, called nodes. Each of these nodes has a copy of the blockchain, which is constantly updated, and which keeps track of all old transactions. This is the reason why there is no real owner of the channel, and it can truly be public. Public blockchains thus operate without resorting to trusted third parties, without a central server.
How does blockchain work?
Having a notebook that everyone can consult is good. But, how to make sure that nobody vandalizes it by registering nonsense? The solution used by blockchains is called a consensus process, which allows the entire network to agree on the correct versions of the information contained in the blocks.
To take an example, a transaction made on the bitcoin network will be recorded on the blockchain in a block, along with other transactions. To validate a new block and add it to the blockchain, you have to do some mining.
Depending on the blockchains, the mining stage can take place in several ways: these are the consensus protocols (to ensure that the information contained inside the block is good). In our case, on the bitcoin network, the consensus protocol used is that of the proof of work.
To add a new block, the network will put in competition the computers connected to the network, also called minors. They will have to answer a series of very complex equations. The first miner to find the answer will make sure to check that all other nodes have the same version of the block.
After completing their verification and in exchange for their efforts, the miner is rewarded by receiving units of cryptocurrencies — on the bitcoin network, by BTC; on the Ethereum network, by Eth; etc.. This step therefore makes it possible to verify that all the nodes of the blockchain have the same version, and to create value with new units of crypto-currencies.
It is important to note that the proof of work is just one method among many: proof of stake is an increasingly used consensus protocol, which we detail in other articles.
What is a blockchain used for?
Blockchains are, in the vast majority of cases, used as the basis of a cryptocurrency. Their decentralized nature means that there is no need for trusted third parties to manage transactions, and that it is impossible to falsify data—and therefore, to enrich oneself artificially. The first blockchain to be launched is also that of bitcoin, proof that the two systems are closely linked.
But, it is also possible to use a blockchain for other things. Recently, we have seen an increased interest in NFTs – authenticity tokens registered in the Ethereum blockchain. They contributed to the birth of a virtual art market by allowing the certification of files on the internet. This market was especially marked by very strong speculation in its early days and NFT sales have fallen sharply since the peak of popularity in 2021.
However, there are still many NFT-related projects. Many video games have launched NFT collections to accompany their games, of luxury brands consider creating NFTs to authenticate their products, and thus ensure their provenance in the context of resales. Finally, the ticketing company Ticketmaster wants to get into NFTs in order to avoid the sale of false tickets and to facilitate resales. We can also expect to see new uses of the blockchain appear over time.
How to consult blockchains?
There are a number of tools that allow you to consult blockchains. First of all, you have to know which one you want to analyze: the tools used on the bitcoin chain are not necessarily the same as those used for the others.
As there are an infinite number of blockchains, it would be impossible to list here all the tools available to consult them. We will note, however, those most commonly used on the bitcoin network and Ethereum, the two most popular cryptocurrencies in the world.
Overall, if you want to check out the bitcoin blockchain, one of the most popular sites is blockchain.com. It allows you to view the latest transactions made on the chain, and simultaneously watch the live prices of crypto-currencies. The site also allows you to explore other blockchains than bitcoin. If you want a simpler interface and less cluttered with information, the site of blockstream will definitely suit you better.
To look at the blockchain of the Ethereum network, the reference remains etherscan. It is a very complete tool, which allows you to consult the transactions, the gas costs of the blockchain, and to see the possessions of the crypto wallets of certain celebrities, including that of Vitalik Buterin.
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