Blockchain technology is creating wonders in the business field, where people are always eager to find more secure and private financial processes.
Has the internet changed our life? But on the web, as in our offline life, we still have the same problem: we don’t trust each other. That is why we need a third party to verify who we are. The most frequent form is the DNI or the digital certificate.
This is even more serious when it comes to transferring money. Until now, financial intermediaries such as banking or Paypal, among others, have been essential.
The intermediaries who certify that we are who we are, of course, keep your data and trade with them. And restrict your privacy. And without privacy there is no freedom.
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What could we do so that these intermediaries are not needed?
Many engineers, computer scientists and consultants propose that for us to solve that, we all have the same information. This is basically blockchain: a database, an accounting book, of which everyone who participates in the network keeps a copy. The key to this technology is consensus: if we all have the same information, that information is true.
In our globalized economy, with people who travel, work and move in various areas, a broad digital identity system is now an internationally shared goal. Several companies are focused on Blockchain technology as facilitators so that independent parts of each other can depend on the same source of shared, secure and auditable information.
Blockchain technology can ensure that the current data status of an entity is a valid representation of that entity, distributed across a network of applications, including an immutable record of provenance.
It is considered that the application of Blockchain technology could prevent some people from using e-mail addresses, social security numbers, or fake phone numbers, protecting all other people against identity theft and ensuring that a person is really Who claims to be.
People are demanding more control over their personal identities. This is because they need to protect your personal information since they need to present that data to use some services (car dealership, insurance, credit card companies, etc.).
Every time a person provides their personal information they are at risk of identity theft. Therefore, there is a critical need for solutions that protect identities and allow the control of personal information.
Digital identity is becoming a fundamental need, and Blockchain is a technology that could revolutionize the way we exchange information.
The Arrival of Blockchain
The electronic payment operations made by Internet depend on financial institutions that act as third parties in the mediation of disputes. The cost of mediation and other support elements can raise the costs of operations and there are no completely irreversible operations. In the world of electronic payments, fraud is considered inevitable.
Thus, central intermediaries strive to minimize fraud but having an acceptable level of fraud is the cost of doing business, a cost that, in the end, is paid by the consumer.
In 2008, Satoshi Nakamoto (a pseudonym) proposed an electronic payment system based on a cryptographic test instead of a trusted third party, allowing anyone to perform operations directly with another. Why? Because a central intermediary can create additional costs and a single point of failure. In other words, if the central intermediary is “inactive”, even in scheduled maintenance, the entire network stops. If the central intermediary is compromised, then the entire network is at risk. With that in mind, Nakamoto adopted a decentralized network typology to avoid a single point of rupture, or a single point of failure.
It began with the concept of Distributed Ledger Technology (DLT) with its distributed peer-to-peer network and digital signatures (the latter provides a solid proof of ownership), but added a timestamp to generate a computational proof of the chronological order of the operation. That date and time record of the DLT solution was aimed at combating the “problem of duplicate expenses” that could exist on purpose or accidentally.
Transaction time registration occurs when a chain of work tests is being processed, forming a record that cannot be changed without first having to redo the work test. In addition, the longer chain serves as a test of the sequence of events, as well as the proof that it came from the larger set of the Central Processing Unit (CPU).
The first implementation of Blockchain technology was Bitcoin, a cryptocurrency. The virtual ubiquity of Internet-enabled Bitcoin operates without a central validator, but with transparency. And if the nodes and miners (who use the nodes) were sufficiently decentralized and properly incentivized, transparency led to a high level of resilience, since it is unfeasible to deactivate the network or make unauthorized changes in Blockchain.
Despite the transparency of the transactions, the ownership of Bitcoin is pseudo-anonymous. That characteristic gave rise to false accusations that Bitcoin was something sinister and was mainly used by drug traffickers.
Innovation
Blockchain is innovative and exciting. Although interesting, the use of Bitcoin may not be the true innovation, considering that the engine of trust behind Bitcoin is what could offer the real promise of a positive change in the way companies and people cooperate.
