What is blockchain and how does it work?
One of the advantages of free time at home, due to the pandemic is being able to study something. During the first days of quarantine, I read an article about blockchain and remembered that last year this topic was widely discussed at @EICOM – European Institute of E-commerce Management, a non-profit organization on which I volunteer.
When talking about blockchain, a lot of people associate it with cryptocurrencies, however, it is not a cryptocurrency but a technology build for trust. The great feature of the blockchain is that at any time I can audit a transaction.
From a developer standpoint
This technology is based on the principle that every operation will have a unique identifier, which we call a track. If I am making a transaction, it happens following a previous one and the previous one also has a unique identifier. For me to generate a unique identifier for a new transaction, I have to take the number of the previous identification and add it to the transaction I want to do now, I take this information and create a unique identifier for my transaction.
Let’s say I have ten cryptocurrencies and that I will transfer one of them to a friend for the first time. I take my first transaction and give her a primary decoder. Let’s call it “A”. Now let’s say that my friend will make a transaction with this single “A” cryptocurrency to pay a portion of the card. She will pay the bank with that currency. When this key is created, the key for my transaction “A” will be used, which will be added to this information when transacting a cryptocurrency to the bank and thus, the key to it will be created.
Let’s assume that her transaction key is “X” and that the bank wants to make sure that she has a cryptocurrency, she can audit these transaction strings. If instead of sending a cryptocurrency, I send half or none, my transaction would not have her key, but another key, which we will call “Z”, for example. When she formatted her key, it wouldn’t be “X”, it would be “Y”. That said, the simple fact that you know the transactions, the key of the previous transaction, and the key you are proceeding with guarantees that there is a ballast, a source of that transaction.
Did you understand the reason for trust? We will now use the example in e-commerce.
Let’s imagine order tracking. The customer placed the order and from there a key was generated, the anti-fraud answered me “OK” at a certain time, and with that, another key was generated, money was dropped into the account, the order was accepted in the logistics department and all of that is registered only in the e-commerce platform, and this order did not reach the customer. Logistics takes ten days to locate the order, in addition to the problems with the delay, in the middle of the operation, someone may have defrauded the sequence. A system made a failure and did not record an order that entered, someone saw the failure and did a manual load to minimize the problem which led to the error. How will you know if someone hasn’t tampered with the system?
With the blockchain and the user information you can have a lot more peace of mind: here’s what happened. They may even question you, but the technique allows you to speak with certainty about what happened and there is no risk of fraud from someone, or from any system trying to modify this information. You are assured that you are not losing information in a huge process.
Another example. A product that arrived at the customer with a defect. Let’s say it’s a cellphone with a problem with the speaker coil.
Today you will understand where the production of this cell phone came from, who the distributor was, which set that product belongs to, which factory, etc.
Now if I have a unique identifier and I support these identifiers along a production chain, I can easily understand what happened with this cellphone. This is because the devices have unique identifiers from the producer who took them to the factory. I can support all the products and even identify the others that received the same defective coil and thus create a strategy to lift the whole lot and ask for the exchange.
I can do this in a safe way, as we are talking about large companies that work with products in various places around the world, potentially transacting cargo from one ship to another.
If a product with a problem was defrauded because it was smuggled, for example, with the blockchain I can connect from the producer of the material, copper, silicon, to the product that was delivered to the individual’s home.
In the end, these new technologies will have an unthinkable impact on virtually every aspect of modern society. The systems we are creating now, collectively, are the tissue from which our applications will be drawn in the future. So it is also of great importance to consider the security aspects of building such impactful systems.