Skip to main content

Blockchain Fundamentals

Blockchain is a technological innovation that has gained momentum with the emergence of cryptocurrencies.

However, its usefulness extends far beyond just digital currency. It has the potential to transform many sectors, from financial services to supply chain.

Taking a step back from the future of technology, it is important to understand the fundamentals of blockchain and that even if it is not the solution, like all concepts will surely inspire those who can solve the problems that blockchain may have.

The foundations​

History in brief​

The evocation of the principles of Blockchain were experienced and reflected upon well before its appearance, precisely in a 1982 thesis written by the cryptographer David Chaum. He introduced a protocol that prefigured blockchain, and the thesis bore the evocative title “Computer Systems Established, Maintained, and Approved by Mutually Suspicious Groups.”

However, it was not until 1991 that “Blockchain” was truly explored as a concept. This advance is the result of the work of two researchers, Stuart Haber and W. Scott Stornetta. Their ambition was to design a system in which time-stamped documents, those indicating precisely the moment of their creation, would be safe from any falsification and would always remain relevant.

A year later, in 1992, the system they designed was optimized by integrating the Merkle tree, a technique for grouping several documents into a single block.

The first concrete incarnation of the blockchain was created in 2008, before being presented to the general public on January 3, 2009. Its inventor remains a mystery, because he hides behind the enigmatic pseudonym of Satoshi Nakamoto. This first blockchain will become the cornerstone of Bitcoin.”

What is a Blockchain?​

A blockchain is a distributed database, made up of blocks linked to each other.

  • Each block contains a certain number of transactions.

  • Blocks are added to the chain sequentially.

  • Each block contains a hash of the previous block.

    • Each block is timestamped and verified by network nodes.
    • Each block is added to the chain through a process called "mining".
    • Each block is immutable and cannot be changed without changing all related blocks and the network consensus.

What makes blockchain unique is its decentralized nature: it is not stored in one place or managed by a single entity, making it transparent and censorship-resistant.

Unfortunately, at the moment few useful projects and far from the blockchain philosophy are being developed. Most projects are ICOs (Initial Coin Offering) which are fundraising for projects that do not yet have a product. It's a bit like buying a car without knowing if you're going to get a car, a bike or a scooter.

And regarding decentralization, you should know that most projects are far from being decentralized. Indeed, most projects are managed by a single entity which owns the majority of the tokens.

Think of blockchain as a public ledger, where each page of the book represents a block. Once a page is full of entries (transactions), a new page is added. But once written, a page cannot be changed without changing all subsequent pages.

What data structure?​

Blockchain uses a data structure called a linked list.

Each block contains a record of current transactions and a hash of the previous block. This hash creates a link between the blocks, thus forming a chain.

Basic operation​

  • Transaction Creation: Users can send transactions to the blockchain, often via a digital wallet.
  • Verification: Transactions are then verified by network nodes.
  • Added to a block: Once verified, these transactions are added to a new block.
  • Mining: The block undergoes a process called "mining", where it is validated and added to the chain.

Application of Blockchain​

  • Cryptocurrencies: Like Bitcoin or Ethereum, used as decentralized digital currencies.
  • Smart contracts: Programs that run automatically when certain conditions are met.
  • Supply chains: To track the provenance and distribution of products transparently.
  • Digital identity: For secure identification without an intermediary.
  • Voting systems: For transparent and secure voting.
  • Data storage: For decentralized and secure data storage. (example: human knowledge through time).
  • Games: For long-term video games, with valuable objects spanning decades.
  • Certification: To certify diplomas, documents, proof of work, proof of ownership, proof of copyright, etc... (sell/buy a house without going through a notary for example).

I think that for all this, for democratization, the blockchain ecosystem must be more mature, use it almost invisibly like Sorare and people must better understand the challenges of the years to come.

What is decentralization?​

Decentralization refers to the distribution of power and authority across multiple nodes or entities, rather than concentrating them in a single central point.

This means that the data is not stored on a central server, but is distributed across several computers (nodes) around the world.

  • Resilience: Difficulty of breaking down because there is no single point of failure.
  • Transparency: All transactions are visible to all participants.
  • Security: Difficult to hack due to its distributed nature.

Imagine a library where every book is copied and stored in thousands of other libraries around the world. If a library burns, the information is not lost because it exists elsewhere.

Blockchain is a revolutionary technology that promises to transform the way we do business, exchange value and manage information. Understanding its fundamentals is the first step to exploring its vast possibilities and potential for the future of technology and our society.