From some years, there is a lot of talk about Blockchain technology. We are in a historical moment in which this innovation is catalysing a lot of attention, but too often we are still stuck in a fairly generalised confusion between Cryptocurrencies, Bitcoin, Blockchain Platforms, Smart Contracts and so on.
Blockchain applications are often characterised by the need for disintermediation and decentralisation. This innovation potentially makes it possible to delete from our lives financial institutions, banks, notaries, insurance companies etc.
Blockchain technologies are part of the broader family of Distributed Ledger technologies which can be read and modified by many nodes in a network. To validate the changes to the ledger, in the absence of a central entity, the nodes must reach a consensus. How consensus is reached, and the ledger structure are some of the features that characterise the different Distributed Ledger technologies.
The Blockchain is thus a sub-family of technologies, or as it is often specified, a set of technologies. As you can imagine, the names come from the fact that it is structured as a chain of blocks containing transactions, and the consensus is distributed across all nodes in the network. All these nodes can participate in the process of validating the transactions that must be included in the ledger.
We can start to inspect the most exciting aspects of this technology. The digital revolution of the Blockchain, born from the world of Bitcoin and cryptocurrencies, is in fact just the beginning. The applications are many, the potential is enormous, much of it still to be explored and not only in the financial sphere. The task of this guide will be to explain the Blockchain in a simple way, while focusing on the opportunities for business and the benefits to be reaped.
The relationship between Blockchain and Bitcoin is as close as it is crucial. Released in 2009, as you probably know, Bitcoin was the first cryptocurrency to use a new type of distributed ledger, known as the Blockchain. Among the innovations introduced by Bitcoin was the fact that each transaction was legitimised by a decentralised network and not by central authorities. Although brief, the history of this cryptocurrency has marked and stimulated the evolution of Blockchain technologies, amidst experimentation, perplexity and unprecedented media hype. And the future? All yet to be written.
The Internet of Value is defined as a digital network of nodes that transfer value through a system of algorithms and cryptographic rules. These allows consensus to be reached, even in the absence of trust, on changes to be made to a distributed ledger that keeps track of unique digital asset transfers. Within this Universe, several galaxies, or rather platforms that enable the development of Blockchain solutions orbit. These platforms can be categorised into two major groups: permissionless and permissioned.
Permissionless blockchains are those in which anyone can become a node in the network and participate in the process of validating transactions. The most famous permissionless blockchains are Bitcoin and Ethereum, but many others have generated their own cryptocurrencies (over 900).
Permissioned blockchains, on the other hand, are characterised by restricted network access to a few authorised participants and a validation process delegated to a restricted group of actors. These include Corda and Hyperledger.
This classification includes some 'hybrid' solutions such as Ripple which, for example, allow anyone to participate in the network, but only a few to deal with the validation of transactions.
Therefore, the Blokchain is a very complex system around which numerous galaxies orbit. First and foremost is Bitcoin. The platform, as we have seen, which gave birth to the first cryptocurrency in 2009, was actually created in 2008 by Satoshi Nakamoto. Bitcoin enables a protocol that uses cryptographic technologies, computer networks and mechanism design to implement a decentralised, uncensored, secure and programmable system of recording and exchanging value. There are several fundamental and innovative properties of this protocol that, over the years, have set the stage for the development of the Blockchain and new platforms.
Despite its many benefits, Bitcoin is characterised by several critical issues. Among the most obvious is the limited possibility of expression, which in turn reduces the possibilities of automation. This is why Ethereum was created, an open-source platform based on blockchain technology that solves this problem through a special scripting language. Ethereum has almost all the characteristics of Bitcoin, but also many limitations: high energy consumption, low privacy and low transaction frequency. New platforms have been created to overcome these limitations. From Primecoin to Ripple, from Iota to Zcash, which of them will prevail in the long run?
Today, several companies around the world have started experimenting with Blockchain and Distributed Ledger solutions. And areas of application and platforms for solutions and development have emerged more clearly. However, it is not always clear in what ways Blockchain can improve existing processes, nor how this technology can enable new opportunities and business models. In this part of the guide we try to shed light on the main ways in which Blockchain and Distributed Ledger technologies can create value in the enterprise environment, with some concrete examples of the most interesting operational projects.
Great, honestly it seems an incredible decision!
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