While I was testing a new tool for discovery and trend analysis on the web, AnswerThePublic, I discovered interesting reports and infographics on the most frequently asked questions about blockchain and cryptocurrency, placed at search engines, globally.
Knowing the answer to these basic questions would allow those who approach the world of blockchain to have the tools to be able to orient themselves within a galaxy of rapidly evolving ecosystems.
So I decided to group these frequently asked questions into thematic areas to which to give a concise answer (often simplifying as much as possible), addressing an audience that is not necessarily technical or prepared on the crypto and blockchain topics. Some of the questions can have multiple interpretations, I answered the most common.
Made with AnswerThePublic — query: blockchain
Made with AnswerThePublic — query: cryptocurrency
What is blockchain?
What does blockchain mean?
Blockchain is in simple words
A blockchain is a network of independent nodes that cooperate and compete in supplying a decentralized ledger, obtaining an economic reward in exchange.
Why is blockchain the future?
Why is blockchain important?
Why blockchain technology?
Why blockchain is needed?
Will blockchain change the world?
How blockchain will change the world?
When will blockchain become mainstream?
Will blockchain take over?
The blockchain is considered the technology of the future in many socio-economic fields, as it promises to reduce the risks of monopoly (thanks to the permissionless approach) and allows to reduce the cost of trust.
Blockchain zero trust
The blockchain is the first trustless digital protocol, as it does not require you to rely on an intermediary to perform value exchange operations between unknown parties.
The blockchain can be applied in all areas where there is an interaction between parties who do not know or trust each other. Although it can be applied to many fields, at the moment, measurable results have been realised in fintech, supplychain, intellectual property protection, and decentralized identity.
Why is blockchain bad?
Blockchain is perceived by some as a negative technology as it allows value to be transferred completely anonymously (such as financing illegal activities) and because many believe that economic supra-government is dangerous for social stability. In reality, many blockchains allow transactions to be carried out as pseudo-anonymous, meaning that if you associate an address used on a distributed ledger with a real identity, it is possible to trace all the operations carried out in its history, thus resulting in a much more traceable technology than other instruments used for the exchange of value in illicit goods, such as cash.
Why will the blockchain fail?
Will blockchain fail?
The blockchain is a combination of technology and community. Many networks still need to pass both technological and social tests to establish themselves, however it is very unlikely that the technological and social paradigm introduced by decentralized registers will be shelved and remain unused.
Where to start with blockchain?
How does blockchain work?
Blockchain for dummies
Blockchain is a complex subject, as it combines aspects of cryptography, cybersecurity, economics, and game theory. It is, therefore, necessary to acquire a critical mass of skills to be able to understand it correctly.
The relevant bibliography in the field of blockchain and cryptocurrency is not very vast, however, there are very valid publications that introduce the technological, financial, and social aspects, designed both for readers without specialist backgrounds and for readers with a technical background as a software engineer. I have reviewed here some recommended reading.
Why is blockchain secure?
Why can’t blockchain be hacked?
In a blockchain, there are security aspects that cannot be compromised by anyone, for example, it is not possible to sign a transaction with an address without having the relative private key. Another matter is consensus management. A blockchain is as secure as the network that supports it, it does not have implicit security linked exclusively to its protocol. If the consensus of a network is attacked, it is possible to obtain various results such as the cancellation of transactions considered final.
When blockchain started?
When did blockchain start?
When did blockchain technology start?
Blockchain technology was originally born with Bitcoin, in 2009, by Satoshi Nakamoto, an anonymous person or group. Satoshi published a paper at the end of 2008 in which he described an innovative solution for the creation of a consensus distributed on a P2P (peer to peer) network, i.e. made up of all equivalent nodes, therefore without a coordination node. In 2009, he released the first version of the working code and began collecting volunteers to build the network.
Who invented blockchain?
Satoshi Nakamoto, probably the pseudonym of a hacker or group, who disappeared about 12 months after the network was launched. There are various hypotheses on the true identity of Satoshi, none of these have yet been verified.
Blockchain is same as Bitcoin
Blockchain vs Bitcoin
Bitcoin was the first blockchain ever invented and built, then many variants were born from it. In the beginning, blockchain indicated the data structure used by Bitcoin to organise its transactions. Today this term indicates the diverse family of technologies derived from Bitcoin.
Who is using blockchain?
Who uses blockchain technology?
Companies, innovators, investors, visionaries, curious and lately also governments. Being permissionless, anyone can start contributing to a blockchain network and start being rewarded for it, just acquire some hardware, install open source software, and you are ready to participate. However, in the mining operations of the main blockchains, there is a lot of competition, and it is extremely difficult to build profitable businesses.
Who owns the blockchain?
Who owns the blockchain data?
No one owns the data on the blockchain, all nodes are equivalent, and all keep a complete copy of the distributed ledger. Some blockchains are protected by non-profit organizations that register the brand and protect it and coordinate the promotion and development of the protocol and the community.
Who controls blockchain?
None under normal conditions, a blockchain is a network of computers managed by anonymous entities (companies and individuals) that collaborate for the definition of the protocol and compete for an economic prize linked to its execution, which can only be won by following the rules of the protocol, which establishes the rules for the correct management of transactions and communications between participants.
The consensus is that protocol allowing a decentralized network, without central coordination, to find a unique and comprehensive agreement temporal order of events, in particular transactions, in order to understand what is the status of spent assets and expendable, as well as the internal status of any smart contracts. The first decentralized consensus protocol ever was Proof of Work, used by the Bitcoin network. The fundamental requirement of a consensus protocol is to allow an arbitrary number of nodes to reach an agreement on the temporal ordering, assuming that 50% +1 of the participating nodes (the quorum) operate honestly (i.e. follow the common rules).
What is a mining pool?
The most popular blockchains have a consensus protocol based on the Proof of Work (PoW) algorithm, which involves the use of computational power to win the right to generate a block. The generation of these blocks occurs through the solution of a complex problem of a probabilistic nature. Many miners participating in a PoW have such a reduced computational capacity compared to the competition, that their probability of winning a block independently is very low (we are talking about 1 event every 50/100 years) making it unlikely the possibility of re-entering their investments in mining operations. This is why the small players immediately began to form consortium groups, called mining pools, where the contribution of individuals is unified, significantly increasing the probability of winning blocks on a daily basis. The profit deriving from these blocks is then distributed in proportion to the computational effort that each miner demonstrates to provide to the pool.
Are blockchain fully public?
A blockchain is as public as it is distributed, and the identity of its miners varies. Nothing prevents an initially public blockchain from becoming private in any way due to the acquisition of 51% (actually 50% + 1 is enough) of the mining power by a single entity. So one criterion for evaluating how public and independent a blockchain is is to evaluate how many distinct groups of miners operate on it and how they are geographically distributed.
Are blockchain blocks really immutable?
Transactions that end up in a block tend to become immutable, the time it takes to become immutable depends on the consensus protocol used by the network. Some consensus protocols support instant finality, i.e. they guarantee that a block once produced and recognised, can no longer be replaced, however, they are more at risk of attack as generally in these networks, it is sufficient to control 33% + to compromise their security. Bitcoin and other derived blockchains have a consensus with a probabilistic finality, and its network can only be compromised with a 51% attack.
Who is a blockchain miner?
A miner is a special node that contributes to the temporal updating of the transaction log by building new blocks, and in return, receives an economic reward. Anyone can perform mining operations without requiring any prior authorization.
Which blockchain has mining?
All public blockchains have a mining protocol to determine the ledger update logic through the inclusion and finalisation of new transactions performed by users. Mining rewards the nodes that participate in this process by attributing to them the possession of the new crypto assets generated and giving them the fees contained in the transactions they have included in the mined block. The blockchains that do not do mining, called DLT (Distributed Ledger Technology), do not provide an economic incentive and therefore are less secure and are suitable for use in use cases involving closed groups of actors.
What is cryptojacking?
Cryptojacking is the practice (usually incorrect) to include mining code in the scripts of a web page, in order to exploit in an unconscious way the computational resources of the device of the visitors of a site. The disadvantage for the user is to see his operating system weighed down, the device overheated and perhaps the battery drained on portable devices. High-traffic sites have monetised hundreds of thousands of dollars a month with this technique. The most mined cryptocurrency with this technique is Monero, whose Proof of Work can be performed efficiently on the CPU, as it is ASIC resistant (i.e. designed not to be made on dedicated hardware). Someone has also proposed to use cryptojacking as a tool that users can consciously use to pay for a site as an alternative to advertising.
Can blockchain be hacked?
It is possible to compromise the consensus of a public blockchain through a 51% attack, which allows the attacker, among other things, to rewrite transactions deemed already finalised and censor unwelcome transactions.
Can blockchain be traced?
Can blockchain wallet be traced?
Are blockchain transactions traceable?
A blockchain is a public ledger, so all operations on it are tracked and visible to anyone. It is also possible to register all active nodes connected to the network that do not use anonymous communication solutions such as Tor. On the other hand, it is more difficult to trace the origin of transactions issued by a wallet.
Can a blockchain be blocked?
A blockchain is a network of independent nodes, each of which necessarily resides in a country. The governments of some countries can impose the shutdown of nodes on their territory, but this is not able to compromise the functioning of a network. An effective way to block a blockchain is through a 51% attack, which instead can censor transactions (for example, those produced by unwelcome services) or even compromise the integrity of the ledger (with a double-spend, which would undermine its reliability).
Can a blockchain account be blocked?
Accounts and related transactions can instead be blocked by centralised services such as exchanges, which can refuse to process them, actions that are frequently taken for accounts used in illegal operations such as theft or blackmail.
Can a blockchain wallet be hacked?
Yes, it is possible, especially if your programmer has set up backdoors or if it is a web wallet. It is suggested to always use a wallet and a stand-alone open source and broad adoption to store large quantities of crypto assets, even better to use a hardware wallet for the so-called cold-storage, as for example, the Ledger Nano.
Which blockchain is the best?
What blockchain technology?
There is no blockchain better than another, there are different blockchains for specific purposes.
A blockchain cannot be both reliable (decentralized) and efficient (scalable) at the same time, it can only be one of two things. It is, therefore, necessary to find the right compromise. A solution that many blockchains are going to offer is the support for the creation of sub-blockchains governed by the main blockchain: the main one remains slow but guarantees reliability, the sub-blockchains can at that point become faster and riskier, but limited to the purpose for which they were created.
Which blockchains support smart contracts?
Bitcoin does not support smart contracts natively. Bitcoin’s scripting language for its transactions is purposely limited to avoid security risks. Ethereum and EOS are among the most famous examples of public blockchains that support scripting languages without limitations in their expressive capacity (Turing Completeness) at the expense of the ease with which errors can be introduced into the on-chain code.
What blockchain does bitcoin use?
Bitcoin uses its own blockchain, the blockchain is a generalisation of the concepts initially introduced by Bitcoin.
What do blockchain developers do?
There are different types of blockchain developers: those that develop applications on existing protocols and those that develop new blockchain protocols. In the first case, the developer develops applications using a predefined protocol, writing on-chain (smart contracts) and off-chain (which interacts with nodes) code. In the second case, the developer develops the node code, as well as possibly on-chain code.
When blockchain meets IoT?
Blockchain with IoT
Blockchain meets the Internet of Things (IoT) when it is necessary to track and certify real-world processes and conditions, such as the transport of goods or perform environmental measurements. In the near future, the blockchain will also allow machines to participate in machine-to-machine economies, that is a new class of economic interactions in which devices manage their budget and their services in a (semi) autonomous way, including collections and payment of suppliers. In general, it should be remembered that the blockchain has no visibility of the outside world, the on-chain code only sees wallets and transactions and needs entities in the physical world that provide data relevant to its function. Among these entities, there are also the IoT devices that provide, independently or collaborating with other devices, this information, covering the function of oracles. An oracle is a service (which can be centralised or decentralised) that provides reliable data from the outside world to the on-chain code.
Blockchain, when to use it
Where blockchain is used?
Where blockchain technology can be used?
Where blockchain cannot be used?
Not all use cases and business models can reap benefits by adopting blockchain technology. Like any other tool, blockchain can improve your business by either saving you costs or generating new profits. The savings can come if the adoption of blockchain technologies accelerates or makes your processes cheaper. Value generation, on the other hand, is a more complex topic. Short version: Business models involving purely digital products and services are better suited to decentralized business models. If you want to know more about how blockchain can help your business generate new value, you can read my article dedicated to this in-depth analysis.
Where blockchain data is stored?
Where blockchain is stored?
The data of a blockchain, consisting of the transactions ledger, plus some auxiliary data that are reconstructed by the ledger and that are used to speed up some operations, are stored in the full nodes of the network that make up that blockchain, generally, each node keeps a complete and autonomous copy of the same ledger.
When a new block is created in a blockchain?
The new blocks of a blockchain are created by miners, full nodes that have mining capacity, generally obtained by using hardware dedicated to this operation. The creation of the new block follows the consensus rules of the current protocol, and the various nodes usually compete to solve one block before the others and win the associated prize.
Where is my blockchain wallet address?
Your addresses are managed by your wallet, if you don’t have, one it means that you probably don’t own crypto assets, or if you do, they are in a custodian service such as an exchange. If you want to really secure them, you need to install a wallet, which is an application for managing digital assets, that is compatible with the type of asset you own or intend to acquire. Once you have installed a wallet, you can usually generate any number of addresses, which represent the addresses where you can receive your assets. You can then use the wallet to send the crypto assets you own to other people’s addresses or to services.
How does blockchain wallet work?
A blockchain wallet is something similar to a keychain. All modern blockchain wallets are initialised with a secret random seed (a random number unique in the world) that can be represented with alphanumeric strings or sequences of words that can be easily memorised and transcribed. Starting from this seed, the wallet can reproducibly generate a sequence of private keys that constitute an unlimited reserve of addresses, to be used for one’s transactions, guaranteeing anonymity and security.
Best blockchain wallet
There are several free downloadable software wallets, some compatible with multiple blockchain networks. Wallets can be software or hardware. A software wallet is an application that we install on smartphones or PCs and that we generally use to store liquidity for small daily expenses, as it does not guarantee high-security standards. In fact, the hosting smartphone or PC can be lost, stolen or infected with malware, or simply accessed by unauthorised users. All decent software wallets have an unlock password and keep private keys in an encrypted format, however, they are more prone to errors and lightness in security management. Crypto assets on unsafe or poorly used software wallets can be easily stolen by transferring them to other addresses. A good software wallet is safer if open source or at least widely adopted by a reference community, which can verify its security and reliability. A good open source wallet for Bitcoin is Electrum, for Ethereum, instead, I suggest MyEtherWallet. A hardware wallet, on the other hand, is a dedicated solution in which the private keys of our accounts are stored in an anti-tampering chip and are never transferred to the working memory of unsafe devices. Hardware wallets, therefore, cover the role of coldstorages, i.e. devices that remain constantly offline, guaranteeing high-security standards, and that are designed to host assets with sporadic access frequency. Among the best hardware wallets in circulation there are certainly the devices of the Ledger Nano S and Nano X family, also appreciated for the support they provide for all the main cryptocurrencies and the main tokens in circulation, in addition to the fact that all the related software (excluding the firmware at the moment) is released open source.
A blockchain transaction is a command sent to a network by a user to transfer assets (crypto or token) from one account under their control to another. In the same transaction, in addition to sending assets, it is also possible to specify data (or payloads), for example, concerning the invocation of a method of a smart contract. To execute a transaction, it is necessary to have a wallet and at least one account with crypto assets. When a transaction is sent, usually a fee is specified, which goes to reward the miners of the blockchain network. This fee, usually suggested by the wallet, is arbitrary and depends on network usage and can be chosen to match the desired cost over waiting time for the inclusion of the transaction in a block. In this regard, wallets generally suggest three fees corresponding to three expected confirmation times: short-time / cheaper, average time / average cost, long time / expensive.
Blockchain unconfirmed transactions
When a transaction is sent to a blockchain network, this is verified by each node that receives it and, if it is valid with respect to the ledger status, it is propagated to other known nodes. Each node that receives it, after having verified and propagated it, places it in a temporary pool of transactions waiting to be included in the next available block. The nodes generally process the transactions with the most generous fees first, until the available space in the candidate block is filled with those with the lowest fees. It can happen, in moments of intense activity on the network, that the transactions in the temporary pool remain on hold for a long time, overtaken by transactions specifying higher than average fees. A transaction in the temporary pool that does not have to be included in a block can be eventually canceled and therefore lost when the pool fills up to the maximum capacity, in which case the least interesting transactions (lower fees) are eliminated to make room, or because a new transaction occurs which makes the pending transaction obsolete or invalid.
The ledgers of public blockchains can be queried and explored freely, many organisations and companies provide web apps that can be freely used by any user, typically without registration, which allow you to browse blocks, transactions, smart contracts and other data of a blockchain, often these tools also allow users to perform writing operations on the blockchain, through the issuance of transactions, which are issued with web wallets belonging to users.
Blockchain without cryptocurrency
Blockchain without token
Blockchain without mining
A blockchain without mining is a blockchain with no direct economic incentive, therefore without cryptocurrency, and is called DLT (Distributed Ledger Technology). These technologies lend themselves to a more limited set of use cases as writing to them must be limited to authorised users only. DLTs are usually used by actors who already have an implicit level of trust and economic interests in their collaboration, such as consortia.
Blockchain vs DLT
Blockchain vs distributed ledger
A blockchain is a public network, participated by voluntary nodes, which provide a service for securing the network through a common protocol called mining, supported by an economic incentive for the participating miners. This economic incentive rewards those who follow the rules of the protocol and ignores (or in some implementations punishes) those who do not follow them. The reference protocol is the one supported by the majority of nodes. For blockchains, therefore, we speak of a direct economic incentive. In DLT (Distributed Ledger Technology), on the other hand, there is no direct economic incentive, the nodes participate in the network by invitation (to a consortium or federation) and are all interested in pursuing a common goal, the indirect economic incentive derives from the benefits deriving from participating to the consortium. Also for the DLTs there is a common protocol that must be followed, and those who do not follow it see their operations not recognised, they also risk being excluded from the consortium.
Blockchain without proof-of-stake
The main alternative to proof-of-stake is proof-of-work, which involves intense competition in terms of hash power (computational resources) between miners, but which is currently the system safer to guarantee the security of a network, as it is based on the acquisition of expensive resources (hardware and electricity) that are impossible to simulate.
Blockchain without proof-of-work
The main alternative to proof-of-work is proof-of-stake, which guarantees competition between miners only based on the amount of tokens they stake in order to participate in the consensus. It turns out to be cheaper than proof-of-work as it does not require particular hardware or significant energy consumption, however, there are still doubts about its effectiveness. The main public network that is working on a migration from proof-of-work to proof-of-stake is Ethereum and has foreseen a hybrid transition period, where the proof-of-work remains active and contributes to the finalisation of the blocks.
Blockchain without Bitcoin
Bitcoin was the progenitor of blockchain technologies, already starting from 2013, there was a rapid increase in the number of derivative projects, called Altcoins by the Bitcoin community, increasingly technologically sophisticated and independent from the initial Bitcoin logic. The first blockchain to introduce a completely new paradigm was Ethereum in 2014. From 2016 onwards, alternative solutions have diversified in large numbers.
Blockchain is it legit?
Blockchain and the law
Many national jurisprudences (Switzerland, Malta, and others) recognise some uses of the blockchain as legitimate and have formalised laws that allow the use of blockchain in legacy applications. However, jurisprudence in this regard is rapidly evolving, and it is not possible to summarise a definitive picture.
Blockchain and AI
blockchain with Machine Learning
The application of AI (Artificial Intelligence) in the blockchain field still takes on rather smoky contours. Some experts believe that integrating AI functionalities within the on-chain code (smart contracts) could make decentralized applications adaptive to external stimuli and, therefore, more robust and flexible than they are now. Personally, I believe that today there are important scalability problems in running complex and therefore expensive AI algorithms on-chain, without considering the reliability problems that self-adaptive code could bring in a context of immutability.
Blockchain to bank account
I guess this question refers to how to convert crypto assets into fiat money and then deposit it in your checking account. Usually, this is done through the use of exchanges. An exchange can be a centralised (managed by a company) or decentralized (managed by smart contract) service. However, to convert decentralized assets into fiat money, it is necessary to use a centralised exchange. There are various types of centralised exchanges, some with an extremely simple User Experience, designed only for fundamental operations such as the purchase, storage, and sale of crypto assets, others very sophisticated and technical for online trading. All centralised exchanges require registration and to perform operations above certain economic volumes, also a KYC (Know Your Customer) procedure, in order to verify the real identity of the user as required by international banking regulations. Once the registration on the exchange is completed, usually it is possible to execute a deposit via wire transfer, once deposited, it is possible to use the amount with the services provided by the exchange, it is also possible to convert crypto assets to fiat currencies and finally make a withdrawal, i.e. sending the fiat value to a specified bank account.
Major public blockchains base their consensus mechanism on building blocks of transactions. These blocks, for performance reasons, have a predetermined maximum size, therefore, a maximum capacity of transactions that they can contain. This means that the number of transactions per unit of time that can be carried out on a blockchain is limited. Therefore, users who need to execute a transaction on a blockchain at a certain time must compete to buy the available slots, and this competition defines the cost of the fee. The space requirement in blocks varies over time and depends on various factors, such as the time and day of the week or the launch of particular on-chain projects that attract a lot of attention. Since fees tend to be extremely variable, they constitute an element of friction in the adoption of decentralized solutions. Some blockchains have been looking for alternative solutions such as using fixed costs per transaction, but at that point, there are no tools to encourage the inclusion of transactions in the desired block. Other blockchains, on the other hand, guarantee users a space in the block proportional to the stake owned. Those blockchains that have instead decided to make transactions free have not proven to be resilient to DDoS (Distributed Denial of Service) attacks and sometimes are forced to insert mining logic of individual transactions to circumvent these problems.
Blockchain vs cryptocurrency
Blockchain and cryptocurrency
Blockchain is a term that identifies both the technology and a network of nodes that use that technology, cryptocurrency is a term that indicates the native unit of value that exists on the blockchain network that allows for the exchange of value.
Blockchain to store data
Blockchain as database
Blockchain vs database
Those who, with a technical background, approach decentralized technologies for the first time find it difficult to understand the differences between a blockchain and a distributed database. A database, even if distributed, has centralised governance, in fact, it will always have an admin able to modify it at will, moreover, it does not have cryptographic primitives to guarantee the author of the transactions. A blockchain, on the other hand, has decentralized governance between generally anonymous actors, and all operations on it can only be authorized by the owners of the address keys.
Blockchain vs cloud
A cloud is a network of specialised machines, globally distributed, under the control of a single organization (e.g. Google Cloud or Amazon AWS, are networks made up of tens of thousands of nodes designed for specific purposes, all controlled by a ‘single company), a blockchain is a decentralized network, participated by tens of thousands of nodes all equivalent, each of which is managed by different owners. The nodes of a cloud optimise the execution of very complex tasks, dividing the work and covering dedicated roles, the nodes of a blockchain optimise the autonomy of a task by repeating the same work all together.
The blockchain is a decentralized service, there is no single governance, some blockchains have a non-profit foundation that coordinates and finances the development of the underlying protocol, none of these are designed to provide technical support. However, around the main blockchains, there are ecosystems of private companies, system integrators, and consultants who develop products, solutions, support, and consultancy.
Blockchain is a type of
The Bitcoin blockchain was the first and one of the main decentralized technologies. The alternative to confirming transactions with blocks is confirming transactions via the Directed Acyclic Graph (DAG), although at the moment, it is not clear what the level of scalability and decentralization of these protocols is in real applications. One of the best-known examples of DAGs is the Iota Tangle.
The first blockchains were born as a similar protocol approach, based on the construction of chains of blocks generated on a statistically regular basis. However, in recent years some academic research groups have proposed and are developing alternative solutions to the aggregation of transactions in periodic blocks, called DAGs (Directed Acyclic Graph). The DAG based solutions, although having different approaches, are all based on the idea that transactions are not grouped by miners but hook into a transaction graph partially shared by all nodes, choosing to hook onto some pre-existing transactions of which correctness is guaranteed, linking a new transaction to existing ones serves to confirm them. In this approach, mining can still be practiced, this time at the transaction level. This approach should ensure a transaction throughput of several orders of magnitude higher than that of the blockchain-based approach, however there are reservations about the true scalability of this protocol and any security problems.
Hashgraph is an alternative technology to the blockchain for the realisation of distributed ledgers, based on a consensus algorithm built on DAG (Directed Acyclic Graph), therefore it does not collect transactions in blocks and uses Asynchronous Byzantine Fault Tolerance (aBFT) to ensure a temporal order of transactions, not requiring mining. Some academics believe that it is not possible to make Hashgraph resistant to Sybil Attack, i.e. that attack carried out using a significant number of addresses that appear to be independent but which are all controlled by the same entity, and therefore is not suitable for public consensus solutions.
Blockchain is like the Internet
Blockchain without Internet
The protocol of a blockchain lives on the protocols of the Internet. Bitcoin, for example, has been called “Internet of money” because it extends the Internet protocol with functionalities to generate non-replicable digital assets and transfer their relative value.
Blockchain and Smart Contracts
Smart contracts are the programs that execute the transaction logic of a blockchain. Some blockchains have a deliberately limited scripting language (ex: Bitcoin), to ensure security and keep the size of the blockchain reduced, others have a generalist scripting language (technically it is defined as Turing complete) which however requires more computing resources, space and increases security risks.
Blockchain without coding
Writing on-chain code is complex as well as potentially risky, which is why services are emerging that allow you to assemble smart contracts starting from predefined templates, which can be (limitedly) customised through purely visual interfaces. With these services, it is possible to cover the most common on-chain programming cases without the need for specific blockchain skills, generating implicitly verified code.
Public blockchains are all based on open source code. Open source means that the source code of the software that constitutes the operating nodes of these blockchains is public, inspectable and available, often even for modifications. The opening of the code guarantees security as it opens up to a huge number of verifiers the possibility of finding structural defects in the code itself.
Unfortunately the blockchain, at least in the early days, was used to organise scams and to sell decentralized products without value, created for financial speculation by its issuers. Criminals have recently realised that the use of the blockchain is not particularly effective for committing scams, due to the total traceability of all operations performed with the stolen assets, the availability of increasingly sophisticated tools for tracking these assets and also to due to the fact that many exchanges block crypto asset operations resulting from illegal activities.
Blockchain and GDPR
The GDPR is a European legislation for the protection of the privacy of personal data in the digital environment. The blockchain can be compliant with GDPR when no personal data is entered in the transactions but hashes (or data fingerprints) of such data, implementing a series of precautions so that these hashes are not reversible (for example because they contain easily predictable data). The use of hash allows you to perform what is called time stamping of the data, which allows you to demonstrate that a certain information exists starting from a certain moment in time and that it was in the possession of a user associated with a public key.
Blockchains are session-less, there is no concept of registration and login, there is the concept of transaction and account / address, linked to asymmetric keys that allow you to use your assets.
The concept of a blockchain account can take on several meanings. The most common interpretation is that of an address whose private key is checked, and is used in blockchain account models (such as Ethereum), in which the status of the ledger evolves by updating the information associated with the same address, as opposed to what happens. with UTXOs (Unspent Transaction Output) model like Bitcoin, where the status of the ledger evolves by passing the control of assets from one group of addresses to the next. Providing an address allows you to receive crypto assets, which can then be spent with the corresponding private key.
Governance on blockchain is that set of interactions that take place between the main actors of a blockchain, which generally are: miners, nodes, developers, users and stakeholders (the roles are not necessarily distinct, on the contrary they often overlap). Miners keep the network safe, (full) nodes keep copies of the ledger but do not create blocks and are generally maintained by organisations interested in verifying the status of the ledger to create services, users use the network to exchange value and to create / use services on it, the developers develop and maintain the protocol and the core software implementations, the stakeholders hold significant quantities of crypto native to the network. These actors can interact constructively or destructively in deciding the evolution of the network, their interactions define the speed and reliability of a blockchain. In order to avoid the conflicts and related forks that we have witnessed for example in the Bitcoin and Ethereum communities. Many latest generation blockchains have introduced governance mechanisms directly into the network protocol, in order to make the decisions of the various actors more transparent and automatic.
The security of a blockchain is developed on three fronts: the software and protocol with which the blockchain works, the on-chain code (the code of the smart contracts that run on the network) and the off-chain code of access services such as the wallets. The protocol and software of a blockchain must be designed to be robust (it must not contain serious errors) and resistant to external attacks (by players outside the blockchain) and internal (by players participating in the blockchain). The on-chain code, developed by the users of the blockchain, before going to manage assets of significant value should be appropriately verified in order to avoid economic damage (already widely documented in the past) that no one can remedy, all (finalised) transactions on a blockchain are irreversible. The security of the off-chain code, which operates on the border between the blockchain and the outside world, is also extremely important for users, in particular wallets and services such as exchanges and oracles are sensitive to security problems.
Blockchain as a service
When we talk about blockchain as a service, we refer to the strategy adopted by an organization to participate in a blockchain with nodes whose hardware you do not physically own, but which are rented as a service from cloud providers external. Generally, this practice is used in federated or private blockchains, if we talk about public blockchains, cloud nodes are not a safe solution for many use cases. The main problems that can occur using cloud nodes in a blockchain are related to centralisation: the cloud provider could intentionally alter the functioning of the nodes, or there could be a massive failure of the cloud such as to cause the disconnection of these nodes.
Blockchain and sustainability
One of the main differentiating themes of the various blockchains is environmental sustainability. In order to function, blockchains need a consensus protocol, the first protocol ever identified was that of Bitcoin, based on Proof of Work, which over time has evolved into an extremely hardware-intensive and energy-intensive process, raising doubts in terms of environmental sustainability. Riding in some cases the hype of this theme, some networks have been born or are migrating towards consensus mechanisms that are not energy-intensive, such as Proof of Stake, shifting the logic of mining from having more computational power to having a greater stake in the crypto assets of the network.
Blockchain and climate institute
The Blockchain & Climate Institute (BCI) is an international think tank that provides experience and networking for the development of emerging technologies in the field of climate and sustainability supported by blockchain technology.
Blockchain to protect intellectual property
When the Bitcoin network (the first blockchain ever made) began to be popular, it was soon realised that it was possible to use the immutability properties of its transactions to create indisputable proof of the existence of a data. arbitrary starting from a certain moment in time. This process is called timestamp, and consists in writing, in the payload of a transaction, a hash (i.e. the fingerprint of a digital data), the insertion of that transaction in a block certifies that that data existed at least starting from the date of block creation. Furthermore, possession of the private key used to sign the transaction can guarantee pseudonymous proof of possession of this information.
An international group of experts and evangelisers that issues certifications and provides training on various blockchain issues, particularly focused on DLT technologies.
An exchange is a centralised service that allows you to exchange assets of various blockchains (cryptocurrencies and tokens) with each other and with the main fiat coins (coins issued by national states).
Blockchain Zero Knowledge Proof
Under the term Zero Knowledge Proof (ZKP) a whole series of cryptographic techniques are collected that allow an actor (called party) to demonstrate to another actor (called challenger) that he has knowledge on a shared problem without revealing knowledge itself. The ZKP allows today to reach unprecedented levels of privacy and anonymity on public blockchains and promises in the future to be able to manage complex logics of personal and business privacy while keeping the data in public registers.
Blockchain and Quantum Computing
Quantum computing is a relatively new discipline that exploits the quantum properties of matter to perform digital computations at a speed level higher than the theoretical limit of traditional electronics. Quantum computing is perceived as a threat by all those security solutions that take advantage of cryptography. The security of cryptography is in fact based on the difficulty of current electronic technology in performing heavy mathematical calculations. Quantum computing risks compromising some of the computationally “simplest” security algorithms. However to date the problem is limited, as the most powerful quantum computers have a few tens of qubits (the elementary units of quantum computing that can be assimilated to bits) and in order to become a threat to cryptography they still require years of development. The approach adopted by cryptography to protect itself from quantum computing is to exponentially increase the complexity of its algorithms so as to make them not attackable even with quantum computers.
Will blockchain replace accountants?
Will blockchain replace banks?
How blockchain works in banking?
This is very unlikely given that banks provide many intermediation and trust services that the blockchain by its nature does not offer, it is instead possible that banks adopt decentralized services for specific purposes like international money transfer, as some have already started to do, offering their end customers some decentralized services.
Will blockchain transform capital markets?
The blockchain introduces a series of new cross-border tools capable of attracting large liquidities to transform this industry, challenges related to scalability and international regulation remain.
Can blockchain revolutionise international trade?
Potentially yes, given that it lends itself to coordinating and certifying cross-border operations, without supranational intermediaries, it can support economic operations and advanced fintech services, and natively implements trustless business automation mechanisms such as smart contracts.
Know Your Customer is a set of procedures first performed only by financial institutions and now also adopted by companies operating in the world of cryptocurrency to ascertain the real identity of users, generally required before authorising such users to carry out financial transactions of value relevant. The KYC was imposed or adopted by crypto operators such as exchanges to achieve greater compliance, at the request of various governments.
Can blockchain be used for voting?
The blockchain is already used for voting in closed communities and with a small number of voters (up to thousands), for example for the governance of decentralized companies. Using the blockchain for political voting is technically feasible but currently encounters serious problems of scalability and verification of voters’ identities.
blockchain in supply chain
Which blockchain is best for the supply chain?
How blockchain works in supply chains?
Supply chains, and in particular the aspects of tracing the production chains, the automation of contracts between the parties, portability and support for international transactions will be strongly influenced by the development of blockchain technologies. To date, however, a definitive solution has not emerged, even if there are many companies with interesting potential, in my opinion one of the most concrete is OriginTrail. At the moment, DLTs seem to be further ahead in this sector, although I personally doubt that in the long term they can represent the winning direction, as they lack effective support to manage the problem of financial transactions. Some vertical applications of blockchain on the supply chain, such as the tracking of quality on a production chain, are sufficiently mature from the technological point of view to start a large-scale adoption, I have written an introductory article on the subject: Blockchain and Quality Assessment in Supply Chain
Blockchain in Real Estate
Blockchain and real estate are a particularly hot pair, especially after the advent of STOs (Security Token Offering), as the blockchain promises to make liquid one of the traditionally most stuck markets, and the legal framework of STOs provides the necessary guarantees for the development of this combination. The fundamental advantages brought by tokenisation to the real estate market are: asset splitting and therefore predisposition to real estate crowdfunding operations, increase in liquidity thanks to the possibility of trading assets on a secondary market, access to an international investor market.
Blockchain in healthcare
Although blockchain and healthcare are often cited together, it is not yet clear which is the most effective value proposition for the adoption of decentralized technologies in the health sector. The most promising possibilities are related to a person’s clinical diary which could be combined with their digital identity, and which through a series of data anonymisation techniques potentially based on Zero Knowledge Proof could be sold to companies interested in collecting and analysing statistical data on pathologies, pharmacological treatments and relative effectiveness. Today there are not enough use cases to evaluate the privacy implications.
Blockchain in insurance
Blockchain and insurance are another hot topic, as it is believed that the automation and independence of smart contracts can take the world of insurance to an unprecedented level, eliminating or reducing the intermediation costs of operators. traditional, and also paving the way for micro-insurance. However, for this revolution to begin, fundamental preconditions are necessary. Blockchains do not have visibility of events in the outside world, therefore smart contracts cannot know, for example, if an extreme weather event connected to insurance coverage has occurred in a certain geographical area, if not passing through oracles, i.e. services ( centralised or decentralized) that allow the on-chain code to obtain data on events from the outside world. Obviously, these windows on the world affect the way in which the on-chain code behaves, and therefore are in turn subject to trust problems.
Blockchain in music
The blockchain is an excellent tool for Intellectual Property (IP) management thanks to its immutability properties, its transparency and the ability to perform low-cost permissionless timestamping. Furthermore, the programmability of some blockchains allow you to combine IP management with value exchange functionality, making it an optimal platform not only for verification but also for the commercialisation of IP. The music industry, especially that of emerging and independent artists, is certainly among the first beneficiaries of this technology. An example of such applications is UjoMusic.
What blockchain does Amazon use?
Amazon has released a centralised DLT called QLDB, which is useful in the context of private DLTs.
The enhancement of crypto assets is developed on exchanges, intermediaries of the international market that follow the law of supply and demand and that allow users to find the optimal match for the various assets between ask (sell) and bid (buy) volumes.
Bitcoin’s first goal (the first blockchain ever made) was to create a universal tool for exchanging value on the blockchain. Bitcoin had to be the internet of value, just as the web had been the internet of information. Since then, several blockchains have been developed with more or less specific intentions in the fintech field, above all aimed at simplifying international payments and reducing commission costs.
blockchain forgot password
blockchain reset password
Blockchains use asymmetric key cryptography to control access to crypto assets. These keys are kept by a wallet, a specialised software and are derived from a single initial seed, a sort of master password. To complicate matters, wallets usually require an access password to authorise the unlocking of the keys in their possession. The loss of this password results in the inability to access the initial seed. The loss of the seed makes it impossible to reconstruct the keys on which your assets are kept. In the event that the seed is lost but you still have access to the wallet via a password, it is possible in some cases to reset the seed or at least transfer all the assets to new addresses generated by a new seed. It should be borne in mind that decentralized infrastructures are designed so that there are no coordination and control authorities capable of providing support and possibly recovering lost information such as private keys. This makes the use of blockchains extremely risky by inexperienced users. It is estimated that 4 million bitcoins have been lost out of a total of 18 million in circulation due to the loss of private keys.
blockchain phone number
Blockchains are not legally registered and recognised organisations and do not have a head office. Some blockchains have a reference non-profit organization that encourages their dissemination, coordinates their development and protects the brand, there may then be independent companies that provide consulting and development solutions on specific blockchains, on the same model as it already happens in the open source world.
In this last section I have collected some questions related to definitions and glossary.
blockchain proof of work
Here you can find a blockchain concepts map, with main definitions and relationships, including an extended glossary.