What is a blockchain?

Definition and explanation

Blockchains make it possible to store and exchange value on the internet without a centralized intermediary ( Blockchain France definition ). They are the technological engine of cryptocurrencies, the Decentralized Web and its corollary, decentralized finance.

A blockchain is a database that contains the history of all exchanges between its users since its creation. This database is secure and distributed: it is shared by its various users, without intermediaries, which allows everyone to check the validity of the chain.

A blockchain can therefore be likened to a public, anonymous and tamper-proof ledger. As the mathematician Jean-Paul Delahaye writes, you have to imagine “a very large notebook, which everyone can read freely and free of charge, on which everyone can write, but which is impossible to erase and indestructible. »

Situate the blockchain

The first blockchain appeared in 2008 with the digital currency bitcoin, developed by an unknown person presenting himself under the pseudonym Satoshi Nakamoto. It is the underlying architecture.

If blockchain and Bitcoin were built together, today there are many associated blockchains and cryptocurrencies.

Some companies sometimes consider the creation of so-called “private” blockchains, whose access and use are limited to a certain number of players. This makes it possible to experiment internally but with limits in terms of innovation (restricted ecosystem) and ROI (cost of the infrastructure to be put in place).

How it works ?

Any public blockchain necessarily works with a programmable currency or token . Bitcoin is an example of a programmable currency.

Transactions made between network users are grouped into blocks. Each block is validated by network nodes called “miners”, using techniques that depend on the type of blockchain. In the Bitcoin blockchain this technique is called “Proof-of-Work”, proof of work, and consists of solving algorithmic problems.

Once the block is validated, it is timestamped and added to the blockchain. The transaction is then visible to the receiver as well as the entire network.

The potential of blockchains

The decentralized nature of blockchains, coupled with its security and transparency, promises much wider applications than the monetary field.

The use of blockchains can be classified into several categories:

• Monetary applications: use of global currencies (Bitcoin, Ether, etc.) which provide an international standard and a potential safe haven for certain populations subject to inflation or unbanked.
• The tokenization of valuable assets (real estate, video game collectibles, works of art, etc.)
• More complex financial applications (hedge funds, insurance, loans, etc.), with, for example, decentralized finance
• Certification applications using the blockchain as a decentralized notary, in order to guarantee the integrity of digital files

Blockchains pave the way for a new web, the decentralized web , and a new digital economy, the token economy . To understand their stakes, it is crucial to avoid caricatures about cryptoassets , which are at the heart of this revolution.