Definition of Blockchain
Blockchain is a distributed ledger technology (DLT) that enables transactions to be recorded and stored securely, transparently and immutably. Unlike a centralised ledger, where a single entity holds control, blockchain is decentralised and operates on a network of nodes (computers) that cooperate to validate and record transactions.
The most distinctive feature of blockchain is its blockchain structure. Each block contains a group of transactions and is securely linked to the previous block, creating a continuous chain of data. This structure ensures that data cannot be altered or deleted without consensus across the entire network, making it an extremely reliable technology that is resistant to manipulation.
The Bitcoin Blockchain
The Bitcoin blockchain is the first and most iconic blockchain. It was created in 2009 by an individual or group hiding behind the pseudonym Satoshi Nakamoto. The Bitcoin blockchain is designed to support the Bitcoin cryptocurrency (BTC), which has become a digital store of value and an alternative to traditional financial systems.
The Bitcoin blockchain functions as a public, decentralised transaction ledger. Miners (network participants) validate transactions by solving complex mathematical problems, which secures the network and prevents double spending. As a result, the Bitcoin blockchain is known for its security and resistance to censorship.
The Ethereum Blockchain
The Ethereum blockchain is another major blockchain, but it goes beyond simply supporting a cryptocurrency. It was proposed in 2013 by Vitalik Buterin and became operational in 2015. Ethereum is often described as a "global smart contract execution platform".
Smart contracts are autonomous computer programs that execute automatically when certain predefined conditions are met. Ethereum enables developers to create smart contracts and decentralised applications (DApps) on its blockchain, opening the door to a multitude of uses beyond digital payments.
Layer 2 blockchains, also known as scaling solutions, are protocols built on top of existing blockchains (such as Ethereum or Bitcoin) to improve their scalability, speed and efficiency. These solutions aim to solve the problems of congestion and high costs associated with first-layer blockchains.
Examples of Layer 2 blockchains include Polygon, Avalanche and many others. They offer a variety of mechanisms to process a large number of transactions outside the main blockchain, while guaranteeing security through intelligent consensus mechanisms.
Stablecoins are cryptocurrencies designed to maintain a stable value by usually being backed by assets such as fiat currencies (US dollars, euros, etc.) or commodities (gold). Stablecoins offer the stability of traditional currencies while retaining the advantages of blockchain, such as ease of transfer and transparency.
Stablecoins play a crucial role in the cryptocurrency ecosystem by allowing users to retain value while avoiding the volatility associated with other cryptocurrencies such as Bitcoin.
In the following parts of this article, we will delve deeper into each of these topics, exploring the applications, benefits and challenges associated with blockchain, as well as its growing role in our ever-evolving digital economy.