Essentially, blockchain consists of a blockchain, each containing a set of verified transactions and a cryptographic hash of the previous block. This process creates a chronological, continuous sequence of blocks, which are linked together in a cryptographically secure manner.
What makes blockchain unique is its decentralized system. Unlike traditional databases, where a central authority controls and manages the data, blockchain It is managed by a network of distributed nodes.
Each node keeps a copy of the complete transaction logupdated in real time thanks to the consensus of network participants. This decentralized approach guarantees security, censorship resistance and transparency of operations.
Originally developed as an infrastructure for the Bitcoin, the first and most well-known cryptocurrency, blockchain has quickly expanded its reach well beyond digital currencies. Today, its potential extends to several sectors including finance, where it is used for improve efficiency cross-border payments, traceability financial transactions and the digital identity management.
Financial applications of blockchain
THE cryptocurrencies This is perhaps the best-known application of blockchain. These digital coins they use cryptography to ensure transaction security and control the creation of new units. Bitcoin, Ethereum and many other cryptocurrencies have become popular investment assets. Cryptocurrencies offer benefits such as fast and inexpensive transactions as well as greater security and transparency compared to traditional systems.
There tokenization rather, it is the process of transforming real assets or rights into digital tokens on the blockchain. This can include securities, artwork, and more. Tokenization allows assets to be divided, making them more accessible to investors.
For example, an asset can be divided into hundreds of tokens, allowing multiple investors to own a portion of it. This increases liquidity and facilitates exchanges of traditionally illiquid assets.
THE smart contracts These are self-executing contracts whose terms of the agreement are written in code. They work on the blockchain and They run automatically when certain conditions are met. This eliminates the need for middlemen, thereby reducing costs and increasing efficiency.
Smart contracts find applications in various fields, such as identity management automation of compliance procedures and facilitation of business processes.