As we previously mentioned in an article published in June 2019, the Bitcoin did not create a new computer technology but integrated a series of pre-existing techniques in a revolutionary manner. The possibilities this protocol could bring were soon condensed in a new disruptive paradigm known as BLOCKCHAIN.

But what is Blockchain exactly?

In its strictest sense, Distributed Ledger Technology (also known as DLT or LEDGER) is a set of data:

  • Arranged chronologically.
  • That can be encrypted or not. In fact, and although it may appear otherwise, Bitcoin data are not encrypted.
  • Is collected in information packages known as blocks.
  • Is analyzed by means of cryptographic algorithms to check that it has not been modified after it was entered in the system, nor within a block or between them.

To upload information in the ledger, a consensus must be reached (distributed trust model). This consensus can be the solution to a “mathematical puzzle” with more or less computational requirements. For instance, there is the Proof-of-Work system (PoW), which obtains a certain hash code through the use of brute-force mechanisms; the Proof-of-Stake system (PoS), which focuses on assessing the level of commitment of the people responsible for reaching consensus; or the Proof-of-Importance (PoI), which is linked to the reputation of the network itself. Variants of the Byzantine Agreement, which establishes the relationship between the parties by assuming a certain degree of disloyalty or computational errors, can also be used. This is, without a doubt, Blockchain’s most complex element.

All transactions recorded in a blockchain have been cryptographically signed by means of asymmetric key algorithms. Nowadays, given the size of keys (i.e., 2,048 bits for RSA), these systems are unassailable.

A same peer network that carries out several transaction-related operations (such as the loading, validation and updating of the Ledger) and keeps a local copy of the files on distributed accounting. Nodes provide backup and support to one another, meaning the attack on one or several will not lead to a system crash.

And, since the appearance of the Ethereum protocol, Smart Contracts. These allow each node to execute a “Turing machine” (first unveiled by Alan Turing in 1936) or, in layman’s terms, to process a code that is similar to the one a computer equipped with a storage and control unit would run. These components are user-enabled or activated by means of event detection. Bitcoin offers a very rudimentary version of this feature.

Blockchain, business logic and management system

As a result, a management system and a blockchain can interact with very few limitations (meaning the end-user can benefit from what they do best). The proposed scheme would be as follows:

    • The Blockchain Model, with users, processed assets, structure and content of transactions and events, and the model to guarantee the system’s integrity and safety.
    • The Business Logic, including financial and technical transactions, the correlation between internal and external managing events, and the consensus algorithms used.
    • A managing system whose structure is capable of drawing a distinction between persistence (model), calculus and processing (controller), and display (view).

If we take the Blockchain technology a step further, it could be said that it is shifting the Internet from a data management network to a value management one. However, this would need to be explained in more detail, in another blog post.


About the author

Carlos LopezCarlos Lopez
Industrial Engineer and Executive MBA. Carlos is Technical Director at Cibernos Group’s SPEC center (Smart Project Excellence Center) and he is also a blogger on the Cibernos blog.

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