Born after the global financial crisis of 2008, the blockchain demonstrates the loss of confidence of citizens in the management of money by the state. This technology then appeared as an alternative, ensuring more security and transparency, as decentralized. What are the advantages and disadvantages of this technology?
What is a blockchain?
The blockchain is like a large virtual registry, grouping the transactions made between the users of a network. It is a technology that allows the storage and transmission of digital data and knows perfectly the origin of the data that circulate. It is often compared to a big book that everyone could consult but which we could not erase the lines or tear the pages. At each new transaction, the data is stored in a new block, itself attached to the rest of the blocks containing the information on the previous transactions. These blocks linked to each other form a chain: the chain of blocks.
There are many applications of the blockchain: banks are the first to be interested in the subject in order to establish transactions between them. The technology can also be used by a recruiter who wants to check the qualifications of a candidate: if the institution issuing the diploma has certified the authenticity of the network, the recruiter can access this information. Finally, cryptocurrencies (like Bitcoin for example) in which many people invest rely on the blockchain. Like a stock, bitcoin has a value and can be bought or sold in the hope of making big gains in the short or long term.
The blockchain technology has several interests:
- It is transparent, ie the exchanges are anonymous but anyone can consult them.
- It is secure: transactions are secured by protocols based on asymmetric cryptography, a technique used to guarantee the confidentiality of data, ensure its security and establish the authenticity of a transaction.
- It is independent of any trusted third party: the entire network authenticates transactions through cryptography.
Limits of the blockchain
Despite its many advantages, the blockchain has limitations:
- It does not remove all intermediaries: the technology is dependent on entries entered manually by a user.
- This innovative technology is still incompatible with existing computer systems.
- There is no regulation around this technology. Therefore, the risk of hacking or closing the trading platform used (to invest in cryptocurrencies for example) is very real.
- Even though network architecture makes attacks costly and difficult, hacking is not impossible.
However, despite these obstacles and the reluctance of the financial world to deal with this technology, the blockchain should continue to evolve in the coming years.