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  • Writer's pictureMaría Belén Gómez

What is blockchain and how can it improve the security and transparency of digital transactions?

The blockchain is a technology that allows information to be stored and transferred in a decentralized, secure and transparent manner. It is a database distributed among multiple nodes or participants, which record and validate transactions through a consensus system.

Each transaction is grouped in a block, which contains a unique code called hash, which identifies it and links it to the previous block. A blockchain is thus formed, which is immutable and verifiable by all nodes.

The blockchain has several advantages that make it ideal for improving the security and transparency of digital transactions, especially in the current context of the digital economy and the information society. Some of these advantages are:

Security: the blockchain is resistant to cyber attacks, as there is no central point of failure or control. To alter or forge a block, one would need to modify all subsequent blocks and obtain the consensus of the majority of nodes, which is practically impossible. In addition, the blockchain uses cryptographic techniques to protect the identity and privacy of users.

Transparency: The blockchain is public and accessible to all participants, who can consult and verify transactions in real time. This ensures traceability and auditing of transactions, as well as trust between parties.

The blockchain eliminates the need for intermediaries or trusted third parties, which reduces transaction costs and times.

This option opens up new possibilities for the development of digital applications and services based on collaboration, collective intelligence and the collaborative economy. For example, the blockchain makes it possible to create smart contracts, which are self-executing agreements that are activated when pre-established conditions are met. It also allows the creation of tokens, which are units of digital value that represent assets or rights.

The blockchain is therefore a disruptive technology that can improve the security and transparency of digital transactions, as well as drive innovation and economic growth. The blockchain has potential applications in various sectors such as finance, health, education, commerce, energy, transportation or government.

The main challenges of blockchain are:

Scalability: the blockchain has difficulty processing a large number of transactions per second, which limits its performance and efficiency. In addition, the size of the blocks and the length of the chain can generate storage and synchronization problems. To solve this challenge, solutions such as increasing block size, creating sidechains or implementing faster consensus protocols have been proposed.

Security: The blockchain is vulnerable to cyber attacks that can compromise the integrity and privacy of the network. Examples of such attacks include 51%, double-spending, eclipse or Sybil. To prevent unexpected attacks, increased cryptographic protection, better management of private keys and increased user awareness are required.

Acceptance: The blockchain faces barriers to its diffusion and acceptance by individuals, companies and institutions. Some of these barriers are lack of knowledge, resistance to change, talent shortage, technical complexity and regulatory uncertainty. To overcome these barriers, more education, awareness, collaboration and innovation are needed in the blockchain ecosystem.

Sustainability: The blockchain consumes a large amount of energy and resources to maintain its operation, which generates a negative environmental impact. In addition, the blockchain generates a large amount of electronic waste due to the obsolescence of mining equipment. In order to reduce the impact, measures such as the use of renewable energy sources, the recycling of devices and the transition to more efficient consensus models need to be adopted.

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