Learn all about Blockchain – Part 2

Very well, guys, we are here to talk to you about Blockchain I’m Kiko Duarte, IBM consultant, and we will continue that talk we started in the last video

If you didn’t see it, go back and watch it We talked about some accounting concepts and now we are going to talk about specific concepts of the Blockchain technology So, we will begin to understand a little more about what this technology is, what can you use it for Up ahead when we talk about applications and use cases, I think it will become clearer Let’s talk about the concept of Blockchain

What is Blockchain? First important thing: it’s a “point to point” technology to make transactions, you don’t have any third parties, you don’t have regulator agent Transactions are made “point by point” between organizations or between the participants of the business network, of course this all happens beneath a series of controls that we will see further ahead Important things about Blockchain Because of its own concept, it’s all based in cryptography, we need to know here the definition of trust, of responsibility and transparency In the case of Blockchain, it allows us to track, but still guarantees all the trust and responsibility – you know who are the members of the business network

The record is distributed, here is where we are going to talk about Ledger Remember I told you guys this? The distributed record means that every member of the business network has a copy of this record These are some important concepts: Business Network, remember that I told you about the business network? So, a point-to-point network that will connect all the participants – customers, suppliers, banks, regulatory agency, government, anything, including across geographical boundaries It’s not necessary to be geographically close or within the same country to be able to make a transaction and record these transactions in the business network The business network concept is going to expand a lot, we will understand it later when we are talking about the use cases

Shared Ledger – is a log book that will show all records made between members; they will be distributed to all members of the business network – everyone will be able to see the transactions that are being made Smart Contract Remember that I said that as transactions get more and more complex we need to establish a set of rules for them to take place? This set of rules is recorded in a contract So, all the transactions are encapsulated and they are encrypted within the business network And it’s these rules who will determine how and if there’s the possibility of a specific transaction taking place between the members of the business network

This is all signed, encoded and is circulating within the entire chain Consensus – it's very important and it's done in many ways, we will discuss it in more detail later Consensus is what ensures that the record that is shared is an exact copy of the one being distributed to all members So the network need to guarantee that the transactions that are being transmitted are valid, the network does this through what we call “Consensus” can make a series of mathematic verifications, there are several algorithms for this kind of thing for example, to prove that a person is a valid member of that business network, and that that business is valid because the network is saying that it is valid

Privacy and reliability, all this is done in an encrypted form So, you have the assurance that everything is being done safely, despite the transparency, but you can also assign security and privacy if you want, for members of the business network This is a very simple example of how Blockchain works So here is the subject A and here is subject B, they are both participants of this business network They will exchange something, in the case here, money specifically

Subject A wants to send money to subject B, this transaction will be represented in a block, this block then is broadcasted for everyone who is a part of the business network Within this business network we will find the business network members who will be the validators All of this is determined in the contract, who are these validators, and these guys will attest that this block is real Once everyone votes and says, "okay," that block is added to the chain – the chain of transactions, which is the Ledger So, finally, after these things happen, the money goes from Subject A to Subject B's wallet

So we have a series of security measures for the transaction to happen, and the entire chain has a record of how that transaction was made This is the block, as you can see The block is actually Hash, it is a Hash code, a crypto code that will be added to a chain, as it is being transacted So these blocks are part of a specific chain of a specific Ledger Every time that asset is involved in a transaction from one point to another it is added in written form, it’s write only, it can't be changed, it can't be deleted – once you write it, it's over, it's written in stone and this block starts to be part of the Ledger's chain of transactions and everyone is aware of that

Because of the consensus it is much more difficult for you to add Hashes that aren't part of it, or if you want to change something Any kind of corrupt action, let's say, any kind of corrupt action is not replicated This is eliminated, and it continues with what has consented, what everyone agreed that is correct, that is right This is our video for today, we started to talk a bit more about the technology, in the next videos we'll talk about centralization, we’ll talk about possible use cases for Blockchain and more See you!

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