What is Blockchain and what is it used for?

Blockchain, or “cadena de bloques” as it is known in Spanish, is a set of technologies that allows us to maintain a decentralized, synchronized, and highly secure record of information across computers and other devices. It creates a public ledger for digital operations, uniquely identifying each device that is part of the blockchain.

The key advantage of blockchain is that it enables the registration of transactions, contracts, or any other type of online interaction in a verifiable, tamper-proof, and transparent manner, without the need for a third party to validate its authenticity. Additionally, it allows for the reliable addition of new blocks to the chain.

The financial sector

The financial sector is the one that has shown the most interest in exploring the world of blockchain due to the advantages of a system of records without the involvement of intermediaries. In other words, it allows for transactions to be conducted without the need for intermediaries such as banks, which often charge high fees in certain cases.

Having a self-validating system enables companies to automate numerous processes, ranging from purchasing materials to payroll management, invoice issuance, material ordering, and other administrative tasks. This automation of processes saves time and money.

Another use for blockchain is smart contracts, which facilitate faster transactions. A set of rules is stored on the blockchain and executed automatically.

A smart contract

A smart contract can define the conditions for corporate bond transfers, include the terms of a travel insurance payout, and much more. This means that if the contract rules are met, the established conditions will be executed; otherwise, they will not be executed, and these rules are immutable.

In conclusion, implementing these technologies is a great advantage as it generates more trust due to being a private network accessible only to its members, and the records are immutable. Additionally, as mentioned earlier, with the distributed ledger among all chain members, the time wasted on record reconciliation actions is eliminated, resulting in greater efficiency in processes.

And to accelerate transactions, a set of rules, called a smart contract, is stored in the blockchain and automatically executed. Considering all it offers, blockchain promises to be the future of technologies.

By: Juan David Arévalo