blockchain technology

Blockchain: meaning, how it works, what it is used for [2020]

Let’s find out in simple terms what blockchain is, how it is different from bitcoin, and what its applications are.

Even if you are not a finance buff, you have surely heard of “Bitcoin” or “Blockchain” at least once.

Are you still a little confused about what these terms mean?

Don’t despair: by the end of this article you will be able to explain blockchain and bitcoins to anyone!

Blockchain: what is it?

Have you ever wondered what happens when you upload a document or photo to a website? When you hit “upload,” the information from your computer goes through your modem, and travels through the Internet: thousands of miles of cable that finally takes it to another computer, called a server.

The server is owned by the website operator, who therefore has total control over your information, and has the power to change it at will: he could delete it by mistake, share it with someone without your permission, or even falsify it!

The blockchain (or “block chain” translation), serves precisely to solve this problem: It is a system that uses thousands of computers and thousands of different owners to save data, joined in a single network that spans the entire planet.

This makes any changes to the information first go through the scrutiny of thousands of owners, who verify that it is legitimate and truthful. This is why data on the blockchain is said to be transparent and immune to counterfeiting.

Because of this feature, blockchain is perfect for recording information in many areas, especially those where data authenticity is crucial: just think of notarized deeds, food tracking or financial transactions.

Now that you are a little clearer about what blockchain is, let’s go into a little more detail! In this post you will discover:

  1. How blockchain works
  2. What is the difference between blockchain and bitcoin
  3. What the blockchain is for

Blockchain: how it works

As mentioned earlier, the magic of blockchain relies on the ability to store data on thousands of connected computers, which are called network nodes.

These nodes have two main tasks: the first is to copy and keep up-to-date a copy of the so-called Distributed Ledger (in English, Distributed Ledger), a ledger that contains all the information saved on the blockchain and serves as a reference whenever someone attempts to change a piece of information.

We can imagine it like this:

4 computers each with a copy of the same shared blockchain ledger

For simplicity, we use only four nodes in this example, but in reality there are hundreds to thousands, depending on the blockchain in question.

When someone attempts to change any of the information saved on a node, the other nodes are asked to verify whether that someone is authorized to accomplish it.

If all nodes give the okay, the shared register is updated with the new information, but also keeping a track of the previous information. Kind of like when we draw a line on a wrong word and write the right one next to it: this way any change is transparent, and it is impossible to change the information secretly.

Bitcoin and Blockchain: difference

What is the difference between Bitcoin and Blockchain then?

It is very simple: bitcoin is based on blockchain technology, just as the automobile is based on the wheel, or google on the Internet.

Bitcoin is in fact a cryptocurrency, and it is the first and undoubtedly most famous application of blockchain technology.

Representation of the cryptocurrency Bitcoin

To make a long story short, cryptocurrencies are digital currencies that have no owner, such as a state or central bank, but circulate on a network based on blockchain technology.

Let’s follow the same reasoning as before; if I have 3 bitcoins and I want to send you 5, the whole network will go and check how many bitcoins I have, and it will find that the transaction is not possible. Conversely, if I try to send you only one, the network will approve the transaction.

Have you ever wondered why it takes several days to make a transfer? It is precisely because this is usually done by banks that they do not communicate effectively with each other, as a digital network can.

Blockchain, on the other hand, represents the underlying technology not only of bitcoin, but of dozens and dozens of other applications, in a wide variety of fields: let’s see some of them!

Blockchain: what it is used for

Now that you know what blockchain is and how it works, we can move on to real-world applications of blockchain.

This technology has been proposed to solve problems in almost every economic sector, but in order not to dwell too long we will only address the most discussed ones.

Blockchain and Cryptocurrencies: Bitcoin, Ethereum, Ripple…

If you’ve read the previous paragraph you now have a good understanding of what Bitcoin is, but the famous gold coin is not the only cryptocurrency in circulation! In fact, there are hundreds (or even thousands) of independent cryptocurrencies, each with different characteristics, value, and uses. The ability of blockchain to function without a central authority makes possible the emergence of this variety of “digital cash,” but it is still very little used in the real economy. This has not prevented the creation of a veritable parallel stock market, with heavy speculation on the values of these coins, which can vary wildly even in a matter of minutes.

Food Blockchain: The traceability of the supply chain

Because of its security and transparency features, blockchain is perfect for recording information about the history of food products.In fact, the use of blockchain in agribusiness supply chains allows companies to communicate with their consumers in a completely transparent way. When you buy a product tracked on blockchain you can find out with just a few clicks everything you want to know about what you’re putting on your plate or in your glass: what the ingredients are, where they come from, when they were made and by which company, whether chemicals were used in processing or not, details about the area where they were produced.

Blockchain ensures secure information about the provenance of food&drink products

There is really no limit to the degree of transparency that companies can achieve thanks to this incredible technology, which is establishing itself worldwide as synonymous with quality and reliability.

If you are interested in this topic, this article addresses in detail the requirements and costs of blockchain traceability for a manufacturer.

Blockchain Certifications

Blockchain is gaining momentum in the field of certification because it allows for the creation of certificates that are absolutely unforgeable and verifiable all over the world-all it takes is a smartphone and an Internet connection. In Italy, we have various examples, such as that of Italian Sandwiches certified on blockchain.

Intellectual Property

Blockchain has recently become law; in Italy saving a document on blockchain has the same legal value as a time stamp. Time stamping is essential when it comes to associating a legally certain and legally usable date and time with a computer document, especially for the copyright or intellectual property protection.


Many banks and stock markets are already experimenting with blockchain as a way to save time and money in the management of financial transactions, as the features of blockchain match perfectly with the security needs of these institutions.

Healthcare, Electronic Voting, Insurance, Logistics…

…are just a few of the other countless applications of this technology, which has dominated events and columns devoted to innovation for years now.

Hundreds of companies around the world continue to experiment with new ones on a daily basis, trying to gain a competitive advantage from this powerful technology that is so famous and yet so little known. But we are making great strides, mainly because of people like you, who are informing themselves about these issues and taking this information home, to work, to friends at the coffee shop, or on social media-this is helping to create a more technologically aware and advanced world.

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