Blockchain: What it is, how it works, and its main applications

Blockchain technology emerged as a potential solution to the erosion of trust in traditional financial systems, spurred by events like the 2008 subprime crisis and hyperinflation. The core innovation, first detailed in Bitcoin's 2008 white paper, proposed a decentralized network where transactions are validated and recorded by thousands of computers globally.

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Thereafter, it proposed a decentralized network where thousands of computers would validate and record transactions in a shared, transparent, and immutable ledger.

This system operates as a shared, transparent, and unalterable digital ledger. Unlike conventional databases managed by a single entity, blockchain relies on a distributed network of nodes that maintain the network 24/7. "The most straightforward way to explain it is to think of a digital ledger that isn't stored on a single computer, but is copied and synchronized across thousands of devices simultaneously. Every time a new operation is added, everyone verifies that it's valid," explains Karina Caudillo, regional manager at OKX.

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In other words, it proposed a type of digital network that, unlike conventional databases, had a very important characteristic: it was decentralized.

Ensuring the integrity of these records is paramount. Blockchains establish predefined rules, and altering them requires overcoming complex governance protocols. "The record doesn't live on a central server: it's replicated simultaneously on thousands of computers worldwide. To rewrite the history of that network, you would need to control the majority of that computing power at the same time," states Rafael De Ambrosi, CEO of Twin.

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The most straightforward way to explain it is to think of a digital ledger that isn't stored on a single computer, but is copied and synchronized across thousands of devices simultaneously. Every time a new operation is added, everyone verifies that it's valid.

While Bitcoin, launched in 2009, established blockchain's potential for value transfer without intermediaries, it had limitations. Ethereum later expanded blockchain's capabilities, becoming a key platform for Decentralized Finance (DeFi) and Non-Fungible Tokens (NFTs), which are increasingly used for digital art. This evolution highlights blockchain's ongoing development and its expanding applications beyond its initial financial use case.

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The record doesn't live on a central server: it's replicated simultaneously on thousands of computers worldwide. To rewrite the history of that network, you would need to control the majority of that computing power at the same time.