Blockchain is a hugely important, transformative technology that will reshape businesses. Modern technology allows people to communicate directly. Voice an video calls, emails, pictures and instant messages travel directly from person to person maintaining trust between the individuals. When it comes to money, people have to trust a third party to be able to complete a transaction. Blockchain technology is challenging the status quo in a radical way. By using math and cryptography, blockchain provides an open decentralized database of every transaction involving value. Money, goods, property or even votes; creating a record whose authenticity can be verified by the entire community.
The future global economy will move towards one of the distributed property and trust where anyone with the access to internet can get involved with the blockchain related transactions and third party organisations may no longer be necessary. The uses of blockchain technology are vast. Some expect that in less than 10 years it will be used to collect taxes, it will make it easier for immigrants to send back the money to countries where access to financial institutions is limited.
What Is A Blockchain Technology?
Blockchains are incredibly popular now-a-days. What is a Blockchain? How do they work? What problems they solve? And how can they be used? Like the name indicates, a block chain is a chain of blocks that contain information. This technique was originally described in 1991 by a group of researchers and was originally intended to timestamp digital documents so that its not possible to tamper with them. However, it went mostly unused until the introduction of digital cryptocurrency, bitcoin. More people to start their e-commerce businness without paying for additional e-commerce tools.
The Future Of Transactions :
Now, a blockchain is a distributed ledger that is completely open to anyone. They have interesting properties. Once some data is recorded inside a Blockchain it becomes very difficult to change it. So how does blockchain works? Lets take a closer look at a block. It consists of data, hash, and hash from previous block. The data inside the block depends on the type of blockchain. The bitcoin blockchain stores the details about the transactions. The another thing block has is a hash. It is similar to a fingerprint. It identifies the block and all of its components which are unique to each block just like a fingerprint. If anything inside the block changes, the hash also changes. This makes hash very useful while detecting a block.
Uses of Blockchain :
The third element is the hash from previous block which is useful in creating a chain of blocks. This makes the blockchain more secure. so ,a chain of 4 blocks. Now, the second block consists of hash of the first block, third block has the hash for second and so on. If any of the block records are changed, then it will generate new hash. Consider if the records of second block are tampered, the hash will change. Third block doesn’t store the new hash and thus makes it invalid. The chain stops there and it can be detected that it is being tampered.
But with the increasing improvements in technology, the hash is not enough to prevent the information from being changed. New blocks with updated hash can be created and it seems like nothing was invalid in first place. So to mitigate this, blockchain has mechanism of Proof-of-Work. It slows down the creation of new blocks. In bitcoin’s case, it requires a time of 10 minutes to calculate the required proof of work and add a new block to the chain. This mechanism makes it difficult to tamper with the blocks, because you need to recalculate the proof for all blocks. So security of the blockchain comes from the use of hash and proof of work.
Applications Of Blockchain Technology:
Blockchain Technology offers a solution to many digital identity issues, where identity can be uniquely authenticated in an irrefutable, immutable, and secure manner. Blockchain technologies makes tracking and managing digital identities both secure and efficient, resulting in seamless sign-once and reduced fraud.
Be it banking, healthcare, national security, citizenship documentation or online retailing, identity authentication and authorization is a process intricately woven into commerce and culture worldwide. Here are few practical applications of blockchain technology outside of bitcoin.
Stock management :
- Blockchain could eliminate a lot of friction and stock tampering happening at the Wall Street. Foremost, reduce the costs and time of stock purchases as right now when a stock is traded, but it has to pass through brokers, exchanges, and needs to be “settled”. Of course, everyone receives the cut from the operation and the processing time may take days, especially when trading occurs over the weekends.
Additionally, blockchain will allow eliminating a lot of grey tactics used by traders such as “naked short selling” and in general, adding more transparency to the operational process.
2. E-Commerce and Online Marketplaces
Open bazaar start-up has embarked on a new mission to introduce a fee-free online marketplace similar to eBay, which is powered by blockchain. They promote an active exchange of goods and services between two parties without relying on a risky centralized authority and hence, enabling more people to start their e-commerce business without paying for additional e-commerce tools.
3. Cross-Border Micro-Payments :
The fees for sending micro-payments, particularly in the developing countries are inhibitive. For instance, majority of Asian workers send a quarter of their personal income to their relatives. Those fees paid for the transfer often equal to their half day’s wage.
Bitcoin Blockchain :
A number of blockchain start-ups have emerged to cater micro-payments. They offer almost a 60% less expensive service for sending money abroad and offers cash pickup locations as an alternative to card/bank transfers – a good selling point for attracting the unbanked population to their service. Again, that was made possible by using bitcoin blockchain technology, which fixes the value of digital cash in real time without any centralized financial intermediary.
Applications of Bitcoin :
1. Payment Infrastructure – You can use Bitcoin to send money around the world. Merchants can accept bitcoin payments. because this is slightly different than using bitcoin as a currency. Uses cases include merchant processing and remittances. Examples: Bit Pay, Abra.
2. Digital Assets – The blockchain can be used to create digital assets such as stocks, bonds, land titles, and frequent flyer miles, assets are created using protocols on top of the Bitcoin blockchain. Example protocols include Coloredcoins and Counterparty. Companies using this technology: Chain, NASDAQ, Openchain.
3. Verifiable Data – Create a verifiable record of any data, file, or business process on the blockchain. Examples: Tierion, Proof of Existence, Factom
4. Smart Contracts – Software programs that live on the blockchain and execute without the possibility of third-party interference. I call this “PHP in the sky”. Examples: Ethereum, RootStock.
Most of these applications are still under developed The future potential of the blockchain applications is still unravelling. The next couples of years will be all about experimenting and applying to all aspects of society. Regardless of which application comes first on a global scale. The bottom line is, Blockchain is here to stay and will and is transforming how our society functions.