The question of 2018 — What is Blockchain? As 2017 saw a huge rise in cryptocurrencies, 2018 is gearing up to be the year of blockchain’s own rise to glory, with thousands of new uses of the technology coming to life.
Originating as the technology behind Bitcoin, blockchain is a type of distributed ledger technology. Simply put, it is a growing chain of records (or blocks), which is stored in a decentralised manner, across all participants in the blockchain. The information in these blocks is encrypted, which is where the high level of security comes from. This encryption is decoded when users “mine” the blockchain by solving complicated math equations. Imagine, how 4 people have written in their diary that it’s raining but 1 wrote it’s sunny. If you had to establish the truth, you’d ask the weather agency and they would correct it. But can you trust the weather agency? What if your diaries were connected and everyone writes at the same time, while a group of independent individuals is constantly validating if what is being written is true?There are many different types of blockchains, which are encrypted differently, stored differently and validated differently but there are some blockchain qualities, which are valid in almost all blockchain types:
Decentralized
When using a blockchain, you’re making agreements and transactions with other people without intermediaries like banks, governments etc. This is achieved through the use of smart contracts, which are basically a piece of code, which can execute actions instead of these intermediaries. E.g. ETHLend is a peer to peer (P2P) lending system, which facilitates safe, quick and easy loans between ordinary humans. Through blockchain, ETHLend has removed banks as intermediaries. Blockchain systems allow easy and safe peer to peer lending and give you the tools for self-governance. Where you would have needed a third party to verify a transaction, the voting systems on a blockchain give you this, by definition.
No Intermediaries
Blockchain gets rid of intermediaries and traction. Imagine a monetary system, which is self organised, fraudless, with controlled, verified transactions, to keep you safe — the financial system we’re creating on the blockchain today can give you that.
Transparent
The transactions stored on a blockchain are transparent to all users. This doesn’t mean everyone can see your name or address, but more that when you send Bitcoin to someone, or trade it, this trade: when it occurred and between which wallets, is transparent. E.g. cryptocurrencies: with money, you want your transactions to be transparent. With blockchain, money transfers and banking becomes a lot more open and secure, especially when it is connected to safe digital identities, that help verify who each wallet belongs to.
Immutable
The same feature which gives information on the blockchain such strong validity, also creates its virtual immutability. “Immutable” means “unchangeable” — in blockchains, immutability is a product of the way the blockchain works and more specifically, the way miners validate pieces of block (information) on the chain. In the case of Bitcoin, this is done by thousands of miners, who all validate a piece of information before it is added to the blockchain. This means that any change in the blockchain’s past records needs to be re-confirmed by all miners — a task, which is virtually impossible. A great new example of blockchain’s immutability is Everledger — through using Proof of Ownership, it’s letting diamond owners “upload” their diamonds on the blockchain, helping reduce the cases of diamond fraud.
I know you’re probably thinking — that is a lot of cool words and features… But what does it all mean for everyday life? So, here are a selected few strands, in which blockchain is likely to have world-changing impact. Particularly, the examples below are cases, where blockchain can easily be making huge changes in the next decade or so and which you’re likely to experience in your daily life.
Supply chains
Smart contracts can minimise the risk and the intermediaries involved and can automate most of the communication needed between all stakeholders. The transparency of blockchain can help you trace your product from the moment it is made to the moment it gets to your doorstep. You don’t have to trust companies that tell you they are ethical — you can know for certain that IKEA don’t make their meatballs with horse meat, for example. If IKEA made their meatballs on the blockchain, and all their supply chain partners tracked their production on the blockchain, you, as a consumer, could easily check exactly where your portion came from. Let’s imagine it: as you’re eating your delicious potion, you’d be able to see the record of your cow being born and bought, when and where it was made into a meatball, how it was packaged and by which factory, what was the company and the number of the truck which transported it to your local IKEA, etc. Not only does this hugely improve your personal knowledge of the products you buy but it can be used to prevent and stop epidemics, such as e-coli and hold large corporations accountable for the way they produce their items!
Voting
Transparency and security of the blockchain allows the authentication of transactions without them needing to be administered or guaranteed by a central authority. Ballot boxes and current online voting platforms are vulnerable to manipulation. On the blockchain, it would be harder for some leaders to gain 146% of the population’s votes. Follow My Vote are developing a blockchain-based system to ensure security, transparency and mathematically accurate election results. West Virginia is gearing up to test blockchain voting and we can only expect more governments to be looking at the prospect in the next few years.
Power generation
Blockchain enables homeowners to sell back energy to the grid without a central energy distributor or manage their own microgrids that are independent from the established system. Based on blockchain’s capacity for peer-to-peer connection, this revenue stream is also playing on the need to remove intermediaries in energy production. Lo3Energy runs a project in Brooklyn, New York, where people can buy and sell energy they have generated on their own roof with solar panels. Because they are doing it P2P, they can set their own price and can save money from the current fees they have to pay to energy corporations.
Resource Sharing
People are already sharing resources through apps like Airbnb and UBER. However, you still have an intermediary, taking fees and centralising operations. Through blockchain, you can remove intermediaries, minimise costs and share across the globe. Blockchain’s power in this case is almost incredible, allowing people to connect peer to peer, across the globe, and transact value, without any meddling from intermediaries, without annoying fees — both for the service itself and the accompanying transactions! Take for example Golem, who are letting you sell your computer space to people who need it, even if they’re on the other side of the world. Or more disruptive still, Bionic — a computer resource sharing platform working to better society, by letting you give your computer’s unused power to scientists and researchers to help their work.
Healthcare
A patient’s medical records are often scattered between GPs, clinics and labs. A blockchain-based health record could be read and updated from multiple locations or services and would contain a note of who made each addition to the record. The patient can own their data and choose whom to share it with. At MIT, researchers are developing such a system, called MedRec, that will integrate with current healthcare computer set-ups. In the future, even IoT devices like your phone, or your watch can add information to your medical record to let doctors make more precise diagnosis.
Aid
In 2012, the then secretary-general of the UN, Ban Ki-moon, estimated that 30% of development aid was lost to corruption. The UN has a number of blockchain-based projects looking to solve issues in delivering aid. If aid goes through the blockchain, it can easily be traced and people who donate can trace exactly where their money goes. Blockchain can cut down on transaction fees for the UN and reduce the frequency of fraud and theft. Additionally, blockchain allows financial integration of people from developing countries; even micro-credits and loans are enabled through peer to peer lending.
Asset exchange
And, of course, the free exchange of assets — in the future, there will be no need for brokers, or even exchanges. People can buy and sell assets of all sorts peer-to-peer, without using brokers and exchanges, notaries and government bodies, at almost 0 cost. This was the original idea behind BTC and is what’s kind of happening now with crypto — but not quite. Exchanges and brokers are still trying to control this market, and most assets’ ownership still needs to be formally verified by a notary. However, with education and cunning, we can bring about a truly limitless system of peer to peer asset exchange.
