A quick glimpse of Blockchain and its Revolutionary Applications
In 2017, the world witnessed the unprecedented meteoric rise of Bitcoin, a digital currency rightly dubbed the digital gold of 21st century. Bitcoin’s value is expected to reach astronomical levels (as high as 1 million Dollars a coin) in by 2020 — boldly predicts John McAfee . At this point, almost everyone has heard of Bitcoin but very few know about the foundational technology that is used to build all the cryptocurrencies and provide the platform for the existence of Bitcoin and other cryptocurrencies - Blockchain technology.
Any effort to have a complete intellectual grasp of the cryptocurrency system must begin with understanding what Blockchain is and the possible ways the technology can be used to fundamentally disrupt every aspect of life as we know it. Initially, Blockchain was built to power Bitcoin, but the applications of the technology have since quickly evolved to numerous fascinating uses.
The Blockchain is simply a digital ledger, designed to be incorruptible and self-executing. The first work on the technology commenced back in the ’90s in a research paper titled “How exactly to Time-Stamp a Digital Document.” It had been the rudimentary concept of what Blockchain would eventually become, but it was the start of something that could reinvent how our digital society operates in many ways.
Even though most people only relate Blockchain technology with cryptocurrencies like Bitcoin, it is as related to cryptography as it is to digital currencies. Blockchains utilizes mathematics, algorithms and communicates with every node in the network to secure and legitimize every single transaction, thereby ensuring the authenticity of each transaction. The Blockchain is an ever-growing chain of data, or “blocks,” which allows for an established digital trail back to the original block that is heavily resilient to changes and tampering.
The first data chain commenced at the “genesis block,” (the 1st record in that chain) and continues unbroken through successive blocks. Blockchain validates the authenticity of each chain by using cryptographic hash pointers, which connects it with the prior block in the chain, thereby establishing its validity by building an immutable chain of historical record. Each block includes a timestamp and transaction data. The transparent and immutable nature of blockchain enables the obtainment of the foundational reason centralized authorities exists today: trust. Blockchain enables the possibility of decentralized trust by consensus protocols verified by each node in its vast network rather than a single private and centralized control. Blockchain has the potential to disrupt numerous existing organizations whose primary reason for existence is to provide checks and balances to ensure transactions occur — think middlemen, escrows, banks lenders.
Distinguishing characteristics of Blockchain
1. Decentralized- Blockchain is distributed and synchronized across vast systems; hence, it is suitable for advanced organizational business networks such as financial consortia or supply chains. Blockchain by its nature and design is 100% public and transparent by providing every node in the network with an exact, immutable copy of the distributed ledger.
2. It cannot be manipulated- One cannot modify any information that has been placed on the Blockchain, the linked list of cryptographic hashes prevents this security threat. The types of transactions one can perform are decided between participants and stored in the Blockchain as “smart contracts,” which provides confidence that once each party has done their part, the transfer of assets will occur guaranteed by the blockchain. The power of Blockchain lies in the fact of every node in the network verifying every transaction. The ledger is immutable and secured and verified by the entire network, with networks including tens of thousands of nodes.
3. Consensus backed contracts Before a transfer is executed, there has to be a contract between all relevant parties to ensure the validity of the business transaction. For instance, if you are registering the sale of a car, you must be the direct owner of that car and provide proof, or you will not be granted an agreement and thus no smart contract will be initiated. This technique is recognized as “consensus,” and it can help keep inaccurate or fraudulent transactions from being recorded in the decentralized database (distributed ledger).
4. Immutable Transaction History A key characteristic of the Blockchain is the immutability of the information stored on the blocks. Once a transaction is executed and stored on Blockchain, it cannot be changed. You can track transactions to confirm its state; nevertheless, you can never modify the original transfer. Every node in the network maintains its own identical, immutable copy of the ledger which ensures that the record of the provenance of investments is always intact. One can always obtain the entire transaction history of each record: where it has been and what has taken place throughout its digital life.
Applications of Blockchain technology
Storage- Blockchain is an incorruptible ledger or record book; therefore, the technology can be used to securely store data in decentralized blocks. Blockchain’s decentralized data storage system removes the need to rely solely on a centralized data storage entity to store your data in a single location. Also, the fact that every computer continually verifies every data record entered into the network on the network makes Blockchain an ideal data storage technology that is insusceptible to improper data tampering associated with data storage.
Already, Storj — a technology company is exploring the Blockchain technology as a storage platform. The company hopes to reduce the cost of storing data by companies and individuals while ensuring high security and privacy.
Smart contracts- Before the advent of Blockchain, performing a business transaction with anyone over the internet meant trusting (following a blind faith) that the other person involved in the deal will keep their end of the bargain. Sometimes this trust is exploited, the other party fails to meet their end of the bargain. Over time, some solutions have been devised to curtail online fraud or other malicious online activity involving individuals defrauding others. One of such solutions is escrow, a payment system that holds money in a trust for two entities who will jointly create a clause for the release of the funds to the recipient or refund of the money to the payer.
Blockchain enables an efficient form of contract execution system called smart contracts. Smart contracts are auto-executable computer programs that fulfill the terms agreed to by two parties (buyer and seller) without requiring an intermediary third party to provide the trust that the transaction will follow through. Smart contracts are the ideal solution for online transactions; they run exactly as programmed, have zero downtime, insusceptible to fraud, third party interference or censorship and are 100% public and transparent.
Smart contracts were initially made possible by the Ethereum project, a Blockchain application platform. Although the term “smart contract” was coined in 1993 Ethereum popularized it in 2013 when the Ethereum Blockchain was developed.
Vitalik Buterin, a founder of Ethereum, explained that “Smart contracts solve the problem of intermediary trust between parties to an agreement, whether that is between people transferring assets like gold, or executing decisions between two parties in a betting contract.”
Currency- Blockchain successfully powers the most popular and valuable cryptocurrency: Bitcoin. Bitcoin is designed to enable peer-to-peer payment, is transferable and has a value determined by supply and demand. Consequently, it is possible for Bitcoin to be used in making payments for the exchange of goods. Cryptocurrencies remove all geo-economic restrictions set by international banking laws. With Bitcoin and other cryptocurrencies, transferring huge amount of funds from one place to another requires little transaction fees compared to standard banking charge that requires high remittance fees.
In 2017, the UNWFP sent over 10,000 Syrian refugees cryptocurrency-based vouchers. This aid effort was led by Ethereum co-founder Gavin Wood, and Blockchain big data firm Datarella, Parity Technologies. They put this platform into action and assisted thousands of displaced persons in making use of cryptocurrency to purchase food, according to Coindesk.
Cryptocurrencies are being adopted massively by people and web stores as a valuable currency that can be used in making purchases, pay a debt or perform any action that can be done with a fiat currency (regular money).
Smart Property- A tangible property such as automobiles, homes, home appliances, or intangible property such as patents, game titles, or company stocks, can have smart technology built in them. Such subscription can be stored on the ledger along with contractual information of other people who are allowed to own the property. Smart keys could be utilized to facilitate usage by the permitted party. The ledger stores and allows the exchange of the smart keys after the contract is confirmed.
The decentralized ledger also becomes a tool for saving and controlling property protection under the law as well as allowing smart contracts to be duplicated if information or the smart key is lost. Smart property diminishes the hazards of running into scams; mediation fees and fraudulent business situations; Blockchain increases trust and efficiency.
Types of Blockchain Smart Property.
Unconventional moneylenders/ hard money lending
Smart contracts will revolutionize the lending system. Many borrowers with poor credit fall under personal bankruptcy and lose their homes as a result of high interest, hard money loans secured by their primary residences. Hard money lenders charge substantial rates and unfortunately many home owners end up losing their properties as a result of taking on these hard money loans, stemming from the fact they do not qualify for traditional financing. The Blockchain reduces this risk by enabling a stranger to lend money and holding your smart property as security. Credit, work history and bank statements are not required. The large number of documents and signatures are not needed as the property details are immutably stored on the Blockchain with 100% transparency for all to view, thereby enabling a new world of lending possibilities otherwise not available to these borrowers.
Preventing voter fraud
Cybersecurity and voter scams have been one of our nation’s major concerns since the United States 2016 election. Unfortunately, this is not the first-time voter legitimacy has been questioned. Voting fraud poses a major threat to the fundamental stability of democracies throughout the world, including the United States.
Blockchain technology can offer an immutable, 100% accurate digital vote-counting system. This technique can secure an election’s voter enrollment and accounts for the voter’s id to ensure each vote cannot is not tampered or modified as a result of the immutable nature of Blockchain. While using the Blockchain, a voter could be 100% sure his vote was accurately recorded while simultaneously remaining anonymous to everyone who may observe the ledger.
Just as Blockchain functions as a general ledger for cryptocurrencies, it may also create a permanent and open public ledger for votes counted — promising equitable, democratic elections throughout the world.
Most of these applications of the Blockchain technology are still developing; the future potential of the Blockchain is still being discovered. The coming years will be focused on experimenting and applying the disruptive applications of Blockchain to all aspects of society. The indisputable fact is that Blockchain is here to stay and is radically changing how our society functions at all levels.
Glossary
• Cryptography: As it relates to Bitcoin, cryptography is the application of mathematical functions to secure information. This technique is used to sign transactions, create and secure wallets, and verify the blockchain.
• Decentralized: This term defines the nature of the blockchain network; which runs without a central authority or controlling party. Consequently, Bitcoin is a decentralized currency because no government, company or individual is in control of it.
• Distributed: A distributed network is designed to work by allowing participants to connect to each other directly, therefore; there is no central server or entity that people must connect to before using the network.
• Encryption: Encryption refers to the use of cryptography to encode a message in a way that only the supposed recipient(s) can decode it.
• Hash: Is a mathematical function that is used to validate that the information stored on the network has not been altered. Also, it acts as a unique identifier of a Bitcoin transaction.
• Peer to Peer: This term describes the Bitcoin networks decentralized system that allows the network participants to communicate directly with each other.
• Block: A group of Bitcoin transactions that occurred during a specific timeframe (typically about 10 minutes). Records of Bitcoin transactions are saved on the blockchain in blocks, another way of saying the transactions are saved in batches.
• Mining: The process of creating units of a cryptocurrency (such as bitcoins) through some work. The work is required so that it is impossible for people to generate infinite amounts of a digital currency, which would make the currency lose its value. In bitcoin, mining is done with a computer.
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