Cryptoverse: World of Cryptocurrencies, Blockchain And Their Use Cases

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On November 09, 2021, the total cryptocurrency market capitalization reached US$3 trillion. It’s a momentous achievement for the ever-growing cryptoverse and one that sees blockchain technology — the infrastructure underpinning digital assets — thrust into the spotlight.

The world of cryptocurrencies and blockchain technology is constantly evolving. In recent years, private organizations and institutional bodies have seen a surge in cryptocurrencies and blockchain technology use cases.

Many people are still unsure about what cryptocurrencies and blockchain technology are and their use cases.

I will explain what cryptocurrency and blockchain are, common blockchain terminology, layers of blockchain, blockchain trilemma, and the different ways that cryptocurrencies and blockchain technology are useful in real-life scenarios.

What is Cryptocurrency?

A cryptocurrency is a virtual form of currency that exists on the internet. Similar to fiat currency (USD, JPY, GBP, and so on), it can be used as a medium of exchange to buy and sell goods and services online.

Cryptocurrencies use decentralized blockchain, utilizing immutable ledger technology to record all transactions. This ensures that the data is tamper-proof, secure, and transparent.

The first form of cryptocurrency is Bitcoin, created on January 3rd, 2009 by an anonymous person or group of people under the name “Satoshi Nakamoto.” Bitcoin is mined by software and hardware through solving complex mathematical problems.

Since its inception, several other cryptocurrencies have been created, such as Ethereum, Litecoin, Ripple, and Monero. These other coins, presently 10,000+, are considered Alt-coins (alternative coins) in the cryptocurrency space.

Investing in cryptocurrencies is a speculative endeavor and should be done with caution. Cryptocurrencies are subject to high volatile prices and can be considered a high-risk investment.

When investing in cryptocurrencies, it is important to Do Your Own Research (DYOR) and understand the risks involved. The prices of cryptocurrencies are highly volatile and can fluctuate rapidly.

For instance, bitcoin fell to $49,243.39 in early December 2021 after reaching an all-time high (ATH) of $68,990.90 the previous month (November 10, 2021). The prices of bitcoin and other cryptocurrencies vary based on forces of demand and supply due to perceived value.

What is Blockchain Technology?

Blockchain technology is a distributed database that allows for secure, transparent, and tamper-proof record-keeping. This means that it can create immutable records of data or transactions.

A blockchain records data or transactions in “blocks,” as the name implies. These blocks are “chained” together via computer nodes to secure the data or transactions and prevent any form of tampering.

The most well-known application of blockchain technology is Bitcoin, which uses a blockchain to track ownership of the digital currency. However, blockchain technology has many other potential applications, including the financial sector, healthcare industry, and supply chain management.

One of the key benefits of blockchain technology is that it allows for secure and transparent record-keeping. This can be particularly useful in industries where there is a need to track transactions or data over a long period.

Here are a few important concepts in the blockchain industry:

• Blockchain Mining: Blockchain mining is the process of verifying and adding transactions to the blockchain. Miners are rewarded with cryptocurrency or other benefits for their efforts. To mine cryptocurrency, miners need to solve a complex mathematical cryptographic puzzle.
• Smart Contracts: Smart contracts are self-executing contracts that are stored on the blockchain. They allow for secure, transparent, and tamper-proof contract execution.
• Proof of Work: The Proof of Work (POW) system validates transactions and adds new blocks to the blockchain using a competitive validation approach. This system is used in Bitcoin and other cryptocurrencies.
• Proof of Stake: The Proof of Stake (POS) system validates transactions and adds new blocks to the blockchain using a consensus approach. The Proof of Stake method is intended to mitigate the scalability and environmental sustainability issues associated with the Proof of Work (PoW) protocol.
• Hash algorithms: Hash algorithms are mathematical functions used to create unique fingerprints of data or transactions. This allows for the verification and authentication of data on the blockchain.

Layers of Blockchain Architecture

When it comes to blockchain architecture, five key layers need to be considered:

1. Application and Presentation Layer: This layer encompasses Smart Contracts, Chaincode, Decentralised Apps, and UI. People interact at this layer. This is where people download apps for use.
2. Consensus Layer: This layer is where the Proof of Work, Proof of Stake, Delegated Proof of Stake, Proof of Elapsed Time, and Practical Byzantine Fault Tolerance come into play. Validation occurs at this layer.
3. Network Layer: This is the layer where passing information and synchronization occurs through many computer nodes. This layer is also known as the P2P layer.
4. Data Layer: includes the structure of data to generate lists in each block of transactions that ensures security, integrity, and irrefutability. Digital signatures, encryption, linked lists with pointers to past transactions are all examples of features found in the data layer.
5. Hardware: The data, as mentioned earlier, and information are stored on physical servers that may be found in numerous data centers worldwide, keeping a copy of the blockchain’s content and data. Because blockchain is a peer-to-peer network, millions of computers worldwide have access to the data.

Blockchain Trilemma:

The “blockchain trilemma” refers to the challenge of simultaneously achieving scalability, security, and decentralization on a blockchain network. This is often seen as the key challenge facing blockchain technology.

The trilemma was first proposed by Vitalik Buterin, the co-founder of Ethereum, in a blog post in 2017. In the post, Buterin argued that it was impossible to have all three features simultaneously on a blockchain network and that developers would need to choose two out of the three.

Buterin’s proposal sparked a debate within the blockchain community on how best to address the trilemma. Some developers argued that it was possible to have all three features simultaneously, while others argued that sacrificing one of the three features was necessary to achieve scalability.

7 Real World Use Cases of Blockchain

The possibilities of blockchain technology are endless. Blockchain technology has the potential to revolutionize the way we live and work. Here are just a few examples of how the technology is being used in the real world:

1. Tracking supply chains: Blockchain technology is being used by companies like Walmart and IBM to track the movement of products through the supply chain. Blockchain’s traceability and transparency aid in ensuring food safety and quality. It also adds visibility, traceability, and trust to the food supply chain by allowing employees to scan or input a few barcodes to track a food item’s origin and transport history with dates, times, and current location. Harvard Business Review(HBR) reports how Walmart Canada employed blockchain technology to solve supply chain management. The distributed ledger technology of blockchain assisted in establishing an automated system for tracking bills from and to payments of 70 third-party freight carriers.
2. Music Royalties Tracking: The famous Canadian singer Justin Bieber held a 30-minute meta-universe concert on November 19, 2021, using Wave (a virtual music platform). With blockchain technology, musicians can track their music royalties. The ConsenSys software powered by Etherium blockchain technology allows artists in Ujo Music to have total control over their music distribution, sales, and profits. This has helped to ensure that artists are paid fairly for their work. Non Fungible Tokens (NFTs) have been identified to help in decentralizing ownership and control of arts, music, and digital collections. Independent musicians who were affected by the aftermaths of COVID-19 now embrace NFTs as a viable option to sell and get incentivized for their records and audios.
3. Cross-Border Payments: Blockchain technology streamlines the process of making cross-border payments. This has helped reduce the cost and time it takes to make cross-border payments. You can send tens of thousands of dollars within a few seconds at lesser fees when compared to the traditional banking method. Intermediaries that exist with cross-border payments often cause delays with remittance of payment. These delays are to checkmate money laundering, embezzlement, theft, and the promotion of terrorism. Anonymity and lack of “Know Your Customer” (KYC) are part of the concerns with the global adoption of cryptocurrencies.
4. Real-time Internet-of-Things (IoT) OS: Blockchain technology is used to create real-time operating systems for the Internet-of-Things (IoT). This would help improve the efficiency of IoT devices and make them more secure. IoTs are devices connected to the internet and can interact with other devices or humans. Some of these IoT devices include home appliances, cars, wearables, and healthcare implants. One of the relevances of blockchain to IoT is the need for data transparency and security. With billions of devices expected to be connected to the internet in the coming years, blockchain-powered IoT operating systems could play a major role in managing and securing these devices.
5. Securing digital identities: Blockchain technology can also create secure digital and personal identities available or useful online. This will help to reduce the risk of identity theft and fraud. Identify fraud costs businesses and consumers huge losses annually. According to a CNBC report, consumers lost $56 billion to identity fraud in 2020. The distributed ledger technology of blockchain can help secure identities by providing a permanent and unalterable record of an individual’s identity information.
6. Secure voting mechanism: Blockchain technology assists in creating a secure and transparent voting system. It reduces the risk of fraud and ensures that everyone’s vote is counted. In countries like Estonia and Canada, blockchain technology has already been used to conduct elections more efficiently. Australia, Japan, Russia, Switzerland, South Korea, Denmark, and Sierra Leone are among the countries working on blockchain governance today.
7. Managing medical records: Hospitals and other healthcare organizations can manage medical records efficiently by utilizing blockchain technology. This will help to ensure that patient data is accurate and secure. Aside from managing medical and electronic health records, blockchain technology has been identified for use in health services such as medical staff credential verification, insurance, and supply chain settlements.

Final Thoughts

Blockchain technology is still in its infancy stages of development, and it will take some time for the full potential of the technology to be realized. Nevertheless, there are already many real-world applications of blockchain that are being used today. As the technology continues to evolve, we can expect to see even more innovative and transformational uses for blockchain in the future.

I hope you found this post helpful in understanding blockchain and some of its potential applications. If you have any questions, please feel free to comment below. I would also like to hear about any other interesting uses for blockchain that you may know of. Thank you for reading!