Bockchain is essentially a database. This database is distributed. It contains records called blocks. The organization of blocks in the blockchain database are ordered. Each block contains a timestamp. It also contains a link that links to the previous block. The data inside a block cannot be altered.
Now that was a bit technical. Why we should think about it? How it can help solve some dire problems? Which sort of problems it can address?
Secure online transactions
Since it is a distributed database, it can act as a decentralized ledger. It is digital, so it can sit on top of digital currency. Remember it can be used for bitcoin as well as non-bitcoin oriented transactions. Each transaction stored in the decentralized database can be in any computer in the world. The good thing is that, this transaction cannot be altered. So no matter where it is, it is safe. You don’t need the secure centralized banking system, although that helps a lot.
In the context of authentication of a particular transaction, you normally rely on banks which can authenticate that a transaction is legit. In the Blockchain mechanism that authentication can be delegated to millions of computers around the world. So collaborative authentication mechanisms can further strengthen the notion of adaptability.
Physical coins and notes have the inbuilt nature of being spent once throughout their lifetime. You cannot duplicate and reuse (although you can be smart sometimes). In non-blockchain digital cash, a file that is normed as a digital cash can be copied to create two cashflows with a single source. That is dangerous since an attacker can do two different transactions with the same cash. But in the case of blockchain, double-spending is completely taken away by having a single transaction that can be collaboratively authenticated to have been used or done once for a single piece of digital cash.
Multiple chains can compete with each other to establish that the transaction happened in a certain way. The chain with the strongest link will win. This chain can be acknowledged through the proof-of-work system. This creates a notion of consensus.
Costs related to verification of transactions are considerably decreased when blockchain is being used. The end organizations can now focus on a different thing than establishing a secure link among transactions and paying for those on so many diverse contracts. This leads to simplifying the transactions at a particular end-point. The blockchain itself is complex but it simplifies things for others.
Usability in Voting (Yes voting)
In your constituency where your vote is registered, it can be duplicated to other places. In some parts of the world this does happen that a single vote gets duplicated and can be used to vote at several places. Since blockchain makes sure that a single piece of information in the block will only be used once, and it can be insured using collaborative, distributed, and decentralized work, a single vote at one place will mean a single vote at that place and across the world.
This will make sure that voting is transparent. This voting mechanism can not only be used in the democracy sense but also in other contexts. If Facebook wants to do voting for a particular feature or privacy concern, they can easily reach to an authentic mass collaborative decision. Thats a complex thing to do currently but in future they might become small regular phenomenon.
Usability in Intellectual Property
If you own a piece of music, and somehow you use your ownership signature, and others can vouch for it through blockchain, then you can establish a trust for each future transaction involving this piece of music. Similar can be said about scientific documents, paid reports etc. It will become really hard to circumvent the system to make use of certain intellectual property illegally.
If you have designed something in 3D, and you want it to be printed in 3D. Then you can make sure that no matter which organization has this design, the printed material will always be your property. You can collect or sell that from anywhere to anywhere without worrying about your Intellectual Property.
Blockchain stores information and protects it. BUT, what information we are talking about here? We are talking about information which has certain value. So Blockchain essentially preserves the value of the asset. It is just like banks which store and move physical cash OR the internet which stores and moves information. The Blockchain actually STORES and MOVES value.
Also, just to say, if you and some other person are enemies to each other. In Blockchain world, you can do Trust-less transaction without worrying about the transaction’s future. Trust is completely managed by the Blockchain for that transaction.
Here is an example of Marbles, an IBM technology, and its use-case.
— IBM Blockchain (@IBMBlockchain) February 1, 2017
If for some reason you want to see a transaction in a local bank. You can see it, but you have to go through some legal mess. Some footwork might be involved. Or some clicks, input of secure digits, use of device to enable authentication to a webpage that contains transaction etc. What about if others want to reach the same transaction? Then?
Blockchain provides a global distributed database which is SEARCHABLE, and easily available. No management is required on behalf of the transaction searcher, or the one who initiated the transaction. No maintainability constraints as well, as it will be abstracted away using the Blockchain.
Blockchain and Internet of Things (IoT)
IoT is on the rise, and millions of devices are joining the ecosystem everyday. The security of these devices and the communication, storage, and computing aspects related to that are of paramount important to consumers, and producers. The security is the biggest threat in this domain, since IoT is essentially an intrusive technology by nature. Privacy policies need a tighter coupling with the security. So for the same reason since Blockchain can protect transactions, communications, and ownership, and can build a collaborative trust, it seems that it can help devices build policy domains which have high coupling to security. The following article is worth a tweet.
Bosch, Cisco, Gemalto and More: Tech Giants Team Up For Blockchain-IoT https://t.co/E5R0e1ksU9
— Patrick Bucquet (@pbucquet) February 2, 2017
Blockchain needs further exploration in terms of its usability. The technology itself is quite mature now, even though many say otherwise. Anyhow, it will impact more industries than Finance. Can’t wait to see what kind of future is being promised. I hope it will be better.
If you would like to understand Blockchain, its history, and how it is reshaping the world, you can watch this TED video
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