Undeniably so, almost every aspect of our lives is seemingly attached to a form of technology which over the past decade has grown to a level of importance occupied only by necessities like food & water. Advancements have allowed us to harness the power of technology for betterment of our livelihoods, unimaginable lengths of communication across the planet, in various shapes & forms of entertainment and essentially, to push the boundaries of human exploration in all spheres.
One such revolution, first conceptualized over 30 years ago in 1991 by Stuart Haber and W. Scott Stornetta, is known as ‘Blockchain’. Its applications? Endless! Having taken the world by storm as the foundation of cryptocurrencies, blockchain is set to be widely adopted & is anticipated to play a key role across various sectors & industries in the near future!
For a singular innovation to be hailed across the planet, its contributions & benefits truly have to be astounding, not only in theory but through translation in real world use-cases.
To understand this vast variety of applications, we must first grasp what blockchain technology is & how it works?
‘A blockchain is an electronic database of information stored digitally, in a linear, chronological order and a decentralized manner’. Data is collected in the form of groups of fixed storage capacities called ‘blocks.’ Once filled, these blocks are allocated a unique identity with a timestamp and linked to its preceding block hence forming a ‘block-chain’. What this does is effectively create an unalterable timeline of data which is then stored on various ‘nodes’ (individual computer systems) across a computer network.
The real beauty of the blockchain lies in its construction!
Data from these blocks is passed through a mathematical function resulting in an output of a fixed length regardless of the size or amount of data in the block. This is known as ‘Hashing’. The fixed length output is completely unique & the data cannot be accessed in a backward fashion through the hash, hence guaranteeing its security.
Secondly, these blocks are stored, not a singular system but on multiple systems around the world to create redundancy (thus decentralized). If a block on one system is altered its timestamp & hash will then change. Other nodes can cross reference information and quite easily spot the fraudulent anomaly as each block is linked to a previous one. This prevents the data in a blockchain from being tampered with or deleted altogether.
Most importantly, processing hash functions to create & validate blocks requires an immense amount of computational power which is extremely costly. Therefore, any person trying to alter a blockchain across each of the nodes its stored on simultaneously, has an almost impossible task at hand.
With our digital footprint increasing by the minute, personal information is easily susceptible to being stolen. The authenticity of data provided by blockchains through its decentralization & security is what makes it so universally valuable.
Having now recognized how a blockchain functions, lets delve deeper into its some of its main current & probable future applications.
The rise of Bitcoin will invariably be the point in history where the light shone on blockchain technology as it began to make its mark. A cryptocurrency is a decentralized & digital form of currency or money. Maintained using blockchains in a widely distributed ledger, they are in theory, impossible to counterfeit or double spend (as only 1 unique entry exists). Its huge value can be accredited to its ability to exist outside the control and regulations of banks & governments as is the case with all other forms of currency such as the USD, GPB or INR. Cryptocurrencies are being highly touted as THE major disruption in the future of finance.
- Smart Contracts:
Smart contracts are digital agreements executed by a computer system utilizing underlying blockchain technology. It allows two willing parties to exchange assets like money, property or anything of value when certain pre-requisites are met. These contracts effectively wipe out the requirement of a third-party such as a broker, agent, lawyer or an organization like a bank to enforce an agreement as the contract is verified for authenticity by the blockchain.
Applications for smart contracts exist in but aren’t limited to finance & banking (payments, settlements, mortgages, escrow, insurance claims), real estate(transfer of property), supply chain management, non-fungible tokens various others.
- Elections & Voting:
Using blockchain networks to mail in or transfer votes for candidates would eliminate the need for manual counting while maintaining the lack of tampering & ensuring paramount security in the election of a worthy & true candidate.
Hospitals, research institutes & the healthcare ecosystem could harness the power of blockchain to create & safely store sensitive and confidential medical records without worrying about breaches, tampering, misplacement or destruction of crucial patient information. These records can be encoded so access is provided only to specific individuals on a need-to-know basis.
Global leaders like Walmart, Pfizer, AIG, Siemens & Unilever have all begun to utilize blockchain technology in their workflows. IBM has created its Food Trust blockchain to trace the journey food products take to get to any specific location/area to monitor & source any issues which may arise from creation to destination.
The Blockchain universe continues to expand as fascinating use-cases & innovations pop up.
To explore the technology & learn from experienced thought leaders, virtually attend the MARKETSANDMARKETS BLOCKCHAIN CRYSTAL BALL EVENT on the 24th of June at 10AM EST!