What Is Blockchain Technology?
In the past decade, blockchain and blockchain technology have become irreplaceable entries in the dictionary of every tech-savvy person on the planet. What began as an ambitious yet straightforward idea has quickly revolutionized the global digital market and continues to transform our lives on a daily basis.
Blockchain is a digital ledger recording immutable data controlled by a group of individuals. There are different types of blockchains that are regulated in different ways. They’re used across many industries, starting with healthcare, real estate, banking, supply chain, and education, a list that’s constantly updated. The information kept on the blockchain can record a money transaction, someone’s personal data, or legal documents and agreements.
If you clicked on this guide, you must be interested in blockchain technology but probably have a lot of questions. Our task is to give you the answers and explain what blockchain is and how the whole technology operates.
What makes this system different from other databases?
What are its main characteristics?
When did it first appear and why? These are some of the questions we’re going to deal with.
If we’re to put it in simple terms, a blockchain is a cost-efficient way for people to exchange information, where every occurring exchange or transaction needs to be verified and approved by the whole network. This eliminates potential frauds and violations by third-parties, leaving the responsibility in the hands of the users themselves.
To understand the implications and development of blockchain, think about the first video game, Pong, released in 1972, and how that prompted the rise of the video gaming industry. When people from other industries saw the potential to capitalize on this new hot craze, the demand for video games increased and so did their production.
The games were purposely competitive, and it didn’t take long before players took the bait. Software engineers got to work once again. With mass-produced personal computers, the 1980s saw the advent of multiplayer gaming which brought a social aspect to the gaming table. This type of gradual development and a series of improvements is a process that every technological innovation goes through, and so did blockchain.
Why Is It Called “Blockchain”?
When the digital ledger first appeared, it wasn’t known under the same name. The name blockchain was added over time and denotes the core parts of the system:
- Block: The chunk of stored data or a list of transactions recorded on the ledger make up a “block”.
- Chain: The blocks of data are then hashed, or converted to unique strings of coded text that are mathematically “chained” together in succession. This function also locks the blocks in chronological order where each block bears on the preceding one to be valid.
Unlike blockchains, the method of hashing data has been around for over thirty years. What makes this mathematical operation relevant to the new database is that it creates an undecryptable function. You can hash any type of data, regardless of its size and length, to a fixed string, and that unique string will always produce the same hash.
Think of this hash as a digital fingerprint.
Here’s what we got when we hashed “Welcome to Cryptohead.io” with the SHA-256 hash function:
Hashing vs Encryption
You might be curious to know the difference between hashing and encryption.
Encryption is a two-way function, which means that the data can easily be decrypted with the right key. For example, we use passwords for online authentication and these passwords are kept on a server. To protect them, we use encryption, in which case the server has to keep the keys as well, to verify the passwords. Therefore, if someone steals the encrypted passwords that person also gets the keys.
Hashing eliminates this problem because it’s a one-way function and, as we said before, the process can’t be reversed nor the data decrypted. The server, therefore, saves the hash of each of these passwords for verification. When someone logs in, the server hashes the entered password with the same algorithm and compares it with the one stored. If the hashes match, the person will gain access.
The chained blocks on the blockchain operate within a network composed of full nodes. These nodes are computers running an algorithm to hash and protect the data, and each node has access to all the data (or transactions) ever recorded on the blockchain.
This means that the network has no central authority but thousands of computers around the world are doing the “mining”, i.e. the verifying of data. The mining consists of running a series of hashing functions, such as SHA-256, the most common function in cryptography. It’s a time-consuming and costly process, so the algorithm awards the node operators, known as miners, with cryptocurrencies.
The process begins when a user requests a transaction that is then sent to the network. Next, the miners need to reach a consensus on the validity of the transaction and add it to the current block of transactions. The block is then chained to previous blocks and the transaction is thus confirmed.
Once confirmed, the transaction is recorded on the blockchain and will remain there forever. It can’t be removed or altered without notifying the miners and the wider community since everyone has access to the digital blockchain ledger. Any changes are recorded in new separate blocks, and users can always go back and check the original data. The original Bitcoin blockchain used this system for monetary transactions but it can be utilized in various domains.
Putting Blockchain to Practice
Let us give you a plausible example. Imagine that you want to travel to London to visit a friend for the holidays. First, you need to book a flight, and the traditional way to do that is online, using the air company’s website or app. For a successful purchase, you need to put your trust into these platforms and hope they’re reliable.
Next, you use your credit card to pay for the ticket, for which you’re charged an additional processing fee by the credit card company.
Now let’s see what happens if we use the blockchain technology to book our flight instead. The involved parties, i.e. you as a passenger and the air company, are positioned on the opposite ends of the transaction. The purchased ticket is a block of data that miners will verify and add to the ticket blockchain, which stores all transactions for that particular air company or entire air traffic. Your ticket becomes an unfalsifiable string of data that no one can tamper with.
Thanks to blockchain technology, we’re able to cut out the extra charge and the middleman. There’s no need for a processing fee or for a third-party to verify the transaction since everything happens peer-to-peer, at a considerable speed.
The History Behind Blockchain
Now that you know blockchain’s core elements and the basics of how it stores data, why not look into the history of this database. Why was blockchain invented and who came up with the idea?
Looking for the Trust Protocol
Back in the ‘80s, the Internet was rapidly expanding across the world. More and more people were getting involved, and it was becoming obvious that the network will continue to grow and develop. As the decade was coming to an end, the possibility for an e-market seemed closer than ever.
For that to happen, cryptographic engineers had to work at full capacity to solve the initial Internet problems such as lack of privacy, security, and inclusion. Despite their continuous efforts, the engineers were locked in a stalemate. No matter what they did they couldn’t deal with the dominant presence of third parties.
The first online transaction was made in 1994 on a website called NetMarket ran by the 21-year-old entrepreneur Dan Kohn and secured with encryption technology. However, non-secure online shopping was already taking place around Europe in the 80s. These first credit card purchases over the Internet were extremely dodgy and came with immoderate transaction fees.
To make matters worse, the companies were tracking private user data, the purchase amount, and the exact time when a transaction was made, which revealed a lot about the individual’s whereabouts (e.g. paying to travel, purchasing food, books, movies, making political contributions, etc).
On the other hand, allowing complete anonymity would have meant a lack of security, potential thefts, double-spending, black market trading, and more.
The Double-Spend Problem
Anytime cryptographers would be discussing the possibility of designing and using virtual cash, the problem of double-spending would pop up.
On the Internet, people haven’t been able to transact or do business directly for the simple reason that money isn’t like other information goods and intellectual property per se. You can send the same selfie to all your friends, but you ought not give your friend a dollar that you’ve already given to someone else. The money must leave your account and go into your friend’s. It can’t exist in both places, let alone multiple places. And so there’s a risk of your spending a unit of digital currency in two places and having one of them bounce like a bad check. That’s called the double-spend problem. – Don & Alex Tapscott. 2016. Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World.
Double-spending was one of the weaknesses of online payments where a person could use the same input for multiple transactions. When you buy something with physical currencies, like for example a $5 book at the store, the service provider takes your $5 bill, confirms that you’ve actually paid, and prevents you from using that bill again.
However, digital information is easily reproduced. What could prevent Bob from making a copy of a file he owns on his computer and then sharing these copies with multiple users on the network? Sharing a media file isn’t nearly as serious as using the same digital coin more than once in order to pay for more than one service.
If everyone used their digital coins multiple times, this would result in inflation. Not only that, but the cryptocurrency itself would lose its value because no one will believe that it’s trustworthy anymore. This is where third parties earned the trust of the online community – they promised they would regulate the double-spend problem.
This is a centralized solution that puts all the responsibility and power in the hands of these middlemen. Unfortunately, it’s a method that has its flaws too. Apart from the loss of privacy and the processing fees that come with involving third parties in the first place, they can be compromised and attacked by external malicious actors as well.
The revolution began with David Chaum, an American computer scientist and cryptographer, who in 1982 proposed an innovative way to solve the Internet trust issues and the double-spend problem. In a paper called Blind Signatures for Untraceable Payments, he developed the concept of blind signatures.
Blind signatures are a type of digital signature that protects the privacy of users’ transactions by allowing them to obtain a signature without the signer seeing the amount that’s being shared in the transaction. Therefore, the signer leaves a “blind” signature. Later on, when the signer, who has the central authority, receives the “unblinded” transaction, he can’t know who it belongs to but only sees his signature on it and verifies it.
The whole system is much more complicated and harder to grasp, and it was implemented using a number of public-key encryption schemes. Chaum’s idea was to use blind signatures in different areas where users wanted to enjoy complete anonymity, such as eVoting, cryptography, and most importantly, to create a digital money system for the online market. However, the system was still centralized.
In 1989, David Chaum founded DigiCash in Amsterdam and took his ideas even further. The company offered electronic payment through a system based on blind signatures. This system was called eCash, while the money became known as CyberBucks. After a trial demonstration in 1994, the software became available for download.
Customers used the software to withdraw notes from their bank and assign encrypted keys (private and public) before sending the notes forward. This is how they conducted private transactions without banks, governments, and other third parties to be able to trace their payments and gain access to personal information.
According to a DigiCash press release issued in 1996, Ecash is a digital form of cash that works on the Internet where paper cash can’t. Like cash, it offers consumers true privacy in what they buy. Yet users can always recover their money if their computer crashes, and also prove who received their electronic cash in payment, making it unsuitable for criminal use. Thus ecash brings an improved form of cash to cyberspace, where it can be expected to catalyze an enormous growth in electronic commerce.
At first, banks were eager to test the innovation, and in 1995, the Mark Twain Bank in St. Louis would be the first bank to obtain a license from DigiCash to use their technology. According to the same press release mentioned above, Deutsche Bank, one of the largest banks in the world followed suit the following year. Their clients had the opportunity to buy information (magazines and stock quotes), services, and tangible goods (from mail order to pizza) with just a few clicks on their computer.
Unfortunately, DigiCash didn’t get the chance to realize its full potential. The eCash concept was still new and unfamiliar to the general public, and not everyone understood the importance of privacy back then. There weren’t enough merchants interested, and as a result, they couldn’t get enough consumers to join the train. The company filed for bankruptcy in 1999.
It’s the year 1992, and a meeting is about to start. The hosts are Eric Hughes (a mathematician and Berkley professor), Tim May (a retired Intel businessman), and John Gilmore (a computer scientist and former Sunmicrosystems employee). They have invited a group of twenty close friends and crypto enthusiasts to discuss important cryptographic matters. Little do they know that this meeting will give birth to an entire movement in the crypto sphere.
Excited to be discussing and working on the same ideas, the party agreed to see each other once a month at John Gilmore’s company, Cygnus Solutions. The group got the name “Cypherpunks” from one of its members, the hacker Jude Milhon, better-known by her pseudonym St. Jude. It’s a play on the word ‘cipher’, meaning coded message, and the popular genre of sci-fi fiction, ‘cyberpunk’.
The group set up a mailing list to reach out to other ‘cypherpunks’ across the globe, and it wasn’t long before that number surpassed one thousand. The subscribers were encouraged to share their ideas, dilemmas, and come up with codes for testing. Their exchange of information was encrypted with new computer programs like PGP, ensuring maximum privacy, one of the main values the movement stood for.
Privacy was the building block behind the rest of the principles outlined in the Cypherpunk Manifesto, written by Eric Hughes in 1993. This manifesto revisits issues discussed in Chaum’s paper from 1982, mentioned above, coupled with ideas underpinning the philosophy of future technologies such as blockchain and Bitcoin.
Here’s what the Hughes says in the Manifesto regarding the lack of privacy in online transactions: When I purchase a magazine at a store and hand cash to the clerk, there is no need to know who I am. When I ask my electronic mail provider to send and receive messages, my provider need not know to whom I am speaking or what I am saying or what others are saying to me; my provider only need know how to get the message there and how much I owe them in fees. When my identity is revealed by the underlying mechanism of the transaction, I have no privacy. I cannot here selectively reveal myself; I must always reveal myself. This is why, he says, our society needs anonymous transaction systems.
It started with Dr. Adam Back and his anti-spam algorithm HashCash, developed in 1997. Its function was to add time and computational cost to sending emails which in turn made sending spam unprofitable. This was an early proof-of-work system where an encoded hashcash stamp was added to the header of the email binding the sender to prove they had expended computational power to calculate the stamp before sending the email. If they did, it was unlikely for them to be a spammer.
A year later, Wei Dai published his proposal for B-Money in which he explained two types of protocols applicable on an imagined untraceable network, where senders and receivers are identified by their public keys only. Moreover, every message received has been signed and encrypted by the sender.
In the first protocol, every participant maintains a separate database of how much money belongs to each user, i.e. public key, and together they define the ownership of money. The second one is a variation of the first, where the responsibility falls over a subset of participants (whom he calls servers). Each server is required to deposit a certain amount of money as an incentive to keep them candid and transparent.
The first option was adopted and modified by Bitcoin, while the second one has been implemented by other platforms such as Ethereum. Since users are putting their money at stake, it became known as proof of stake (POS) method.
Things got even more heated in the early 2000s when the first cypherpunk money appeared. In 2004, Hal Finney came up with his own hashcash-based server which received Reusable Proof of Work (RPOW) tokens. The RPOWs could be used only once and exchanged for new ones. The major drawback was that double-spending was still controlled by a central server.
The following year, Nick Szabo proposed the “bit gold”, a digital financial system that uses cryptography and mining. The system generates a public challenge string using a benchmark function and then the user generates a “proof of work” string from the benchmark before storing it in a title registry. However, Szabo wasn’t clear about limiting the bit gold units.
The Stock Market Crash
Up until now, we mostly talked about the lack of Internet privacy as the major incentive for the emergence of all these anonymous transaction systems and later on for blockchain itself. This, however, is not the whole story. There was another party to be taken care of, and it was literally standing in between – the banks.
One of the solid arguments of cryptographers was that they didn’t want to use currencies controlled by countries anymore. They’d had enough of governments and banks dictating the rules and making a profit out of their transactions. They wanted a market that won’t be affected by inflation and deflation. This was suddenly made crystal clear to the more general public in September 2008, when the US stock market crashed.
The building mistrust in financial institutions finally exploded as they were losing credibility in the eyes of customers at a rapid speed. A number of crisis-stricken banks and many large investors who lost their savings in these banks were faced with bankruptcy. They had to be bailed out by the government with taxpayers’ money.
Bitcoin: A Peer-to-Peer Electronic Cash System
The year of the market crash is remembered by yet another groundbreaking event – the publication of the Bitcoin whitepaper by Satoshi Nakamoto, an individual or a group of individuals whose identity has remained unconfirmed to this day. The paper is only 9 pages long, so we strongly recommend reading it!
The whole idea for the new e-cash system was to prevent financial institutions from acting as the middleman in online payments and to do away with the weak trust-based model. Satoshi describes the downsides of third-party mediation in the Introduction:
The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for nonreversible services. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party.
The proposed server is based on cryptographic proof instead of trust in a central authority. This peer-to-peer network generates a computational proof of the chronological order of transactions. The double-spend problem will be avoided as long as the full nodes control more processing power together than potential attacker nodes. This model draws on the B-Money protocols.
To verify the transactions the system uses a timestamp server modeled on Adam Back’s Hashcash proof-of-work system to which Satoshi gives credit. The server timestamps the hashed blocks of data to prove that they have been registered at a given time. Each timestamp reinforces the previous timestamp encoded in the hash which is how these blocks form a chain. Anyone who tries to make a change to one of the blocks will have to redo those coming after it.
This revolutionary system would become the foundation of the digital ledger known as blockchain today. Many people think there’s only one, the Bitcoin blockchain, but that’s just the largest one. There exist a lot of globally distributed blockchains because the platform can be downloaded and run for free, and its potential isn’t limited to this transaction system exclusively.
On October 12th, 2009, the first transaction of Bitcoin took place on the blockchain. It’s the first and last known transaction made by Satoshi to Hal Finney, another famous cryptographer. The transaction fee back then was 0 BTC. To see how much things have changed and how the Bitcoin has gained in value, just keep in mind that at the time, 5,050 BTC were sold for $5.02. Today, that same amount is worth $42 million!
The first Bitcoin transaction; Source: Blockchain
The Blockchain Backbone
Blockchain gained widespread acclaim thanks to its four main principles: decentralization, privacy, trust, and immutability. We’ll cover each of them in more detail.
A decade ago, centralized platforms were the norm. You had someone, e.g. a company, a bank, governmental institutions, etc, storing your data and playing the role of the middleman. They tracked your activity and gave you the green light to place an order or transfer money to someone. On top of that, they charged you for their services.
The idea behind centralized systems was to make our lives easier, and they served us well in this regard. However, they have their faults too:
- Security hazards. Since everyone knows that they store valuable data (or money), centralized systems are one of the main targets for hackers. This type of attacks and security breaches could lead to a serious loss of money and even bankruptcy. You will never be able to get your funds back.
- Transaction fees. They charge you for withdrawals and transfers. The fees vary depending on whether the transactions are made in the same bank, to other banks in the country, or internationally. The last ones remain on the higher end of the scale.
- Slowness. It usually takes some time for processing an order, especially if more institutions are involved in the transaction.
- The obligation to go to the offices.
Thanks to blockchain, there’s no need for third parties. The information isn’t controlled by one single entity because the blockchain is designed to be distributed across the whole network. This network is responsible for building trust and authenticating transactions.
Here’s a comparison of the traditional approach versus blockchain:
The traditional centralized banking approach ensures privacy by keeping sensible data between the parties involved and the bank itself. The blockchain goes even further than that and keeps the user public keys anonymous so even though anyone can see the transaction taking place on the network, no one knows the identity of the sender.
Satoshi’s white paper includes the following revised privacy model:
The public address gives you privacy, but the fact that no transaction can be hidden and users of the blockchain can track them as they’re being accepted allows for trust and transparency. Before a transaction becomes part of the blockchain, a few things have to happen:
- The transaction is transmitted to all the nodes.
- Each node begins collecting new transactions and forms a block.
- Each node works on solving a difficult maths problem as proof-of-work for its block.
- When a node has the solution, it administers the complete block to the other nodes.
- The nodes check the block and reach a consensus on its validity algorithmically.
- Once a block is accepted, the nodes start working on the next block in the chain which has the hash of the previous accepted block in it.
The part where the nodes verify the transaction, thus avoiding the double-spend problem as well, is an integral part of the system. Different blockchains use different consensus methods to achieve that. Let’s take a look at the most common ones.
The bitcoin network uses the popular proof of work (PoW) mechanism as a consensus method.
The idea behind it is pretty simple. In the process of creating the new block, a node has to create and solve a super hard puzzle. Miners compete against each other to be the first ones to solve the problem, and for that, they work very hard and fully expend their resources, i.e. computing hardware and electricity.
In Blockchain Revolution (2016), the proof-of-work process is summed up like this:
Miners gather all the pending transactions that they find on the network and run the data through a cryptographic digest function called the secure hash algorithm (SHA-256), which outputs a 32-byte hash value. If the hash value is below a certain target (set by the network and adjusted every 2,016 blocks), then the miner has found the answer to the puzzle and has ‘solved’ the block. Unfortunately for the miner, finding the right hash value is very difficult. If the hash value is wrong, the miner adjusts the input data slightly and tries again. Each attempt results in an entirely different hash value. Miners have to try many times to find the right answer. As of November 2015, the number of hash attempts is on average 350 million trillion. That’s a lot of work!
Although difficult to solve, the puzzle is easy to verify and everyone can check the answer. The miner who has solved it gets to create the next block as a reward since the whole network knows it’s mathematically impossible to get it right via any shortcut. In addition, the miner gets bitcoins himself.
A proof-of-stake (PoS) blockchain has a group of validators who propose and vote on every new block. The prerequisite to becoming a validator is for the user to hold the blockchain’s native currency. Next, the user sends a special kind of transaction that locks up their coins as a deposit and then waits for current validators to accept the block using a consensus algorithm.
The advantage of a PoS method is that there’s no need for spending large quantities of electricity in order to keep the blockchain running. The most popular blockchains, Bitcoin and Ethereum, have been criticized for the notoriously large amount of energy required to run them. It has been estimated that they burn over $1 million worth of electricity and hardware costs per day! That’s why Ethereum is planning to integrate PoS in its new version Ethereum 2.0.
Blockchain Energy Consumption Index. (Source: Digiconomist.net)
Ethereum Energy Consumption Index. (Source: Digiconomist.net)
- Relying on social networks – used by blockchains like Ripple and Stellar, who ask the new users (nodes) to generate a unique node list of at least one hundred trustable nodes which means you need social intelligence to become a miner.
- Proof of activity – a combination of PoW and PoS, where a random number of miners sign the block with their crypto key before the block becomes accepted.
- Proof of capacity – miners use the empty space on their hard drive for mining and store possible solutions.
- Proof of storage – miners are asked to allocate and share disk space in a distributed cloud.
The third unique feature of the blockchain ledger is its immutability, i.e. its ability to remain unaltered and prevent anyone from messing up the stored data. New blocks are always retroactively chained to the ones before them. This means that the hash of the new block always includes the meta-data of the previous block to make the chain “unbreakable”.
Someone trying to alter a block would have to re-mine all preceding or following blocks and that would require an incredible amount of computing power to overpower that of the miners. This makes hacking virtually not feasible! Here’s how a snapshot of Bitcoin’s already mined blocks with transactions actually looks like:
What Can You Use Blockchain for?
According to Deloitte’s 2019 Global Blockchain Survey, more and more people are aware of the diverse advantages of blockchain. The year has seen a continual investment in the technology, with 53% of the participants saying that blockchain has become an integral part of their business.
So, what are the implications of blockchain? What kind of data can you store in the database? What kind of blockchain-based platforms are gaining momentum?
Smart contacts allow you to exchange anything of value (money, shares, property) in a transparent and cost-efficient manner without the mediation of a third party. Before, you would sign contracts with the help of a lawyer or a notary and pay for their services. Now, you can do that by yourself using the blockchain and pay in cryptocurrencies.
The smart contract contains all the conditions, payout, and details of the involved parties. When the set conditions are met, the client receives an invoice as agreed and has to pay the defined sum for the services. This is less time-consuming and saves you the frustrations of dealing with an irresponsible client since the system automatically reminds them.
You can use these contracts for a range of deals like financial services, breach contacts, insurance premiums, property law, credit enforcement, crowdfunding, and more.
The Sharing Economy
The success of the sharing economy can be seen from platforms like Uber or Airbnb. However, currently, people who want to list an apartment for rent have to share some of their profits, i.e. Airbnb charges hosts a 3% fee for processing payments. Blockchain peer-to-peer payments will discard the intermediary and allow for direct interaction between merchants and buyers.
One such example is OpenBazaar which uses the blockchain network to create a peer-to-peer eBay. All you need to do is download the free app software on your device. There are no fees for listing and selling items, and no middlemen to take cuts from the sales. The dream of free e-commerce is finally a reality.
Blockchain is a real game-changer for cross-border payments that are otherwise very expensive and take a lot of time to be completed. The new technology speeds up and simplifies the process, reducing the extra charges on top of that. In the past, to send money from the US to a relative in Spain, let’s say, you have to wait for the transaction to be approved, the currencies to be converted, and the money to pass through the banks.
When you use the blockchain, as Deloitte does, you can reduce the transaction cost from 40-80% at great velocity, and with verifiable records.
Crowdfunding is the practice where businesses or individuals raise funds from regular people in small investment amounts, usually via the Internet. Popular platforms like Kickstarter, Indiegogo, and Gofundme have shown that there’s strong enthusiasm for the development of such a peer-to-peer economy.
What’s the role of blockchain here?
The system can help platforms maximize the success of a funding project. It allows the company to generate its own cryptocurrency that will serve as company stock and these are known as initial coin offerings (ICOs). This way, investors are going to buy cryptocurrency tokens as their share in the project. These shares might increase in value over time depending on what happens with the company. This new type of investment is known as crypto equity.
The trust and transparency guaranteed on the blockchain, and the fact that the database can be publicly available to anyone, make it a potential platform for holding elections, decision-making, and poll taking. The benefits include a reduced risk of voter-fraud and lost records, as a voter can check whether their vote was transmitted properly and still remains anonymous.
Intellectual property refers to all inventions and creations of the mind and it’s protected by the law with patents, copyrights, and trademarks. The reason we do this is for the person to earn credit or financial benefit for their brainchild, and motivate people to come up with new ideas.
However, this balance and protection are very difficult to maintain online where your content can be stolen and reproduced very easily. The blockchain technology can be implemented by a platform to manage and store copyrights and track any transaction connected to digital content. This is another peer-to-peer network that fosters transparency and trust between creators and consumers.
In a similar way, keeping property records on a blockchain makes it easier for prospective buyers to verify the ownership of a house they want to purchase for example.
Again, the use of blockchain technology on the stock market utilizes the advertised speed and transparency. In the future, we can improve the efficiency of the market itself through automatic stock trading. Here’s how:
- No more third parties.
The stock buyer and seller relationship is interrupted by middlemen such as stockbrokers, depositories, banks, and corporations. Their existence brings extra costs and potential bias to the trade.
- Built-in regulation,
- Shorter time lags for a trade confirmation,
- Servers flagging suspicious transactions,
- E-voting for bond and stockholders.
Out of the many uses of blockchain technology, the impact it can have on energy and sustainability is often overlooked. However, the World Economic Forum, Stanford Woods Institute for the Environment, and PwC published a report that identifies environment-related existing and emerging blockchain use-cases. In the Executive Summary, stands the following: Fortunately, an opportunity is also emerging to harness blockchain to address six of today’s most pressing environmental challenges that demand transformative action: climate change, natural disasters, biodiversity loss, ocean-health deterioration, air pollution and water scarcity. Many of these opportunities extend far beyond “tech for good” considerations and are connected to global economic, industrial and human systems. Blockchain provides a strong potential to unlock and monetize value that is currently embedded (but unrealized) in environmental systems, and there is a clear gap within the market. In the first quarter of 2018, for example, 412 blockchain projects raised more than $3.3 billion through initial coin offerings (ICOs). Less than 1% of these were in the energy and utilities sector, representing around $100 million of investment, or around just 3% of the total investment for the quarter.
It’s just a question of some more time and hard work before we transform the energy market with decentralized resource management, transparent supply chains, and blockchain-enabled finance platforms to attract more investors. Generate div table elements with this table generator, a free online tool! It is also capable of generating and convert grid elements.
For more interesting insights, check out our Blockchain Statistics page.
Disclaimer: Digital currencies and cryptocurrencies are volatile and can involve a lot of risk. Their prices and performance is very unpredictable and past performance is no guarantee of future performance. Consult a financial advisor or obtain your own advice independent of this site before relying and acting on the information provided.