Blockchain technology is gaining more and more predominance in the world of technology and more and more use cases are considering adoption of this technology to enhance trust, effectiveness, speed and profitability for their business objectives. Trust is a significant factor in nearly every segment of human life and blockchain technology comes as a huge help in addressing this concern.
Bitcoin was arguably the first to implement the blockchain technology in a decentralized system for currency and payments. But, the technology itself has a wide range of applications including as well distanced from the financial world. Encryption of data and the scripting language like cryptography that is employed for storing and communicating data is what makes the blockchain technology distinct and significantly more reliable compared to other tools and technology available today.
Ethereum Helps Diversification
Ethereum, a cryptocurrency which kicked off in 2015 was the first to identify the potential of blockchain for a wide range of applications and that lead to the creation of smart contracts. With Ethereum, developers have the ability to design private crypto currencies and contract based applications with the help of Turing-complete language allowing business to employ such a language to define their own set of policies and rules for the desired applications.
In use cases that involve a significant level of trust, the blockchain technology brings several benefits when solutions based on this technology are implemented. Potential cost reduction is another huge benefit this technology can deliver apart from the feasibility of building and maintaining infrastructure that can deliver capabilities at lower costs compared to traditional models that are centralized.
Secure and Fast
Speed and security is the other desirable feature of the blockchain technology. Admittedly, as we know today, there is no single system that can claim absolute security from cyber attacks. But, blockchain with its distributed ledger technology provides a significant level of trust. Blockchain is immutable and since it is publicly available among the users through a private or public ledger, there is great transparency. On real time basis any user has the ability to query transactions.
Blockchain For The Cryptocurrency Industry
The first crypto currency to implement blockchain was Bitcoin in 2009. From there, it has gained immense traction and popularity among businesses seeking the seeking the distributed trust version. The consensus algorithm of Bitcoin relies on PoW or proof of work. In this model miners add transactions in the form of blocks to the blockchain and miners solving a cryptographic puzzle that demands significant computational power to derive the solution gets rewarded. This cryptographic puzzle can be solved only through guessing and ensuring neutrality.
Subsequent evolution of the technology has also produced other solutions like proof of stake as in the case of Ethereum and Intel’s ‘proof of elapsed time’. Double spending was also an age old problem faced by digital currency and blockchain that supports Bitcoin was the first to solve this problem. Double spending happens when the same digital currency in expended twice and with its distributed consensus, Bitcoin was able to solve this problem for the first time ever.
Another huge benefit brought by crypto currencies supported by blockchain is the speed at which cross border payments are made with significantly lower fee and the absence of middlemen like banks.
Even Federal governments are getting interested in creating their own crypto currencies. While Venezuela is the first such nation to have its own crypto currency christened the Petro, the USA is also actively engaged in creating its own crypto currency.
Limitations of Crypto Currencies
Although the blockchain technology has helped the creation of a large number of crypto currencies, there are several bottlenecks before they can expect global adoption. Federal governments are concerned and are looking for effective regulations to prevent illicit trades, money laundering, volatility and absence of recognition by trusted participants.
Digital Identity and Blockchain
Every corporation and community is now seeking a singular and centralized source for truth in respect of identities. With a centralized system of digital identity as a source of truth wherein every bit of data like credentials and user attributes are incorporated into the system through distributed consensus alone, irrefutable identity can be established. Users can also gain enhanced control on their identity since they will be empowered to share such information with trusted parties alone. User data or identities cannot be tampered with any one centralized entity. Leading technology giants like IBM and Microsoft are already focused on this model.
This model brings significant improvement in privacy and accessibility of data as well as control with respect to personal data of users. In the case of businesses, this model brings down the cost of identity management, improves customer service, monitoring process as well as overall efficiency.
Real Estate and Blockchain
For the real estate industry, several parties, individuals, investors, lenders, owners and service providers are involved in most dealings. With the prevailing centralized systems, these transactions can have multiple problems that can arise from several factors like absence of trust among peers, deficiency and fraud from a singular source of truth about the real estate covered by the transaction and its history. Blockchain technology supported by an extremely efficient search engine to look up the source of properties offered for sale can offer a system to squarely address the bottlenecks and pave way for clean and smooth transactions.
While we have covered only a limited number of use cases, there exists the scope for significantly wider application of the technology in a wide range of other areas like education, immigration, food, healthcare, logistics, travel etc. Across 2019, we also expect to see the adoption of Blockchain technology in at least some of these sectors.