Blockchain Technology – Use Cases & It’s Potential Impact in Future
Blockchain was conceptualized in 2008 by Satoshi Nakamoto, in the form of first & foremost & most popular cryptocurrency, i.e. Bitcoin. Blockchain is neither a buzzword, like cloud or Internet of Things (IoT), nor an in-your-face innovation, like a smartphone, that you can touch and feel. However, with the recent growth in popularity of Bitcoin, people’s interest has also increased in its underlying technology, i.e. Blockchain. However, it is very important to understand that blockchain provides potential of far more utility than just Bitcoin or any other cryptocurrency. This paper aims to gain further insight into few use cases, for blockchain technology, involving cryptocurrencies and beyond.
What is a Blockchain?
A blockchain is an enhancing list of records, also known as ‘blocks’, which are linked and secured by using ‘cryptography’. Each block comprises a timestamp, transaction data and a hash pointer as a link to previous block. Blockchain is an open, distributed ledger, used to register transactions between participating users in a verifiable and permanent way. Blockchain, by design, is a secured mechanism as the information on the verified blocks cannot be altered retrospectively. It is managed by a peer to peer network, collectively adhering to a protocol for validating new blocks. The basic element of validation of transactions is ‘trust’ between the participating nodes.
Where Can Blockchain Be Used Beyond Cryptocurrencies?
While blockchain is being hyped recently, primarily due to increasing popularity of Bitcoin, it is of paramount importance to understand that it has potential for far more utility than just Bitcoin or any other cryptocurrencies. Let us consider few more use cases for blockchain technology.
1. Blockchain Enabled Authentication / Notary Services
Given the secure nature of smart contracts, blockchain technology can be leveraged to provide online notary services. Following range of activities can be performed in this space:
a. Blockchain enabled interviews
People can record their statements / interviews and upload the same over the blockchain, in form of a smart contract, for remote identity verification. This can be used, for example, for recording an agreement between a lender and a borrower, for a loan. In future, it might be possible to admit these kind of blockchain enabled, smart contract based videos, as a part of evidence in the court of law. This technology can also be used by people for authorizing other people’s actions, like someone may authorize a family member or a close friend to use their credit card for buying air tickets.
b. Blockchain enabled timestamped documents
With blockchain technology it is possible to authorize and timestamp a document or a file, online, for its authenticity and genuineness.
This is the most dominant form of use case for blockchain in present time. Using this technology, hundreds (if not thousands yet) of cryptocurrencies exist on the realm today. Bitcoin, Ethereum, Litecon, etc. are few of the most famous currencies to name. The secured nature of smart contracts helps to enable peer to peer transactions without having any dependency on any centralized institution / authority. All currency transactions, initiated on the blockchain, are authorized by participating nodes. Trust amongst the nodes, forms the baseline for value of such currencies. Increasing prices of famous cryptocurrencies, have helped to attract the interest of masses towards the blockchain technology, in recent times.
3. Crowdfunding for Organizations
This use case, of blockchain technology, is in some way or other connected to cryptocurrencies. However, it is important to mention it separately because, by following the route of Initial Coin Offerings (ICO), startup companies can ‘crowdfund’ or accumulate money from public / investors for their upcoming ventures, in a very early stage. The collection is obviously in the form of cryptocurrency, i.e. Bitcoin or Ethereum in present day scenario. The investors, in turn are issued company’s coins / shares, again in form of cryptocurrency for their investments. The investors can realize returns on their investments as the prize of company issued cryptocurrency increases on the trading exchanges.
4. Internet of Things (IoT)
With the proliferation of Internet of Things (IoT), blockchain can provide a mechanism to track the unique history of individual devices, by maintaining a record of data exchanges between it and other devices, web services and human users. This use of blockchain would be extremely useful from information security perspective, because with the transactions recorded in blockchain it would be extremely difficult for hackers to manipulate the information exchange between two or more devices.
5. Transport Sharing
There is a classic case for utilizing blockchain technology for transport sharing / ride sharing. People can share rides / conveyance and make payments to each other using cryptocurrencies, without requiring a central authority or a centralized solution to broker between them.
6. Energy Sharing
Energy grids can be setup and participating peers can contribute or consume solar energy to / from the grid easily by using smart contracts. Peer to peer payments can be made using cryptocurrencies. Again, needless to say that the involvement of any central authority / centralized institution would not be required in such case.
7. Corruption Free Governance
Corruption free systems can be built based on blockchain technology to ensure smooth governance. Numerous applications can be developed, on this technology, for providing identities, casting online votes, day to day governance operations, material procurements, hiring of personnel, etc.
8. Banking Operations
Blockchain technology can be utilized for carrying out banking operations. It is very easy for peers to form a blockchain and start banking operations, based on blockchain, without requiring intervention of any central authority. As already discussed above, the blockchain transactions work based on level of trust between the entities participating in that particular blockchain.
Blockchain technology can be instrumental in setting up insurance operations between participating peers, without requiring any centralized institution to control the affairs. Participating members may pay premiums, in form of cryptocurrencies and insurance policies can be issued in form of smart contracts. Some participants may act as validators / authenticators for claims, etc.
10. Block Data Storage
Protocols can be designed to create a permanent & decentralized method of storing and sharing files, using blockchain technology. Nodes in the network can form a distributed file system. It is possible to create a network infrastructure to store unalterable data, remove duplicated files across the network, and obtain address information for accessing storage nodes to search for files in the network.
It is beyond doubts, from above discussion, that blockchain has the potential to change the way we buy and sell, interact with various organizations and government, verify the authenticity of everything and that too without needing a centralized organization or authority. With blockchain we can visualize a realm, in which contracts would be embedded in encrypted codes and securely stored in shared databases and would be immune from deletion, tampering & revision. Intermediaries like lawyers, brokers, and bankers might no longer be necessary. Individuals, organizations, machines, and algorithms would freely transact and interact with one another with little friction. This is the immense potential of blockchain.