by Jonathan Phillip
The technology that’s going to impact and disrupt all aspects of the technological sphere has arrived and surprisingly, it evolved from one of, if not the greatest inventions of all time: the Internet. The internet has really evolved from the internet of information (social media, emails, online newspapers and magazines) to the internet of things (Artificial Intelligence), but now the third generation of the internet is here and it’s called the internet of value, and the underlining power of this new internet generation is known as blockchain. Created by a person or group of people by the pseudonym Satoshi Nakamoto, it is undeniably one of the greatest inventions of our time and has grown to become the backbone of a revolution within the financial institution today.
The main question everyone is asking is WHAT IS BLOCKCHAIN?
Here are the simplest explanations for Blockchain. A block is a record of new transactions (location of cryptocurrency, medical data, or even voting records). Once each block has been completed it is then added to a chain, creating a chain of blocks called blockchain. The blockchain is a public ledger where transactions are recorded and confirmed anonymously. It is a record of events that is distributed between many parties, by allowing digital information to be distributed but not copied. Once information is entered, it cannot be altered.
What are the uses?
- Payment processing & money transfers. One of the best examples of the use of blockchain is for money transfers. If I want to send a friend $20, it is important that I am not sending my friend a copy but $20. This problem is called double spending in the world of cryptography. Currently, we depend on large intermediaries called middlemen. Middlemen include big banks, governments, credit card companies, big data companies, etc. to establish trust in our economy. We trust them to perform every type of business transaction from authentication and identification of people, to clearing, settling and recordkeeping. But there are a growing number of problems with this system. To begin, it is centralized and increasingly gets hacked quite often. It also excludes billions of people from the economy who don’t have enough money to open a bank account and is slow when performing simple operations. Let us use an example: when you are sending an email to someone halfway across the world, it only takes seconds for that person to receive your email, but when you send money across the world, it might take days or weeks. Sometimes this happens even when you are sending money between different banks in the same district, and these intermediaries take huge commission percentages of 10-30% when performing these types of transactions. With blockchain, this transaction can be sent, processed and received in a matter of seconds with little commission.
- Manufacturing, Supply chain and Quality control. Monitoring manufacturing lines, supply chains and maintaining top-notch quality control can be a daunting task for even the largest manufacturers today. When faculty products are released it can be extremely difficult for manufacturers to pinpoint where or at what stage the defects occurred. For example, back in 2016 when Samsung released their notorious Galaxy Note7, it took Samsung two recalls of their phone and months of investigation to figure out at what stage in manufacturing the defect occurred. Where blockchain comes in handy is in monitoring supply chains and eliminating paper-based trails. Manufacturers will be able to pinpoint shortcomings within their supply chains quickly as well as be able to locate these deficiencies in real time. Moreover, blockchain would allow consumers to view how products they purchase fair from a quality control perspective. Since blockchain data is immutable, consumers will be able to trace the origin of that produce to the retailer.
- Data security & Recordkeeping. Blockchain can be a perfect way to backup and store data either for personal use or for recordkeeping for large institutions like the government, medical institutions or large business firms. Although there are cloud services that handle these things, they are centralized and store on a server which can be hacked or altered which is practically impossible to do with blockchain. For example, medical institutions are already using a form of cloud storage, but blockchain offers more safety and addresses more privacy issues concerning patients’ data. In addition to storing patients’ records, blockchain allows the patient to possess the keys to his\her digital records. This allows them to be in control of who gains access to their information and how it’s used.
- Smart Contracts. A smart contract is a computer protocol intended to digitally facilitate, verify, and enforce the negotiation or performance of credible transactions without third parties. These transactions are trackable, irreversible and immutable. Because blockchain is a decentralized system that distributes digital information between all permitted parties, there is no need for any intermediaries, and all parties involved avoid conflicts usually associated with old traditional ways of signing contracts. Other benefits that come with smart contract include autonomy (as mentioned before blockchain is decentralized, so there is no need to rely on a broker or lawyer), security (documents are encrypted and irreversible offering top-notch security), and savings (smart contracts save you money since they eliminate the need for intermediaries). A lot of companies are beginning to use smart contracts when employing workers. This also assists workers, content creators, artists and musicians to protect their contents, artworks or music (copyright and royalties).
- Transfer Of Property. Transfer of property work similarly to smart contracts. It aims to eliminate the use of paper when signing documents for transfer of ownership of property, whether it is a car title, real estate or land ownership. Instead of using paper documents, which can be stolen or altered with ease, blockchain stores these titles on its network, allowing for a transparent view of this transfer and a clear representation of legal ownership.
- IoT(Internet of things). The IoT is the network of physical devices, vehicles, home appliances, and other items embedded with electronics, software, sensors, actuators and connectivity which enable these things to connect and exchange data. This creates opportunities for more direct integrations of the physical world into computer-based systems, resulting in an improvement in efficiency, economic benefits, and reduced human exertions. Application of blockchain in monitoring an IoT network could determine the trustworthiness of devices on a network and continuously do so for devices entering and leaving the network. IBM is currently working on using blockchain based systems to monitor an IoT network.
- Digital Voting. Elections all over the world can be quite controversial as some are plagued with fraud or election rigging. Blockchain technology offers the ability to vote digitally. Since blockchain is a decentralized system and information recorded is irreversible, voting regulators and even voters would be able to see if something was changed on the network in real time. Furthermore, since each voter will have a unique digital signature, it will be impossible for individuals to vote twice or at two different locations. This type of voting system has already been tested. In West Virginia in May 2018, it became the first U.S.state to allow internet voting by blockchain in the primary election. This system of voting is a beneficial tool for elections all over the world to maintain transparency in the electoral process, minimize the cost of conducting elections, streamline the process of counting votes and ensure that all votes are counted.
- Equity Trading. Today stock trading requires a lot of paperwork and a great amount of trust which often gets betrayed due to bad brokers. Stock trading also requires a long list of procedures like placing an order to either buy or sell a certain number of securities for a specific price, executing orders as per requirements, contracting note preparation by the broker, delivering and clearing shares, and dealing with the settling of securities. With blockchain technology, all of these procedures can be eliminated and the transaction times could be reduced to a few minutes.Blockchain data is accurate, time-saving, consistent and easily accessible. Blockchain technology not only simplifies trading stocks, but other securities as well, by speeding up the processes, increasing the traceability of their origin and facilitating the availability of the records. Blockchain has the potential of offering brokers and traders a solution for reducing the significant amount of time that it takes to exchange money and securities. Blockchain also provides the ability to track and monitor any movement and operation in real time. Unlike the traditional ways of verifying transactions that give a lot of room for suspicious movements to occur, the blockchain network would be able to block such malicious activities and report to the affected parties, ensuring the safety of the system and the wellbeing of the platform.