Let’s think about making a transaction without involving your bank or other influential third party authority. It makes a big ‘aww’ in your face, I know. But, it’s also true that very few people know about the magical world of the blockchain technology. But don’t worry, this technology has stepped ahead from the ‘buzzword’ stage to reach out for every doorstep in this world. Hold still; we are about to explore ‘the biggest innovation in computer science’ dedicated to humankind.
What is Blockchain?
The first concept of Blockchain was the brainchild of Satoshi Nakamoto and his group of programmers in 2008, and the technology was implanted as the core element of the open-source software Bitcoin cryptocurrency in 2009.
Technically saying, it is a distributed database to manage an ever-growing list of records, named as blocks. Here, every block owns a time-stamp and is linked to a previous block. But it’s just a rough sketch. The main purpose of it is to resolve the issue of double-spending in a decentralized manner without inter-mediating any trusted third party as if bank or government using the scheme of proof-of-work.
You don’t need to submit your assets to a centralized almighty company or government influential for the purpose of protecting or monetizing it, so that they can peer through your privacy or interfere with every transaction you make. There is no need to be afraid of any fraudulence, because it’s quite a direct process with a complete sense of freedom to own your property. It’s “a platform for truth and trust.” Let’s dig a bit deep.
In the interview with McKinsey’s Rik Kirkland, the Tapscott Group CEO Don Tapscott elaborates how the open source distributed database of blockchains is making it possible not only to collaborate and track every kind of transaction and interaction by using state-of-the-art cryptography but to authenticate the settlement with genuine privacy protection.
In his book Blockchain Revolution co-authored with his son Alex Tapscott, Don explained the difference between the old media in early 1990’s with one to many schemes and today’s open media with many to many processing where anyone holds the authority to alter the underlying code. It can be assumed as a giant, worldwide spreadsheet running on every computer connected to the internet. Now, when anyone can participate in the coding process, all of them can also have the access to watch over the entire picture for every event taking place in this open media.
Let’s have an example of money transferring. Say, you need to transfer $100 to someone. You make the transaction, and again, you send the same file to another person. Now, when you are using the digital payment system using Bitcoin crypto-currency, it is authenticated by network nodes and recorded in the public ledger of blockchain. (Here to mention that the biggest blockchain technology bitcoin is certified as the first decentralized digital currency since it eliminates the requirement for any single central administrator.) Now there are miners who continuously verify and record every new transaction broadcasting into a new group called a block.
Here, every miner aims for the first discovery to search for the truth. Once collected, it becomes the evidence of the entire community using this open source. The reward for this mining service by solving a complex problem of mathematics is to gain some money that is some bitcoin to be specific. Here, the transaction fee is optional, where the miners prioritize the transactions based on highly paid fees and older unsent inputs.
Fees depend on the storage size and the number of inputs to process the transaction. Now to hack the transaction or payment process to send the same digital file to someone else is practically impossible as it requires to hack that ten-minute block. Here, every block owns a cryptographic hash of its previous one by using the SHA-256 hashing algorithm, which connects it to its previous block and the previous of that and so on.
Thus, it has earned the name as the blockchain which is connected to the millions of computer systems. That is to commit a fraud, it must take place beneath the nose of the entire history of commerce. Is that possible? Definitely no.
The present status of Blockchain:
The blockchain technology or bitcoin currency don’t stop conquering only the financial industries. It is also exchangeable into other currencies, services or products since it has the ability to collect data for any well-structured information as if someone’s marital status with someone, the knowledge of owning property, a power source connected to a specific service or any other information you can think of. Internet of Things is in requirement of a blockchain system settlement, where uncountable numbers of real-time transactions take place between things, which is impossible for the banks to maintain.
In February 2015, there were 100,000 merchants and vendors who accepted bitcoin as the method of payment. And the survey report held by Cambridge University in 2017 proclaimed the quantity of unique users having crypto-currency wallet as 2.9 to 5.8 million worldwide, among which most of the systems are bitcoin. To understand the trust implanted by this modern revolutionary technology, you must see through the broad picture where the whole computing power source of Google is estimated only to be the 5% of the blockchain computing power source spreaded for bitcoin blockchain.
This open source software contains the potentiality to rearrange the entire system of every industry into the prospect of neutralization where everyone plays the equal role to participate and own the value through the digital asset they create.
The same has worked for Imogen Heap, the well-known singer-songwriter from the United Kingdom, who is a member of the group of creators of Mycelia. They collaborated with the blockchain developer company Consensus Systems, and she posted her song onto the internet with the help of Ethereum platform of blockchain.
Permission less and Permissioned or private blockchains:
Bitcoin and other crypto currencies use permission less open blockchains as the public ledger. In September 2016 bitcoin has capitalized for highest market share in the blockchain history. These open technologies are secured by the method of proof-of-work. Bitcoin, in this case, included Hashcash puzzles created by Adam Back in the 1990s.
But the financial companies prefer private or permissioned blockchains instead of decentralized, open sources. These technologies encourage the openness and collaboration with their open source protocols to control the selection of participants in the consensus process. The New York Times has reported the tendency of many organizations in both 2016 and 2017 on using their private blockchains independent of the public systems.
Every opportunity comes with some questions to be answered and the blockchain revolution is no exception from that. In Computerworld, Nikolai Hampton has pinpointed the issue on private blockchain as: “There is also no need for a ‘51 percent’ attack on a private blockchain, as the private blockchain (most likely) already controls 100 percent of all block creation resources. If you could attack or damage the blockchain creation tools on a private corporate server, you could effectively control 100 percent of their network and alter transactions however you wished.” For bitcoin, he added, “the bitcoin blockchain is protected by the massive group mining effort. It’s unlikely that any private blockchain will try to protect records using gigawatts of computing power — it’s time consuming and expensive.” Also, “Within a private blockchain there is also no ‘race’; there’s no incentive to use more power or discover blocks faster than competitors. This means that many in-house blockchain solutions will be nothing more than cumbersome databases.”
Application and the Future:
Instead of having some issues to work on, we can now focus on the vast area of applications blockchain is offering to our world.
- The biggest application of blockchain includes cryptocurrencies like bitcoin, blackcoin, Dash and Nxt and the blockchain platforms like Factom for distributed registry, Gems for decentralized messaging, Maidsafe for decentralized applications, etc.
- The insurance industry is thriving with peer-to-peer insurance, parametric insurance and microinsurance with the adoption of blockchain.
- Smart-contracts are created on the basis of blockchain which is partially or fully executable without any human interaction.
- Alternative blockchains or altchains are dependent on the bitcoin technology on the basis of concept or coding. Within the non-cryptocurrency designs, LaZooz is based on decentralized ride sharing methodology, Synereo works on synchronous and asynchronous communications, Steemit combines a blogging site with cryptocurrency, and the list includes much more.
- In commercial sectors, Deloitte and ConsenSys planned in 2016 for a digital bank named Project ConsenSys; Microsoft Visual Studio is allowing the availability of Ethereum Solidity language for application developers; Disney has created Dragonchain based on the blockchain technology.
The list is not complete yet. Admittedly, it’s hard to judge the exact potential and the future impact of a budding technology like blockchain. But, one thing is for sure that with blockchain, the opportunities are endless and truly, the implementation of the blockchain technology will decide its future along with its global impact.