There are around 200 currencies in the world, but only one that has the potential to be an international currency. This currency is referred to as cryptocurrency, and will prove to be a great asset for our future generations. According to a survey, around 2016, there was no major bank or an accounting firm that did not research about digital currency.
The old question ‘Is it in the database?’ will be replaced by ‘Is it on the block Chain?’ — William Mougayar
A blockchain is undeniably an artful invention. It is a growing list of blocks linked using cryptography. Blockchains, which are public ledgers, and readable by everyone who is a part of the network are mostly used by cryptocurrencies. This technique goes way back to 1991 but originally came to use in 2009 when Satoshi Nakamoto adapted it to create Bitcoin. A blockchain is a distributed ledger that is entirely open to anyone. Once some data is recorded inside a block, it becomes very difficult to change it.
So, how does this work? Well, let’s understand what the elements of a block are. A block contains some data, the hash of the block and the hash of the previous block. A hash basically is a function that converts an input of letters and numbers into an encrypted output of a fixed length. A hash can be compared to a fingerprint. It identifies a block and all its contents, and is always unique. The data stored inside a block depends on the type of blockchain. After a block is created, its hash is calculated. If any change is made inside the block, the hash will change. Once the hash changes, it no longer is the same block. Also, the third element is that each block also contains the hash of the previous block which creates a chain of blocks that point to each other, and adds a high level of security to the blockchain. In simpler terms, a blockchain is a distributed database that everyone can get a copy of. Every person in the network can add new records to this database but no record can be changed.
The most popular application of the blockchain is the use in cryptocurrencies. When Bitcoin was launched, it allowed people to transact without the interference of a third party. Since then, over 1700 cryptocurrencies have been created.
Many of you might have heard the term ‘odometer fraud’. If not, we can help you understand it. People sometimes tamper with the odometer with the simple mission of proving that the car is newer or less worn out in order to hike its selling price. It is not that the government has not tried to stop this. They did try to collect the mileage of cars during routine safety inspections, but that is not enough. So basically we can replace regular odometers with smart ones that are always connected to the internet and frequently record the mileage of the car to a blockchain. As we know by now how secure blockchains are, this would create a secure and digital certificate for each car. Additionally no one can tamper with it, because of course they cannot! This application of blockchain technology is already being tested on a fleet of over 100 cars in Germany and Switzerland.
Another alluring application of the blockchain is digital voting. Today, voting happens either on paper or on special computers that are running proprietary software. The drawbacks of this method are that voting on paper costs a lot of money, and computers have security issues. Recently some countries even moved away from digital voting fearing that it could be tampered with. But now instead of paper we could use blockchains to cast and store votes. The security problem would automatically be solved because such a system is so transparent that everyone could verify the count for themselves and this system would make tampering very difficult. Agora, a Swiss company is already working on such a system which will be completely open source. If the users are allowed to vote with their own phones or computers, we have to take into account that those systems might be infected with malware designed to tamper with the voting, which could alter the outcome, or slow down the process of voting on a blockchain platform. Finding a way around this shortcoming could be a tough nut to crack but if we can, blockchain platforms would be a more practical and secure way to vote.
Let’s take a look at another application, the food industry!
Here the technology can be used to track food products from the moment they are made, to when they end up in the hands of their customers. It is known that almost every year, half a million people die because of food borne diseases. This is partially because it takes too long to isolate the food that is causing harm. Blockchains have the power to create a digital certificate for each piece of food, proving the entire process of where it came from. So if a contamination is detected, we can trace it back to its root and instantly alert the people who bought the same batch of bad food. Walmart is currently working on this specific application of blockchain technology.
Another idea would be to track packages and shipments by this technology, which IBM is working on.
Apart from this, blockchains can be even more powerful because they restore ownership of private information and data to the rightful person. For example, our medical records can be saved and only doctors could access them with a digital signature that we allow them to use. Similarly, any of our personal data can be saved, and we can choose what to reveal.
Blockchains are an underlying technology behind all cryptocurrencies; they have the potential of changing the way we work and communicate. Many people might be sceptical about its future now, but so were we in the 90’s when the internet was introduced. With adoption of blockchain technology already underway, it will only be a matter of time before mass adoption becomes imminent.