Commercial author Archibald Kelman told the Netology blog about what blockchain is and how the world is learning to apply the new technology in various areas besides cryptocurrency.

Imagine a world where everything is changing rapidly, where everything is transparent and anonymous, and most importantly – 100% protected. Imagine – and welcome to the world of blockchain. Many people associate the word “blockchain” with bitcoin and cryptocurrencies (and rightly so), but blockchain is much more than just a financial instrument.

What is blockchain technology?

According to Wikipedia, the term “blockchain” first appeared as “the name of a fully replicated distributed database implemented in the bitcoin system. Accordingly, 2008 can be considered the birth date not only of bitcoin, but also of blockchain, since it was in the bitcoin system that the technology was first used.

In simple terms, a blockchain is a distributed database that consists of individual blocks in the form of a continuous chain. It holds all the transactions that have ever occurred and all the data of wallets that have ever existed.

In other words, it is like a perpetually existing digital journal that can be programmed to record almost anything of any value. And that is why it is possible to deal with far more than just cryptocurrency in a blockchain. Each block in a blockchain contains a timestamp and a link to a previous block. So it can actually be infinite, but in the real world it is limited by the capabilities of the technology.

How blockchain works in simple words

Let’s think of a simplified blockchain scheme as a list of numbered items. We’ll take digital currency as an example, because that is where blockchain technology is used the most today.

  • Opportunities and Prospects for Blockchain Technology – Beyond Cryptocurrencies Suppose user #1 wants to transfer bitcoin or other digital currency to user #2.
  • Opportunities and Prospects of Blockchain Technology – Beyond Cryptocurrencies The information requested by both participants is transferred to a P2P network (peer-to-peer, a decentralized network consisting of nodes scattered around the world) with nodes. A node in this case is actually a computer with the Internet connected to it.
  • Opportunities and Prospects of Blockchain Technology – Beyond Cryptocurrencies The node network verifies the transaction (undergoes a validation procedure) and the status of an unknown (anonymous) user using known algorithms. A validated transaction, by the way, can include not only cryptocurrency, but also contracts, records of this or that event or thing, and generally other non-financial information.
  • Opportunities and Prospects for Blockchain Technology – Beyond Cryptocurrencies All transactions are transmitted into the network and collected into blocks, each with a different hash number (checksum) of the previous block. A hash function (from the word hash, “jumble”, “jumble”) allows you to reduce any array of data to a number of a given length. Simple hash functions are used when checking the integrity of packet transmission, e.g. over TCP/IP (roughly speaking, the Internet).

Complex hash functions, as in our case, are used in cryptography, and the main conditions for them are impossibility to calculate the initial result from the final result, as well as resistance to “collisions”, i.e. impossibility to get two identical hash functions from two different data arrays during processing. The bitcoin blockchain, for example, uses 64-digit hexadecimal keys with the SHA256 algorithm.

Thus, you can see yourself the complexity of hashing and, consequently, the resistance of this cryptographic function to trivial hacking: so far nobody has managed to do it and until quantum computers appear it is unlikely to succeed. I paid so much attention to the hash function because it is the basis of blockchain.

Opportunities and Prospects of Blockchain Technology – Beyond 

Cryptocurrencies Now back to blocks. Once assembled, they are sent out automatically to all participants in the network to check, and if there are no problems or errors, then a new block is added to the existing blockchain so that it remains constant and unchanged. This is how the blockchain – the blockchain – exists, containing information about all previous transactions. All this information is open and public, and anyone can view it without problems: there are parsers or online services for this purpose. Of course, all this is done in complete anonymity. Yes, you can watch the transactions, but you won’t know who they belong to.

One indirect “driving element” in the use of blockchain in finance is hackers: A year ago, for example, hackers managed to break into the largest traditional international interbank information and payment exchange platform, SWIFT, which led many people to think “should we switch to blockchain?

Prospects for the use of blockchain in various fields

Today, blockchain is used in many areas beyond sending and receiving digital money. However, I would like to stress that most such projects still exist in the idea format: on paper or in the initial development process. However, some are already working and showing good results.

Blockchain opportunities in the IT sphere

Being the spawn of IT, blockchain has many uses here, so I will mention some of them.

Data management and security. Because of its centralized nature, even the cloud architecture on which most of today’s security technology is based is vulnerable. Individual servers must constantly send and receive credentials, and each of them can be a weak link, putting the whole system at risk.

At the moment, most popular sites on the topic Canadian Casinos Online use blockchain technology and various types of cryptocurrency, such as: bitcoins, litecoins, dogecoins, ethereum and many others. And, also, are in the ranking of the most reliable resources in the field of gambling.

Blockchain works fully automatically, so that interconnected devices are managed not by people and supercomputers, but by systems and programs. Thus, full data security is achieved: because of the complex encryption and decentralized structure (just remember the bitcoin algorithm – SHA256 – and 64-digit keys) and technical absence of hacking, blockchain looks like a panacea in today’s world full of digital threats.

It is always easier and cheaper to prevent a threat than to deal with its consequences. For example, six months ago, the well-known Kaspersky Lab presented a blockchain-based e-voting system it developed, where the latter underpins the transparency and security of the process. At present, electronic voting in elections is used only in Estonia, but it is very likely that this will change dramatically in the near future.

IBM and Samsung are working on the Adept project, which will use blockchain-like technology to create a decentralized network of a huge number of different devices of the Internet of Things (IoT) family, which will be able to interact with each other.

Blockchain opportunities in retail

This is where technology has a huge future. Blockchain was recently recognized by the World Economic Forum as one of six global trends that could have a huge impact on society in the next decade.

For example, Walmart, a well-known American chain, recently announced the introduction of blockchain in the purchase of imported goods: a new blockchain-based logistics tool was developed by the Hyperledger consortium and allows you to monitor the entire path of products from supplier to supermarket, containing data about expiration dates, storage and transportation requirements, and so on.

Another example is the Japanese retailer Rakuten, which acquired Bitnet to create a blockchain lab.

Finally, I would like to mention once again the well-known high tech giant IBM, which announced a project six months ago to explore the use of blockchain technology to control food supplies and improve food safety. Many retailers and food companies have already joined this project.

Blockchain opportunities in education

It is possible to integrate blockchain into document storage and control systems: of course, the most important advantage here is the lack of possibility to manipulate the data recorded in the system; information can be added, but not overwritten. At the same time, the authenticity of the document is easily traceable, because everyone can see who recorded it and when.

Few people have used it in practice so far, and one of the pioneers is the University of Nicosia in Cyprus: it is used there to store diplomas and certificates. Even more interesting is the fact that this university was the first to accept cryptocurrency as a tuition fee, and the degree of this university is recognized around the world. The initiative has already been taken over by the Open University in the UK, the Massachusetts Institute of Technology (MTI) and others.

We keep in mind that when data is stored in a blockchain, it cannot be altered. This makes it possible to use blockchain as documentation to confirm the transfer of digital assets and to store information about the owner of the actual property.

This allows, for example, the Swedish National Land Survey to develop a blockchain-based pilot system in the near future to digitize the processes for buying and selling real estate, as well as for regulatory compliance – recording all actions and results in blockchain could successfully act as an audit trail for regulators. The latter can also access an internal blockchain to view a financial institution’s information. All of this can enable the latter to provide more effective regulatory reporting.

The possibilities of blockchain in the medical field

Blockchain in the medical field is literally a “lifesaver,” at least because the medical industry has long been cracking at the seams in data processing. However, it is not a panacea – there are problems here: blockchain is good for small amounts of information, but, as we all know, medical data is extremely vast.

Nevertheless, this was not an obstacle to the creation of the Healthcare system: the full information about each user of the system takes up all the available space of the ecosystem, because the bandwidth and capacity are incredibly large. In general, rather than being a carrier of complete patient information, the latest blockchain-based technology in healthcare would act as a mechanism to control and record data in relation to changes in medical records.

In other words, the solution was that the data would be stored off-blockchain, and the links that would lead to the huge files would be located in the blockchain.

As for data encryption, many different projects have been proposed to solve this problem: for example, delimiting the type of access to patient information, or implementing a closed data set on the blockchain with access only by the regulatory authority or other regulatory organization.

And these are not the only problems of applying blockchain to the medical field: unfortunately, blockchain is incompatible with the Health Insurance Portability and Accountability Act (HIPAA). Thus, additional legislative measures are needed to address the other problems.

Unlike other fields, blockchain in medicine is still far from even the initial stage of widespread use. This is not to mention the lack of a legal framework in most countries in principle.

The possibilities of blockchain in entertainment

Finally, let me talk about the future of blockchain in entertainment. The first thing that comes to mind here is the brilliant possibility of circumventing gambling bans in many countries by not recognizing cryptocurrency as currency or property. Cryptocurrency casinos in general and bitcoins in particular are currently multiplying at the speed of light, indicating a high demand for them.

But it’s not just about gambling: For example, even a huge industry like music (audiovisual production; to put it simply, artists and bands) is already interested in blockchain.

Blockchain can store data about all transactions, encrypted ownership data, financing, and, even better, execute smart contracts (e.g., code-level exchanges of value without intermediaries). For example, Stem is a blockchain-based payment and distribution platform for audiovisual products: you can publish content, manage contracts and make payments in one place.

This service and similar ones can be called a great platform to be used by little-known aspiring musicians. Micro-payments with low commissions, more secure sales and consumption data create an interesting business model.

The possibilities of blockchain in everyday life

To date, no one has dared to implement blockchain in the daily routine, but such possibilities exist in the SP (Smart Property) sphere, for example.

For example, if one embeds a public key in an ordinary car and transfers the corresponding private key to the owner, it would be possible to use a system of car sales in which the car’s public key is transferred to the new owner and the cryptocurrency amount is transferred to the other side: in this case, the blockchain confirms ownership and the amount paid.

The good thing about this scheme is that the sale-purchase transaction will not require any intermediaries with a power of attorney and a lot of paperwork. It is technically extremely difficult (read: impossible) to cheat or tamper with blockchain, and the entire buying and selling process can be automated. All the seller and buyer would need to do is meet their smartphones at the car.

So far, due to the confusing and complicated laws related to auto ownership (as well as the illegality of cryptocurrencies in most countries as money), such a scheme is from the category of fiction, but such fiction, which may well be implemented in a few years: sooner or later there will be a corresponding ICO-project, and in this case, most likely, it will be approved at the state level, because it will require removing some responsibility from state authorities.

I cannot help but mention a domestic development: in the last week of May, the Canada Footwear Group began implementing blockchain technology, which will be used in the microfinance organization (MFO) that is part of the company’s structure. The data will be encrypted and stored in three data centers in London. However, some retailers believe that blockchain makes more sense for the accounting of goods: this issue will certainly be considered.

Conclusion

I didn’t even cover half of the possibilities that blockchain offers to the world in this article; in fact, there are many more. But even from this “meager” data, one can imagine how rich and flexible this world of possibilities is and how it is available for use in almost all areas of life. Blockchain is indeed a very promising technology, and we will see that in the coming years.

By Business