First off, Do not think of blockchain as an app store where developers can just create and launch their product on it. Although understanding how a blockchain works is complex and confusing, we will discuss the key terms you need to know when learning about blockchain and the functionality between them.
Basics of a blockchain.
Invented in 2008 with Bitcoin, The tech behind blockchain enables digital information (pictures, money transfers, texts, phone calls, etc.) to be distributed, but never copied or altered in anyway. This enables a piece of data to individually have one owner. The beauty of this concept can have a magnitude of applications, especially when it comes to privacy data such as identity or individual wealth. Normally being heard as a “distributed ledger” which is true, the information within the blockchain is constantly reconciled into the database. Meaning the data is pubilc, verifiable, and being stored in multiple locations and updated instantly with anyone who interacts with the blockchain. This makes it extremely difficult to hack due to the decentralized nature of the protocol. Since the data is being stored in multiple locations and exits in multiple locations, the result is hackers can’t determine an IP address to steal precious, valuable data.
Why is it called a blockchain?
The term blockchain is derived from how the technology functions. To break it down simply, A block in the chain, is a record of transactions. Using cryptographic hash technology, each block that is created are chained together, representing the previous block’s transaction data and a timestamp representing its creation on the chain. Once created, the data in any given block can’t be altered unless every block on the chain adheres to the change in the entire chain. Typically blockchains are managed by a peer-to-peer network, being agreed on within the protocol through inter-node communication for verifiable and validated new blocks within the chain.
Benefits of blockchain.
What are the benefits of blockchain and what purpose does it provide? How is it better than current data transfer systems? What are the downsides and compromises? Are people using blockchains or is it just hype? These are the assumptions everyone has when first hearing about Cryptocurrency.
The growth of blockchain intergration by market size has been booming for the past 10 years since its creation and is estimated to grow 1000% – 10,000% in the United States of America alone by the end of 2025. The main reasons for this growth consists of big tech names like Mircrosoft, Apple, Starbucks and even IBM intergrating blockchain technology into their own products to offer to their customers.
Use Case Number 1
Joe is extremely addicted to gardening and wants become a farmer to start selling plants of all kinds. He takes the precious time out of his day to check the temperature of the soil for each individual plant, checks the weather, inspects the moisture content, and organizes his garden strategically to help with plant growth. With so many different plants, soil types and water consumption for those plants, it takes a lot of research and time to figure out his garden for a maximized yield. Blockchain can help Joe’s frustration. With a tracking protocol oriented blockchain such as Vechain (https://www.vechain.com/), Joe can purchase sensors that help manage his plants. Data from his plants (soil type,moisture, root strength, weed formation,etc.) can be recorded on the blockchain along with several other farmers due to its secure decentralized manner. Since the data is secure and is 100% immutable, Joe is able to see his plants growth compared to other farmers. This helps Joe not make make mistakes and helps him get the most out of his plants!
Use Case Number 2
Bjorn is a wealthy man that owns several business in the United States but has family in the Middle East that are poor and can barely afford to live comfortably. Bjorn sends them money every month to help them, but ends up paying high fees in the United States and has to send extra money in his transfer, for the fee that his family has to pay to transfer it out in the Middle East. In addition to the fees, the transfer can take up to 2 business weeks to hit his family’s account. Cross-border payments have been an issue since the beginning of time, and blockchain solves this problem. A cross-border payment oriented blockchain such as Ripple (https://ripple.com/) where XRP can be sent to his family. A transaction through Ripples blockchain, powered by the XRP token, has an average transaction time of 5 seconds and is secured through the blockchain with a one time transaction fee one of $0.002. Bjorn can now send any amount of money seamlessly to his family with no worries or strings attached thanks to blockchain.
Downsides of blockchain.
Although blockchain is a revolutionary technology, just like the internet, it has some disadvantages when compared to other systems that involve data, money, and media. Some things to consider when talking about blockchain are…
- Blockchains use excessive energy
- Blockchains are not indestructible
- Some Blockchains are extremely complex and makes them inefficient
- Blockchain miners can pool hash power together, compromising the integrity
The chance of attacks on a blockchain and altering its performance are very slim, but the threat of it will always be there… looming in the darkness. Regardless of the few flaws in certain blockchains, it is still one of the greatest upgrades to the internet for seamless peer-to-peer data transfers of all types. Blockchain is here to stay and pave the way for innovation to help mankind.
Although the technology may be confusing at first, it is an extremely crucial mechanism for data transfers that everyone must understand.