In Part 2 of our «Improveadvisors about the Blockchain» article, we describe the areas, which this powerful technology has the opportunity to change significantly, and predict some threats that a decentralized public ledger can face on its way to mass adoption.
Most of us are sure, that nowadays «Privacy is dead» because let’s admit – we don’t really own completely neither our identities nor our money! But it doesn’t necessarily have to remain that way. The aim of the Blockchain is to bring freedom to the future generations of our society – instant, transparent and responsible financial trust relations between individuals peer to peer without any middleman or additional costs.
Even tho Blockchain technology is still where the Internet was in the late ’90s — how can it become a powerful opportunity and the greatest potential for humanity?
Bitcoin is the first cryptocurrency created by Satoshi Nakamoto in 2008, and remains the most prominent one, with such altcoins as Ethereum and Litecoin on the rise. Because of its growing popularity, Bitcoin is now being used every day for ordinary transactions. Well-known businesses such as Subway or Etsy accept bitcoins as payment. The «BitPay Visa debit card» allows you to transform your bitcoins into conventional money within minutes, and use the card anywhere that accepts normal Visa.
Japan has already accepted bitcoin as legal currency with major retailers and Russia is seeking to recognize cryptocurrencies as legal financial instruments.
World major business players are already considering cryptocurrencies as an investment.
Banking and Payments
Not only does blockchain allow anyone to exchange money faster, more efficiently and more securely, but many banks are already working on adopting blockchain technology to improve their transactions.
This is the original use-case for digital currencies like Bitcoin, but there are also further opportunities for banks to use the blockchain technology to improve other services and compliance activities.
The usage of a decentralized distributed Blockchain system would allow data storage in the cloud to be more robust and protected against attacks.
All data is verified and encrypted using advanced cryptography, making it resistant to unauthorized changes and hacks. Centralized servers can be quiet vulnerable to data loss/corruption/human error/hacking, and the history of the past few years with Target, Deloitte, or Equifax only proves it.
With blockchain, we could reduce bureaucracy and increase security, efficiency, and transparency. What, if not this, could really fight corruption in politics? Welfare and unemployment benefits could also be more easily verified and distributed and votes could be counted and verified for legitimacy.
Blockchains can be utilized for identity management systems, document processing, safeguarding financial and state services, as well as transmitting sensitive information just to mention a few.
Blockchains could be used to address inefficiencies in current systems and increase the effectiveness of public service delivery. In Public Sector it can be used for Securing data, Voting, Streamlining administrative processes, Smart contracts for business incorporation, etc.
Keeping track of documents far more efficiently is possible with Blockchain, reducing administrative costs and preventing costly delays. Corporations could also use blockchains to better improve E2E processes in the area of quality control.
Trading Energy and other commodities, Forecasting & Betting
Boundaries between asset classes will blur as cash, energy products, and other commodities, from industrial components to carrots could all become digital assets trading interoperably. Blockchain will provide the right platform for any case!
It is set to change the entire approach to research, consulting, analysis and forecasting. These technologies can be used to place and monitor bets on anything from sports to stocks to elections in a decentralized way.
Supply chain management and logistics
Smart contracts automate the moving of materials based on predefined conditions.
They offer nearly complete transparency to the entire supply chain, ensuring the quality, authenticity, and availability of goods. Within the next year, smart contracts will increasingly be a part of logistics platforms.
Using blockchain technology for IoT applications and smart contracts may one day become a part of an unalterable record of the entire manufacturing process. This will make it nearly impossible for careless workers to hide their mistakes or fake the numbers.
By incorporating smart contracts into program management software applications, strict controls can be created that prevent problems from infiltrating downline processes.
With a blockchain solution, manufacturers have a complete living dossier of all activities and more so they can keep track of the flow of goods between people and companies, which therefore provides an extra level of transparency and control.
Blockchain technology eliminates the need for the third-party agents in the commerce ecosystem which means that you will be not charged substantial fees for the services that contribute considerably to the final cost of the transaction, unlike while passing through the third-party authenticators like banks and clearing houses.
Nowadays nearly all digital content can be copied and freely distributed on the internet, and how artists are compensated when their materials are used or bought through legitimate channels, could be resolved by connecting authors, musicians and videographers directly with consumers.
Media companies are looking to the protocol to help battle the incessant piracy that comes with the digital distribution, combat “fake news”. The advertising technology sector and the video streaming category have many plans on blockchain.
Example – Music Industry
Allowing listeners to download music stored on the blockchain, paying for it with cryptocurrency would be one of the paradigm shifts in the industry. The need for distributors may decrease, but artists will be the first ones winning from such a perspective because it would mean that the right people get paid…
The first artist to engage cryptocurrencies in the music industry was Bjork with a release of a new album that provides buyers with 100 Audiocoins.
Concert tickets as another example – if you put one on a Blockchain, and every time the ticket changes hands, a percentage of the sales goes back to the artist, instead of scalpers profiting from sales of tickets to sold-out concerts.
There is great potential for insurers to use blockchain technology to streamline payments of premiums and claims. Blockchain technologies could support the significant digital transformation underway in the industry because much of this transformation relies on data.
No industry requires more data to be processed daily than the healthcare sector.
Unlike conventional medical records databases, every entry or modification becomes a new, sequential data block within the blockchain. Whether entering new patient data or updating a patient’s contact information, every change becomes a new record with its own date and timestamp.
The challenge — and the opportunity — lies in creating healthcare blockchains that are shared between large sectors of the medical industry.
With all of the private patient data that hospitals collect, a secure platform is necessary. With the advent of the blockchain, hospitals and other healthcare organizations could create a centralized and secure database, store medical records and share them strictly with authorized doctors and patients.
Using blockchain to offer fractional interest in property is another area where the technology could transform industries, specifically those in which a bundle of rights is divided among multiple stakeholders, according to Robert Massey, a tax partner with Deloitte who focuses on blockchain and cryptocurrency.
In 2017, the first brokerage in Texas closed a home deal purchased entirely with bitcoin.
More recently, paying rent in bitcoin has emerged as the next frontier.
Internet of Things (IoT)
Today the Internet of Things includes cars, buildings, doorbells and even refrigerators that are embedded with software, network connectivity, and sensors. However, because these devices operate from a central location that handles communications, hackers can gain access to the car you’re driving or to your home. By decentralizing all the information and data, Blockchain may solve crucial security concerns in the future.
Example – Connected car
Creating blockchain-based in-vehicle solutions is not just a good idea, it may very soon become necessary.
It gives the opportunity for automotive communications to remain fast and secure and provide safety of drivers and their passengers. Cloud-based shared ledger platforms are capable of facilitating the storage, encryption, transport, and distribution of the enormous amounts of data that connected cars generate every minute.
Crowdfunding and Donating to Charities, Non-Profits
Bitcoin-based charities are already creating trust through smart contracts and online reputation systems and allowing donors to see where their donations go through a secure and transparent ledger. The United Nations’ World Food Programme is currently implementing blockchain technology to allow refugees to purchase food by using Iris scans instead of vouchers, cash or credit cards.
Decentralized Social networks (DSN)
DSNs claim to ensure strong privacy standards because user data can’t be stored or controlled by any central agency or owning company, as in the case of other classic social networks nowadays. There are still few existing so far and they are at a very early stage of development, but soon they are going to become the norm, working based on the reward incentives :
– If users can create wealth, they could be paying for the value they produce. – they monetize their content
– Users can contribute to the network by editing the open-source software behind the social network itself.
Your content is encrypted so no one, neither government nor marketers, can spy on you without your knowledge. Others can get paid for distributing your content and if advertisers want to target you, they will have to pay you for the privilege.
Social network Synereo incentivizes users to reward each other and support the creation of value on the network directly, without intermediaries or fees.
Your Own Chain!
The blockchain is a data management concept, not a fixed methodology, so the greatest thing is that the rules have not been written yet on how to make it all work. Your application could integrate with Bitcoin or Ethereum, or you are free to create your own blockchain, using whatever rules and features you want to include!
We hope to live in a world where we would be able to manage our personal data ourselves — what to reveal or to keep in privacy, make money on our hobbies and passions in many new ways…
… but as in the case of any other new technology with such a huge power and potential, there are not only rainbows and unicorns around it!
So what dangers and complications can be waiting for us behind the corner in this Decentralized journey?
The cost of electricity required to run large-scale blockchain networks is massive, which can become an issue for the environment. Many researchers claim that Bitcoin Mining wastes vast amounts of Energy and harms the Environment.
Theoretical immutability of the blockchain is enhanced as the size of the network increases. But not every potential blockchain application needs to be largescale, which opens the door for a 51% attack and other forms of manipulation. A 51% attack is a situation whereby a node or group of nodes that control 51% of the hashing power of a blockchain can alter the records of the blockchain, this could lead to shattering consequences.
Scalability — Security Trade-off
On the other hand, the bigger the blockchain gets, the less scalable it becomes. The sheer size of the data stored on a large blockchain will create data storage space constraints. The exponential growth in the size of a blockchain leads to a scalability — security conflict that can be difficult to handle. In any case, a larger blockchain means more security as a 51% becomes nearly impossible to accomplish once the network reaches a certain size.
The ultimate challenge is simply that the high complexity of operating in Blockchain means that the end users will find it hard to appreciate the benefits. Some people may also say that this whole new platform is the ultimate job-killer.
Let us know in comments — what you think?
In our next articles, we will continue bringing up important subjects related to Blockchain and get deeper into understanding how this technology works. Follow up on «Improve Advisors about the Blockchain» articles!