At some point, people that have come to the knowledge of this ‘Blockchain craze’ wonder why it is such a huge deal. Even I have thought the same before gaining understanding.
Briefly, what is Blockchain? It is a system or network that is maintained across different computers; linked to a peer-to-peer network. It is the record-keeping technology behind bitcoin.
How does it function?
Blockchain is typically a chain of blocks of which each block contains stored data. These Blocks work like a spreadsheet with “rows” and “columns” in which the data is collected but it does not allow copying of data. The chain refers to the different points of storage for data collected.
Since a block in a blockchain is a collection of data. Blockchain is referred to as a distributed ledger, this ledger is spread across the system among all peers in the network, and each peer holds a copy of the complete ledger. The spreadsheet possesses information of transactions performed by users.
Blockchain is used to trade digital currencies. Commonly, individuals transact business through banking facilities of the approved financial institutions. Blockchain is a platform on which people can perform transactions as regards transferring money to each other. The unseen money that blockchain works with is called a ‘Digital currency’ or Cryptocurrency.
In a blockchain transaction; when a transaction occurs, the said transaction is verified by pre-existing protocol then the transaction is stored. When transaction data is stored in a block, that block is then given a hash. The hash is a unique, identifying code. That block is given the hash of the most recent block that had been added to the blockchain forming its link to the chain.
After that new block is hashed and added to the blockchain, the information contained therein becomes available for the public eye. Visible information will include Time of the transaction, participants, nature of the exchange, etc. With this visibility, no information that can endanger participants is let out but transactions to be traceable and the platform is secure. As to the extent of security, each computer in the network owns a copy of the blockchain, consequently, there are thousands and millions (like in the case of Bitcoin) of copies of the same blockchain. These copies are an identical spread of information across the network of computers thereby making the information more difficult to be tampered with. A hacker would need to manipulate every copy of the blockchain on the network to alter the system for his gains.
Advantageous applications of blockchain an economy
Having established the meaning of blockchain and how it functions, let us identify life examples for blockchain uses other than Transferring of Bitcoins or other cryptocurrencies because this, in turn, reveals the potential of the Blockchain technology to positively affect an economy where it is adopted. Contrary to popular notion blockchain can be used in other capacities other than just trading or business transactions online.
Copyright and royalty protection
The need for Copyright and royalty protection is growing in the creative space globally. Original Music, art, intellectual content amongst other creatives need assurance of a system that protects their crafts asides the regular punishments of the law put in place for piracy, plagiarism, and the likes. Blockchain could amplify those copyright laws would for digital content downloads, it could also ensure the artist or creator of the content gets their fair share from the use or purchase of their content. The blockchain is transparent and operates in real-time this can be applicable to royalty distribution data to musicians and content creators as there’s a dire need for transparency and almost instantaneous feeds of royalty allocation.
Voting fraud is a societal menace, the votes of citizens may not actually count when the voting system in place is handled by individuals. This gives room for manipulating results or rigging. Added to Blockchain’s offer of digital voting being transparent enough for concerned parties to monitor information, there is convenience and safety for voters as the voters will use preregistered digital IDs to cast votes without leaving their comfort zone.
Fixed data backup
The existing Cloud storage systems are designed for safe data keeping but the initiative, however, is not immune to hackers, or other possible problems. Blockchain could be the perfect way to back up data, although not immune to hacking, it is highly improbable for a successful hack. Blockchain could be a backup source for cloud data centers — or for any data.
This form of identification is lacking in many nations. Some of the billions of people worldwide face identity challenges. With blockchain innovators can create platforms that would give users a way to control their digital identities. It will provide ease for government issues as little as population census if facial identity and other information of citizens are stored. Ease of access to financial services will be enabled. Microsoft’s are in a process of implementing decentralized digital ID for their customers.
The processes of Real estate, land, and auto title transfers, Tax regulation and compliance, Data sharing, Payments and money transfers amongst other aspects can also be amplified in different ways through Blockchain.
These real-life applications of blockchain technology are aspects that directly or indirectly affect a nation’s economy. Impoverished economies can capitalize on implementing this technology in ways that will counter negative happenings and generally improve the standard of living. For instance, in the case of digital voting, there are recorded instances of violence during elections. If voters are availed access to voting digitally, there will be no avenue for tyrants to threaten the safety of voters in the case of physical ballot vote casting. In an instance of mandatory digital IDs for citizens, there will be reduced fraud cases since perpetrators can be easily found from facial identity and other information in the system, a citizen registered with Digital IDs can be given a loan without much hassle for the bank and fear of defaulted payment. The reason being the loan beneficiary can be easily tracked. Blockchain has been known to boost global trade in figures that run into trillions of dollars since its emergence. This recorded happening is a testimony that further boosts the reputation of the network.
An incorruptible and secure network like the blockchain, however, we look at it will only be a boost to an economy that capitalizes on its many advantages. In the long run, there will be a reduced crime rate or less illegal and inhumane acts and a general increase in the standard of living, two things of which make a progressive economy amongst other things. This is not to say that Blockchain is the solution to every economic problem but its wide range of uses could bring significant improvements. Can Blockchain be a boost for developing economies? In my opinion ‘a boost’ is an accurate description of what the technology can definitively do for an economy. But it is really left for authorities in place to begin experimental procedures for what has proven to be a trusted amplifier.
Credits- Investopedia, Mina Down, coindesk, the Medium, Sean Williams.JOIN OUR COMMUNITY