Almost everyone has heard of bitcoin. However, not everyone knows that behind this mysterious and incomprehensible virtual currency is a new, revolutionary technology called blockchain .
There are many indications that it will have a huge impact on the economy and our lives in the coming years, especially after 2018.
Before you invest in cryptocurrencies, read about the innovative solution behind them.
Table of Contents
Blockchain - technology that will change the world
Examples of blockchain applications
International payments and transfers
Cryptocurrency message - how does it work?
How does blockchain work in practice?
Micropayments
Internet of Things and blockchain
Trade without p2p intermediaries, e.g. electricity
Contracts, land registers on blockchain
Blockchain bonds
Blockchain in the film industry
Treasury na blockchainie
The marijuana market on blockchain
Gold on blockchain
Blockchain in the automotive industry
Blockchain i Moda
Blockchain in logistics
Blockchain in art
Artificial intelligence and blockchain
Summary
Reference
Blockchain - technology that will change the world
Blockchain is a database (Swan, 2015).
Contrary to traditional databases, blockchain is not located in any specific institution (e.g. bank, company, office).
Even more so, it does not consist of paper documents that can be damaged by fire.
It is also not saved on the disks of only selected computers that are in someone's possession, which may give rise to suspicion of manipulation of this data.
Blockchain is a base without a storage, control and management center .
Blockchain is sometimes called the next generation internet .
Why is it compared to the Internet?
Like the Internet, blockchain is a database that has the nature of a network. However, in the case of blockchain, it is not the servers but the participants of the network that store the database on their drives.
Thanks to this solution, the entire database is safe, because it is distributed on computers located all over the world. No country can shut down servers and block domains. No data will be lost in the event of fire, natural disaster or failure of even multiple disks or servers.
Finally, and perhaps most importantly, such a database is resistant to hacker attacks , because in order to forge or delete data, more than half of the computers that make up this network would have to be hacked.
As a result, blockchain is objective because it is independent.
There is no managing or supervising entity of the trust authority or state institution, company or organization that could influence its content.
This feature of blockchain can be used, for example, in transactions between superpowers, since neither party is able to falsify information, or simply when organizing voting (e.g. parliamentary elections, referendums).
Moreover, blockchain is crypto-graphically secured . All entries made in the database are verified in accordance with the adopted consensus mechanism , e.g. using the power of processors.
Data entry is an irreversible process
(Gates, 2017).
The process of securing the network using the computation of many millions of processors around the world makes the bitcoin network largely decentralized and resistant to attacks.
It is estimated that to crack such a private key , the fastest computer on Earth would have to compute it for several million years .
As you can see, there are no intermediaries, no trust bodies, no supervisors . Nobody will make a mistake when entering or verifying data that is entered. Nobody can fool anyone. The network works on a client-client basis. No headquarters or broker is needed. Customers trust each other because all operations are confirmed by cryptographic algorithms - using access keys matching the cipher.
Blockchain is a fully public register . Each network participant can see information about all entries.
Thanks to the use of cryptography , blockchain is resistant to cyber attacks.
(noble man later pointed out cybernetics and cryptography as a whole)
It functions without anyone's control, as originally programmed. It is transparent and no one can influence it . Nobody can turn it off. It will exist as long as at least a few computers are connected to it.
It is worth knowing that there are already hundreds or even thousands of different blockchain networks.
The most famous of them is bitcoin blockchain , other cryptocurrencies have their own blockchains ( ethereum , eos , ripple ).
However, payments are just one of the many uses of this cutting-edge technology.
Examples of blockchain applications
A simple example of how blockchain works
Through a very simplified analogy, the operation of the blockchain network can be described by the following example:
In an event of an educational hour in school, the student pays let's say 25EUR for participating in a school trip. The money is paid by the teacher, who notes this as a fact in her notebook. Typical?
25EUR is not a property, but similar situations in dealings are being applied in banks, settlements between companies, election results and many other instances.
You could have made a mistake by noting information in the notebook - entering the wrong amount and / or assigning it to the wrong student and / or to the wrong trip etc and/or bad hand writing. The notebook may become damaged or lost. Someone may overwrite the numbers/letters and information in general gets tampered with during the break, and some payments were made late, some forgot and etc. There are many options. A database in the form of a notebook and the process of entering data into it may contain numerous and significant defects, affecting the accuracy of the information contained in it.
If this analog situation from an ordinary school class was compared to the operation of blockchain technology, it would look for example like this.
Johnny, you pay 25EUR for the trip. Teacher and all the students in the class take out their notebooks and write this down, thus confirming the transaction. To certify that it was held and that the teacher received 25EUR from each student. Even if someone makes a mistake or a notebook is damaged, lost or falsified, the rest prove that Johnny paid for the trip. In the digital world of cryptocurrencies, the additional 25EUR would go from John's wallet to your wallet, and the location of this particular banknote (coin / token) would be visible in the blockchain network.
International payments and transfers
When sending money to a colleague, we first give it to an intermediary, e.g. a bank.
Our bank kindly sends them to a friend's bank during working hours, and only the latter sends them to our recipient.
This process makes traditional transfers even take several days, and our money passes through the hands of many intermediaries.
In addition, there can be a mistake in the whole process, just as a teacher can make a mistake in noting the payment in the notebook.
The whole thing is time-consuming and costly.
Cryptocurrencies don't need banks.
There are no intermediaries.
We send the given amount directly from our account to the account of a friend.
For cryptocurrencies, national borders are irrelevant - just like for email. It makes no difference whether we send an email to a friend in the next room or from the other side of the world. However, even e-mails reach the recipient through intermediaries - mail service servers that may not work, someone can take over and read our message, impersonate someone or simply collect information from the content we send - just like in traditional banking.
In the case of cryptocurrency transfers, there are simply no intermediaries, it works as if we gave a colleague a banknote.
Cryptocurrency message - how does it work?
We do not log in anywhere, so there is no risk of any server failure, operator's technical break or bank collapse. No one will ever restrict access to our account. All you need is internet access, and this can soon be delivered by satellite to any point on Earth.
How does blockchain work in practice?
The state of our account (and all the others) is saved in a given blockchain (i.e. the currency database that we want to send).
It also records and fully discloses all operations (deposits, withdrawals) that have ever been made between all addresses (wallets).
The number of all coins in circulation is also fully public and predetermined. It is also known perfectly well how many coins are currently on which wallet.
However, we do not know who is in possession of a given account, because addresses are not named, and a given user may have an infinite number of them.
If you want to make a transfer, send funds from our account to another account, we must sign the transaction with our private key, i.e. a cryptographic proof of ownership.
It is a transaction authorization tool. Confirming that the account belongs to us and that we can use the funds accumulated on it.
There is no intermediary, so if you lose your private key, no one will remind you of it. There is no helpline we can call. There is no option to reset such a key and regain access to the funds. Our resources are only in our hands and no one else.
Information about the transfer of funds from our account to another account is saved in the block chain.
It is irreversible.
The funds go to the address we provided. The block is "kicked" according to the blockchain's consensus mechanism. No middlemen. We send funds directly from one address to another, and the transfer is encoded using cryptographic methods.
Blockchain works 24 hours a day, 7 days a week.
If it is fully decentralized, there are no interruptions or failures. The transfer fee is usually much lower than in traditional banking. It goes to miners who have lent their computing power to secure cryptographic transactions.
Some blockchains allow for free transfer of funds (e.g. nano or also known as cold wallets ).
Micropayments
Do you want to give someone 47 cents? You will not do it by bank transfer, because you will pay 3eur for the transfer and you will wait one business day.
Recently, there are several non-cryptocurrency opportunities to conveniently pay even such small sums (eg Revolut ). However, this branch of financial services is relatively young and is growing rapidly.
Currently , Facebook is entering the game , which wants to enable sending money between users of its social networks and messengers ... for this purpose, it creates its own Libra cryptocurrency .
Because it is cryptocurrencies that offer a new dimension of micropayments . Not only do they allow you to send hundredths of a penny, but in addition they allow you to automatically transfer funds after meeting certain conditions, included in the " smart contract ".
Thanks to the use of blockchain technology, for example, a blogger can receive remuneration for each display of an advertisement on his website.
See also: BitTube a new competitor of YouTube?
One display of the blog - the equivalent of one hundredth of a penny goes to his account in real time, immediately after viewing.
There are no intermediaries who can default on the contract.
There is no need to create monthly settlements, statements, no intermediary commission and tons of invoices. Everything is automated, decentralized, safe and reliable.
Internet of Things and blockchain
Since you can monitor network traffic via blockchain and pay for each ad displayed, why not go one step further.
More and more devices have various sensors and devices for wireless data transmission. They send information about their condition and location.
They communicate with each other more and more often. Therefore, it is enough to properly write a smart contract, and devices can pay each other for specific activities.
Trade without p2p intermediaries, e.g. electricity
You have solar panels on the roof.
On a sunny day, you don't use all the electricity you produce, so you let your neighbor use it. The neighbor has a windmill and allows you to use its excess power on a windy day.
How to settle fairly?
For example, by using blockchain technology. A fixed number of tokens for each thousandth of a watt-hour of electricity consumed can be automatically transferred or charged to your accounts .
This way, entire housing estates and cities can function. There is no need for intermediaries who will make money on it and officials who will check the counters and calculate the monthly balance.
What's more, the use of blockchain technology may allow for more advanced monitoring of energy trading across the entire network, bringing greater efficiency and savings. Such solutions are dealt with by, among others SunContract project .
You do not need a trust institution that will confirm the conclusion of the contract.
The profession of a notary , as well as many offices, may soon become unnecessary.
Agreements can be concluded through entries in a distributed register, i.e. blockchain.
Who is the owner of the property or car?
Who bought it from whom and when?
You can check against an explicit database. Everything is clear, accessible and impossible to counterfeit, as well as the transactions in the example of international transfers given above.
What's more, thanks to tokenization , you can become the owner of several square meters of a given property, for example, the Atlanta project is associated with it .
Summary
A database that hangs somewhere in the cloud, but not on a server that can be turned off by its owner at any time, but is distributed, decentralized, i.e. independent, is a revolutionary technology of the future. It can change our lives as the internet once changed it. In this case, it will have a large impact on the economy, on the one hand reducing the need for many contemporary professions, and on the other hand it will improve the operation in many areas of the economy, influencing its development.
Reference
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