After the financial crash of 2008, a new White Paper was published by a person or group named ‘Satoshi Nakamoto’ which discussed a new peer-to-peer financial system. It was to use a digital cryptocurrency called Bitcoin.
Many people perceived this system as a better way of doing things, especially people who were sick of centralized power meddling with economic systems.
The technology invented to power this new system was called Blockchain, and Nakamoto’s paper was called Blockchain, and Nakamoto’s paper was its grand unveiling.
What is Blockchain?
Blockchain is the underlying technology behind cryptocurrencies like Bitcoin and Ethereum, but its uses go far beyond that.
Simply put, Blockchain is a continuously updated record of ‘who holds what’. These records are split into link blocks and then secured using cryptography. Cryptography ensures that you can be sure of the records. This is dubbed as ‘automated trust’ or trust that’s inherently built into the system.
The list of records known as a distributed ledger is decentralized and available for everyone to see and verify. In addition to this, the Blockchain is tamper-evident and un-hackable due to its distributed nature. Everyone knows when the Block is being messed with because it will be rejected by the rest of the system.
Most people think that Blockchain strongly relates to Bitcoin and cryptocurrencies. They view the Blockchain as something for intellectual tech-savvy criminals or for people that are anti-government.
The emerging truth, however, is that Blockchain has applications far beyond cryptos and, as a whole, will be nothing short of revolutionary.
Where can Blockchain be applied?
To understand the applications of Blockchain technology, let’s take a look at the FITS model. The Blockchain can be applied to areas of Fraud, the existence of Intermediaries, Environment with high Through-Put, and areas that require Stability of Data.
- Fraud – The Blockchain can assist in reducing the likelihood of frauds actually occurring. This is why Blockchain is being used for international financial transactions
- Intermediaries – If you have an environment where intermediaries are involved, then you may be able to disintermediate certain parties if they don’t provide value – We can get average transaction settlement times down from 2 days to 15 minutes by taking away middlemen.
- Through-put – Through-put stands for the number of transactions per second. Bitcoin can do only 10 transactions per second, while MasterCard and VISA can do 80000. Researchers are looking to increase the through-put. Vincent Gramoli from the University of New South Wales has been able to increase the throughput to 400,000 transactions per second through decentralized computers using 100 laptops and PCs.
- Stability of Data – You don’t want volatility of data. You want things that are going to stay the same for at least a while; things such as land ownership titles and personal information.
Where is Blockchain actually being used Today?
- Blockchain land registries are being looked at in Honduras and Sweden.
- Diamonds are looking to be tracked by the Blockchain to stop things like Blood Diamonds
- The NASDAQ Stock Exchange will soon begin a Blockchain system to record the trading in privately held companies
- The Bank Of England has stated that the Blockchain is significant innovation with far-reaching implications in the financial industry
- Six banking Giants, including Barclays, Credit Suisse, and HSBC; are all planning on making a single digital cryptocurrency to clear and style transactions using the blockchain
- Microsoft is entering the space by building a framework using the Ethereum Blockchain
- Steemit (Reddit’s competitor) and D.Tube (Youtube’s competitor), are both Blockchain based platforms where you can get paid in cryptocurrency for uploading content
Decentralized Autonomous Organizations (DAO)
As a result of Blockchain technology, we now have the ability to create huge companies that are distributed and automated for the first time in history. This has never been done before and could provide near limitless potential.
A DAO is like a democratically run company, that is automatically run.
- A DAO would have a computer code that runs the rules and decisions of an organization instead of a central management team at the top.
- People in the decentralized network could decide the rules, form a consensus and create something called a smart contract which is basically a set of computer coded rules that a computer would execute later when needed.
Downsides to Blockchain Technology
Since it’s a new technology with limitless potential, there are certain downsides to the use of Blockchain technology:
- Militia Smart contracts can theoretically be designed to clog up the entire system
- Coding errors can create massive problems.
- The Blockchain is also permanent where all transaction are recorded for all time. This doesn’t sit well for those concerned with privacy and the right to be forgotten.
- There are going to be some entities called ‘Oracles’ who will have special clearance to make edits on the Blockchain.
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About Bank Of Hodlers
Bank of Hodlers is a Blockchain based firm that provides services in terms of ensuring security against Crypto thefts, providing Crypto credit cards and Crypto backed loans.