Blockchain Tutorial: An Introduction
Welcome to the exciting world of blockchain! Have you ever heard of this mysterious technology, but felt too intimidated to ask what it actually is? This Ultimate Blockchain Tutorial is here to guide you through the maze of information and provide a beginner-friendly introduction to the world of blockchain.
In this Blockchain Tutorial, we dive deep into the world of blockchain and explore how it works. We will also discuss the various types of blockchains and how they are used in different industries.
But that’s not all. We also examine the benefits of blockchain, such as security, transparency, and efficiency. You’ll soon see why this technology is being hailed as a game-changer.
Finally, we take a sneak peek into the future of blockchain and how it has the potential to transform industries as we know them. The possibilities are endless!
So sit back, relax, and get ready to join us on a journey to the forefront of innovation. Let’s dive into the world of blockchain together.
Historical background of blockchain: in brief
The concept of Blockchain can be traced back to a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” published in 2008 by an unknown individual or group of individuals under the pseudonym Satoshi Nakamoto. Despite the popularity and success of Bitcoin, the true identity of Satoshi Nakamoto remains unknown to this day.
The original purpose of blockchain was to create a decentralized digital currency that could operate independently of centralized financial institutions. The basic idea was to create a system that could be secure, transparent, and immutable by using a distributed ledger that would record all transactions. “Immutable” is a word describes something that never changes over time. In other words: once something is on the Blockchain, it is there forever.
The first blockchain-based cryptocurrency, Bitcoin, was launched in 2009 by Satoshi Nakamoto. For Blockchain enthusiasts, this marked the birth of a new era in finance. Satoshi Nakamoto continued to work on the development of Bitcoin, contributing code and making updates to the system until 2010, when he suddenly disappeared from the public eye. Since 2009, blockchain technology has been adopted by various industries and organizations, including banks, governments, and healthcare providers, to name a few. For example, in February 2023 the Bank of England announced that is investigating the use of blockchain in creating a ‘digital pound’.
Another key Blockchain landmark came In 2014 when Ethereum was introduced, which took blockchain technology to the next level by enabling the creation of smart contracts that could be used to execute complex transactions automatically.
In recent years, there has been a growing interest in blockchain technology, with companies and governments investing heavily in research and development. Some of the notable figures in the development and adoption of blockchain technology include:
- Nick Szabo: A computer scientist and legal scholar who developed the concept of smart contracts in the 1990s.
- Satoshi Nakamoto: Already mentioned above, this mysterious person (or persons…) is the starting point for Blockchain as we know it today.
- Vitalik Buterin: A programmer who co-founded Ethereum in 2014.
- Don Tapscott: A Canadian business executive and author who wrote the book “Blockchain Revolution” in 2016, which helped to popularize the concept of blockchain technology.
Today, blockchain technology is being used for a wide range of applications, including supply chain management, digital identity verification, and voting systems. Its potential to revolutionize various industries has made it one of the most exciting technological innovations of our time.
Why is blockchain a gamechanger?
Blockchain technology is like a digital vault, where transactions are securely stored in an immutable and tamper-proof manner, without the need for a bank teller to validate them. It’s like a magic wand that can make transactions happen almost instantaneously, cutting down the time and cost of traditional financial transactions.
It’s for these reasons that Blockchain technology has the potential to revolutionize industries, and most notably the financial industry. By its very nature Blockchain is incorruptible, with the information contained on the Blockchain being fixed and unchangeable. This potentially creates numerous benefits such as:
- Increased security: Transactions on the blockchain are secured by cryptography, making them tamper-proof and eliminating the need for intermediaries to verify and validate transactions.
- Improved efficiency: Blockchain transactions can be completed in near real-time, reducing the time and cost associated with traditional financial transactions.
- Greater transparency: Like a window, Blockchain provides an unobstructed view of all transactions to anyone with access to the network. This provides increased transparency and accountability to all stakeholders.
- Cost savings: Blockchain technology eliminates the need for intermediaries such as banks and payment processors, reducing transaction fees and costs.
- Accessibility: Blockchain technology has the potential to enable financial inclusion by providing access to financial services to individuals and businesses that are currently underserved or excluded from traditional financial systems.
Would you agree these Blockchain benefits could revolutionize the world of finance? Blockchain certainly looks like it has the potential to transform the way financial transactions are conducted, making them more secure, efficient, and accessible to a wider range of individuals and businesses.
How does blockchain technology work?
We can talk all day about how Blockchain is changing the world, but – for non-techies – how does Blockchain work?
Blockchain is a distributed database technology which allows for secure and transparent record-keeping of digital transactions. It is based on a network of computers that work together to verify and store transactions in a decentralized manner.
The basic idea behind a blockchain is to create a digital ledger that records transactions in a way that cannot be altered without the consensus of the network. Each block in the chain contains a hash of the previous block, along with the current transaction data. This creates a continuous chain of blocks. These cannot be modified without affecting all subsequent blocks in the chain.
To add a new block to the chain, a network of computers (known as nodes) must work together to validate the transaction data and confirm that it is legitimate. This process is known as mining. It involves solving a complex mathematical problem that requires a significant amount of computational power. Once a block is added to the chain, it is broadcast to the entire network. Then, everybody on the network updates their copies of the ledger accordingly.
One of the key features of blockchain technology is its decentralized nature. Unlike traditional databases that are stored on a central server, a blockchain is stored on multiple computers across a network. This makes it more resistant to tampering and hacking, as there is no single point of failure or vulnerability.
If we break this down into something perhaps a little easier to digest:
- A blockchain is like a digital ledger that keeps track of transactions. It’s kind of like how a bank keeps track of deposits and withdrawals in your account.
- When a transaction occurs, it is verified by a network of computers called nodes. These are like bank tellers checking to make sure that the transaction is legitimate and that the funds are available.
- Once the transaction is verified, it is added to a block of transactions. This block is like a page in a ledger book, with all of the transactions written down in a specific order.
- Each block is given a unique code called a hash,. This is like a unique fingerprint that identifies the block and all of its transactions.
- Once a block is created, it is added to the blockchain. It’s like adding a fresh page to a book. Each block is connected to the previous one, forming a chain of blocks (hence the name “blockchain”).
- Because each block is connected to the previous one, it is very difficult to alter or delete a transaction. It’s like trying to erase something from a page in a book without leaving any evidence.
- To make sure that the blockchain is secure, a process called mining is used. Miners use powerful computers to solve complex mathematical problems (essentially, it is an example of cryptography), which helps to verify transactions and create new blocks.
- When a miner solves a problem, they are rewarded with a small amount of cryptocurrency. This incentivizes people to participate in the network and keep it secure.
- Because the blockchain is decentralized (meaning that it is not controlled by any one person or organization), it is resistant to hacking and fraud. This makes it a secure way to store and transfer value.
Still struggling to get your head round it? We don’t blame you if you. Let’s break some of these ideas and concepts down further.
What is a distributed ledger system?
Mentions of Blockchain are frequently matched up with the term “distributed ledger system”. Basically, a distributed ledger system is like a digital ledger or a book, but shared among many people. Instead of having a central authority controlling it, it is decentralized and replicated across a network of computers.
- Imagine a giant chalkboard in a public square. Anybody can write on this chalkboard, and everyone else can see and verify what has been written. The chalkboard is constantly being updated with new information, and everyone in the square has access to the same information.
- Now, instead of a single chalkboard, imagine there are thousands of interconnected chalkboards spread out all over the world. Each one is updated simultaneously and automatically. Also, each chalkboard contains a copy of the same information, with the network ensuring all chalkboards remain in sync with each other.
This is a distributed ledger system. It has several working parts that all need to work together in order for the technology to work. Let’s look at them in turn.
Part of the distributed ledger system is a node. A node is, in essence, a computer. Instead of a chalkboard in our example above, the network is made up of many different computers, or “nodes,” each with a copy of the ledger.
A hash in the context of blockchain is like a unique digital fingerprint or a “seal” that represents a block of data, much like a wax seal on an envelope. Just as a wax seal can be used to verify the authenticity and integrity of a message, a hash can be used to ensure the integrity and security of the data on a blockchain. When data is added to a blockchain, it is transformed into a fixed-length string of characters that is unique to that data.
The word ‘miner’ in blockchain is pretty evocative and, to an extent, reasonably self-explanatory.
Cryptography is the practice of securing communication from third-party interference using codes and ciphers. It is like a secret code that only the sender and intended receiver can understand, ensuring that the message remains confidential and secure.
Decentralization and consensus mechanism
Decentralization and consensus mechanism are two essential concepts in Blockchain technology. To understand these concepts, we can use similes and metaphors:
- Decentralization: Decentralization in Blockchain means that there is no central authority controlling the system. It is like a democracy where power is distributed among citizens, and no single person or entity has complete control over the system. In a decentralized Blockchain, all nodes in the network have equal power and participate in maintaining the integrity and security of the system. This means that there is no single point of failure, making the system more robust and resistant to attacks.
- Consensus mechanism: Consensus mechanism in Blockchain is like a jury system. Just as how a jury requires agreement from the majority to reach a verdict, a consensus mechanism in Blockchain requires agreement from a majority of nodes to validate a transaction. In a Blockchain, nodes work together to validate transactions and create new blocks, and they use a consensus mechanism to ensure that all nodes agree on the state of the Blockchain. This means that all nodes in the network must agree on the validity of a transaction before it is added to the Blockchain, ensuring that the system is secure and reliable.
Decentralization and consensus mechanism are crucial components of Blockchain technology, ensuring that the system remains secure, transparent, and free from any central control. Decentralization distributes power among nodes, while consensus mechanism ensures that all nodes work together to maintain the integrity of the system. Together, these concepts create a robust and secure network that can be trusted to handle decentralized transactions and data storage.
Smart contracts are self-executing computer programs that run on a Blockchain network. They are like vending machines that automatically dispense a product or service when certain conditions are met.
The concept of smart contracts was first introduced by Nick Szabo, a computer scientist and cryptographer, in the 1990s. He envisioned a system where contractual clauses could be embedded in code and executed automatically without the need for intermediaries.
To understand how smart contracts work, we can use a vending machine metaphor.
- Just as how a vending machine dispenses products when a user inserts money, a smart contract executes a transaction when certain conditions are met.
- For example, a smart contract can be programmed to release payment to a supplier when the agreed-upon conditions, such as delivery of goods, are met.
- Once the conditions are fulfilled, the smart contract automatically executes the transaction without the need for intermediaries.
It’s pretty clear to see how the idea of smart contracts have the potential to revolutionize industries. They reduce the need for intermediaries, increasing efficiency at the same time, and eliminate the potential for fraud. Smart contracts can be used in a wide range of applications, such as supply chain management, insurance claims, and financial transactions (such as Blockchain).
Types of Blockchains
If you thought there was only one type of Blockchain then think again! There are several different types of Blockchain out there so here is a run through them.
- Public Blockchains: Public blockchains are open to everyone, and anyone can participate in the network without any restrictions. They are fully decentralized, meaning that there is no central authority controlling the system. Examples of public blockchains include Bitcoin, Ethereum, and Litecoin. Public blockchains are transparent, secure, and resistant to censorship, making them ideal for applications that require transparency and immutability.
- Private Blockchains: Private blockchains are similar to public blockchains, but they are restricted to a specific group of participants. They are controlled by a single entity, and only authorized users can participate in the network. Private blockchains are faster and more efficient than public blockchains because they have fewer participants and less computational overhead. They are ideal for use cases that require privacy and security, such as financial institutions and government agencies.
- Consortium Blockchains: Consortium blockchains are a hybrid of public and private blockchains. They are controlled by a group of organizations that work together to maintain the network. Consortium blockchains are ideal for industries that require cooperation among competitors, such as supply chain management and healthcare. They are more efficient than public blockchains because they have a smaller group of participants, but they are more decentralized than private blockchains.
Permissioned vs Permissionless blockchains
Blockchains are sometimes described in terms of “Permissioned vs Permissionless”.
To understand this difference, imagine you are outside a nightclub.
- A permissionless blockchain is like a nightclub that is open to anyone. Anyone can come in and participate in the network without any restrictions. This means that the blockchain is completely decentralized and public, and anyone can participate in the validation of transactions and the creation of new blocks. Examples of permissionless blockchains include Bitcoin and Ethereum.
- On the other hand, a permissioned blockchain is like a private club that requires membership or invitation to enter. Only authorized members can participate in the network, and access is restricted to a specific group of users. This means that the blockchain is more centralized and controlled, and only authorized participants can validate transactions and create new blocks. Examples of permissioned blockchains include Hyperledger and R3 Corda.
The choice of which type of blockchain to use depends on the specific requirements and use case of the application.
A hybrid Blockchain is another way of describing a Consortium Blockchain. To recap, a hybrid blockchain is like a restaurant that offers both a buffet and a private dining area. The buffet area is open to the public, offering a wide variety of dishes for anyone to try. The private dining area is reserved for a select group of customers, offering a customized menu tailored to their needs.
A hybrid blockchain offers the benefits of both public and private blockchains. The public chain offers transparency, immutability, and decentralization, while the private chain offers speed, privacy, and control. The two chains are connected through a bridge that allows for seamless interoperability between them. The user gets the best of both worlds.
How Blockchain Is Used In The Real World
Cryptocurrencies and digital assets
When people think about Blockchain, what they often think about is cryptocurrency. The biggest cryptocurrency of them all is Bitcoin, and we’ve already touched on that earlier. But getting your head around cryptocurrency is not so straightforward.
What is cryptocurrency?
One way to think about cryptocurrencies is to compare them to traditional currencies like dollars or euros. Just as traditional currencies are backed by governments and banks, cryptocurrencies are backed by their respective blockchains. In fact, some people refer to cryptocurrencies as “digital gold”. This is because, like gold, they have a limited supply and can be used as a store of value.
Another way to think about cryptocurrencies is to compare them to virtual tokens in a video game. Just like how virtual tokens can be used to buy and sell items in a game, cryptocurrencies can be used to buy and sell goods and services in the real world. The difference is that cryptocurrencies have real-world value and can be exchanged for traditional currencies or other cryptocurrencies.
Backed by blockchain
When we say that cryptocurrencies are “backed by the blockchain,” we mean that the value of a cryptocurrency is derived from the trust and security provided by the underlying blockchain technology. In other words, the blockchain acts as a guarantee of the authenticity and validity of the cryptocurrency, and ensures that transactions are secure and cannot be tampered with.
To understand this concept, let’s compare it to a traditional fiat currency like the US dollar. The US dollar is backed by the government. The US government guarantees the value of the dollar by controlling the money supply, setting interest rates, and maintaining the stability of the economy. If people trust the US government to manage the economy and maintain the value of the dollar, then they will continue to use it as a means of exchange and a store of value.
In contrast, cryptocurrencies are not backed by any government or financial institution. Instead, cryptocurrency value comes from the fact that they are secured by the blockchain. This means cryptocurrencies are not subject to the same kind of government control and manipulation as traditional fiat currencies.
Think of it like a house. Traditional fiat currencies are like a house built on a strong foundation of government and financial institutions. Meanwhile cryptocurrencies are like a house built on a strong foundation made of blockchain technology. In both cases, the foundations provides stability and security. This stability and security builds ensures the currency retains value and can be trusted.
Why are governments scared of cryptocurrency?
It certainly feels like governments have been scared of Blockchain and crypto, and ever since Bitcoin burst into the public conscience in the early 2010’s.
The only world government to formally acknowledge cryptocurrency as a legal currency is El Salvador. In June 2021, the country’s Legislative Assembly passed a law that made Bitcoin legal tender in El Salvador from September of the same year, alongside the US dollar, which is the country’s official currency. What does this mean? Firstly, all businesses in El Salvador are legally required to accept Bitcoin as payment for goods and services. Secondly, individuals can use Bitcoin for everyday transactions such as buying groceries or paying bills.
The move was seen as a significant step forward for the adoption of cryptocurrencies. It sparked debates around the world about the potential benefits and risks of using digital currencies as legal tender.
Other countries are exploring the adoption of cryptocurrency too, not including the Bank of England (which we noted earlier).
- Ukraine has been actively exploring the use of cryptocurrencies and blockchain technology since 2018. In September 2020, the Ukrainian Ministry of Digital Transformation announced that it was working on a draft law that would make cryptocurrencies legal in the country, and would establish a legal framework for their use as a means of payment and investment. Following the start of war with Russia, which began in February 2022, Ukraine allowed foreign and native cryptocurrency exchanges to operate legally in the country.
- Venezuela is exploring the use of cryptocurrencies too. Indeed, Venezuela launched its own cryptocurrency, called the Petro, in 2018. The Petro is backed by the country’s oil reserves and is intended to serve as a means of payment for goods and services, as well as a store of value.
- In addition, countries such as Sweden and China are exploring the use of digital currencies, although they are not based on blockchain technology and are not considered cryptocurrencies in the traditional sense. Sweden’s e-krona and China’s digital yuan are both being developed as digital versions of their respective national currencies, with the aim of improving payment systems and reducing the use of cash.
Global governments have expressed a range of attitudes towards cryptocurrency, and while some are more cautious than others, it’s fair to say that many are at least somewhat afraid of its potential to disrupt the traditional financial system.
Why so scared of crypto? Some potential reasons
To understand why governments might be afraid of cryptocurrency, imagine a game of Jenga. The traditional financial system is like a carefully constructed Jenga tower, built up over many years by banks, governments, and other financial institutions. It is a complex and highly regulated system that provides stability and security for the global economy. However, the emergence of cryptocurrencies is like a player trying to remove a block from the middle of the tower – it threatens to destabilize the entire system and potentially cause it to collapse.
Cryptocurrency is highly decentralized and difficult to regulate. Unlike traditional financial systems, which are governed by a complex web of laws and regulations, cryptocurrencies are designed to operate outside of government control. This means governments are unable to monitor or tax cryptocurrency transactions. Also, they may have difficulty preventing criminal activities such as money laundering or terrorism financing.
Crypto also has the potential to undermine the value of traditional currencies. If people start using cryptocurrencies as a means of exchange and store of value, then traditional currencies could lose their dominance. Governments could lose control over their monetary policy.
On balance, while not all governments are necessarily “afraid” of cryptocurrency, many certainly seem cautious. Governments may be concerned about its decentralized nature, its potential to facilitate criminal activities, and its potential to undermine the value of traditional currencies. As a result, many governments are exploring ways to regulate and manage cryptocurrency, while also encouraging innovation and development in the sector.
Why is cryptocurrency often talked of as a ‘store of value’?
Articles about the likes of Bitcoin and Ethereum often mention how these cryptocurrencies are considered to be a store of value. But what exactly does this mean?
When people talk about cryptocurrencies being a “store of value,” they mean that they can be used to hold and preserve wealth over time, much like gold or other precious metals.
To understand this concept, imagine that you have a large piggy bank that you use to store your spare change. Over time, you accumulate more and more coins in your piggy bank. The value of your savings increases. In this scenario, your piggy bank is acting as a “store of value”. It is a safe and reliable way to store your wealth over time.
Cryptocurrencies potentially function in a similar way to the piggy bank. They can be bought and held for long periods of time, but like the piggy bank, cryptocurrencies are not without risk – their value can be volatile and subject to market fluctuations. However, many people see cryptocurrencies as a promising way to store value because they are decentralized and can be held outside of traditional financial systems.
Another way to think about cryptocurrencies as a store of value is to imagine a virtual safety deposit box. Just like you might store valuables in a safety deposit box at a bank, you can store your cryptocurrency holdings in a digital wallet. This wallet can be accessed from anywhere in the world, and provides a secure way to hold and protect your wealth.
One of the main risks involved in using cryptocurrencies as a store of value is their price volatility. The value of cryptocurrencies can fluctuate rapidly and unpredictably. This means their ability to store value can be uncertain. For example, Bitcoin, the most well-known cryptocurrency, has experienced significant price swings over the years, with values ranging from a few cents to over $60,000 in just a few years.
Another risk involved in using cryptocurrencies as a store of value is their susceptibility to hacking and fraud. Cryptocurrencies are stored in digital wallets. Unfortunately, digital wallets are potentially vulnerable to hacking and cyber-attacks. If your digital wallet is hacked, your cryptocurrency holdings could be stolen, and you could lose your entire investment. We’ve seen already how cryptology is fundamental in creating security in the blockchain, but this doesn’t mean that hacking and theft doesn’t happen (rare as it is).
Furthermore, cryptocurrencies can be affected by regulatory risks. Governments around the world are still grappling with how to regulate cryptocurrencies, and new regulations could significantly impact their value. For example, a government could ban the use of cryptocurrencies, or introduce new regulations that restrict their use or sale.
Finally, the lack of liquidity in the cryptocurrency markets is another risk to consider. Cryptocurrency markets can be relatively illiquid, which means that it can be difficult to sell your holdings quickly if you need to cash out. This could result in significant losses if you are forced to sell your holdings during a period of low liquidity.
The dominant cryptocurrencies
If you visit any crypto exchange you will encounter many different crypto options. It might seem impossible figuring out what they are and why they should differ.
It’s best to treat them as if you would in a traditional currency exchange bureau. Some cryptocurrencies are considered ‘stronger’ and more valuable than others.
It’s like the US dollar being a more reliable store of value than the Tongan Pa’anga. Why do we say this? It’s purely because we know that the US dollar is backed by the government of the world’s largest economy. On the other hand, the Tongan Pa’anga is backed by a country ranked 184th in the global economic rankings (or thereabouts). Which currency would you pick?
Here is a selection of some of the biggest cryptocurrencies out there. This is by no means an exhaustive list but it gives a flavour of the most high profile.
- Bitcoin (BTC): Bitcoin was the first cryptocurrency, created in 2009 by an unknown person using the pseudonym Satoshi Nakamoto. Bitcoin has since become the most widely adopted cryptocurrency, with a market capitalization of over $1 trillion at its peak.
- Ethereum (ETH): Ethereum is the second-largest cryptocurrency by market capitalization, created in 2015 by Vitalik Buterin. Ethereum is known for its smart contract functionality. This allows developers to build decentralized applications on top of the Ethereum blockchain. Ethereum’s historical price high was achieved in May 2021, when it reached almost $4,400 per coin.
- Binance Coin (BNB): Binance Coin is the native cryptocurrency of the Binance exchange, one of the largest cryptocurrency exchanges in the world. It was created in 2017 and has since become a popular cryptocurrency for trading and investing. Binance Coin’s historical price high was achieved in May 2021, when it reached almost $700 per coin.
- Cardano (ADA): Cardano is a blockchain platform created in 2015 by Charles Hoskinson, one of the Ethereum co-founders. Cardano is known for its focus on scalability, security, and sustainability. Cardano’s historical price high was achieved in September 2021, when it reached almost $3 per coin.
- Dogecoin (DOGE): Dogecoin was created in 2013 as a joke cryptocurrency, featuring the likeness of the Shiba Inu dog.. Despite its origins as a joke, Dogecoin has since gained a significant following. Dogecoin’s historical price high was achieved in May 2021, when it reached almost $0.70 per coin.
The highest values listed above were all achieved during market bull runs, and should not be considered guaranteed or indicative of future performance. It’s important to do your own research and exercise caution when investing in cryptocurrencies.
Will cryptocurrencies ever become mainstream?
Cryptocurrencies are already gaining mainstream adoption, but to extent will become even more mainstream?
One real-life example of mainstream adoption is the use of Bitcoin as a payment method by major companies such as Tesla, PayPal, and Microsoft. Another example is the acceptance of cryptocurrencies as a form of payment by merchants and businesses around the world.
However, cryptocurrencies still face significant barriers to mainstream adoption. One of the main barriers is their volatility, which makes them difficult to use as a stable medium of exchange. Another barrier is the lack of regulatory clarity and acceptance. This makes it difficult for businesses to integrate cryptocurrencies into their operations.
To help understand this concept, we can use a metaphor of a brand new highway connecting one end of the country to another. Cryptocurrencies are the new road, offering the public an alternative way to travel to their destination. However, because construction isn’t yet complete, people still need to travel by air or by train. For the crypto highway to be used by everybody, construction needs completing so that it is accessible to a wider range of users.
Individual currencies and all stakeholders need to address some of these challenges if cryptocurrency is to become more widely accepted as a form of payment. This may require further developments in technology, regulations, and infrastructure. It also means increased education and awareness among consumers and businesses.
Should you invest in cryptocurrency?
It’s impossible to talk about crypto without talking about the rollercoaster price ride crypto has been on. To the public at large, investing in cryptocurrency has looked like the quick and easy way to immense riches. This sometimes looks like the case with the benefit of hindsight, but the truth about cryptocurrency investment is of course more nuanced. Whether or not to invest in cryptocurrencies is a complex decision that depends on individual circumstances and risk tolerance.
Since “Satoshi Nakamoto” released the whitepaper in 2008 outlining a new digital currency called Bitcoin, this whole new asset class called cryptocurrency has appeared and is now worth – as of March 2023 – $1.16 trillion.
2008 was the year of the great recession that was triggered, ultimately, by a toxic house market bubble that went ‘pop’. With the global banking industry appearing to fail, perhaps the world was very open to a new way of conducting business. It’s sobering to think that in the time since that happened, this entirely new industry – cryptocurrency – has sprung up and shifted the global economy in new and unexpected ways.
Indeed if it wasn’t for the 2008 financial crisis, it might be that cryptocurrency wouldn’t have taken off at all. At first, Bitcoin was largely unknown and dismissed by many as a fringe concept. But over time, more and more people began to take notice of this new form of money. Bitcoin began to gain traction among tech enthusiasts, libertarians, and other early adopters. They all saw its potential as an alternative to traditional financial systems that tend to go ‘pop’ every now and then.
As more people began to invest in Bitcoin, its value skyrocketed. By 2013, Bitcoin’s price had risen from just a few cents to over $1,000. Other cryptocurrencies, such as Litecoin and Ripple, also began to emerge and gain traction.
But this rapid growth was not without its setbacks. In 2014, a major exchange called Mt. Gox was hacked, leading to the loss of hundreds of millions of dollars worth of Bitcoin. This led to a sharp drop in Bitcoin’s price, as well as increased scrutiny and regulation of the cryptocurrency industry.
Despite these setbacks, the cryptocurrency market continued to grow and evolve. New cryptocurrencies emerged, each with its own unique features and potential use cases. Ethereum, for example, introduced the concept of smart contracts, which would allow for a wide range of decentralized applications to be built on top of the blockchain.
In 2017, the cryptocurrency market experienced another major surge in value. Bitcoin’s price reached an all-time high of nearly $20,000, and many other cryptocurrencies also saw significant gains. However, this growth was once again followed by a steep decline, with Bitcoin’s price dropping by more than 80% in the following year, closing 2018 (December 31st) at $3,740.
Despite these ups and downs, the cryptocurrency market continues to evolve and mature. Major companies and financial institutions are starting to take notice of cryptocurrencies, and many are exploring ways to integrate them into their operations. While the future of cryptocurrencies remains uncertain, it is clear that they have already had a significant impact on the world of finance and technology.
Cryptocurrency: for and against investing
As for investing in cryptocurrency, here are some arguments for and against getting involved.
The argument for investing in cryptocurrencies:
- Cryptocurrencies have the potential to offer high returns on investment. For example, Bitcoin’s price rose from less than $1 in 2010 to almost $70,000 in November 2021. That said, let’s not forget that Bitcoin has plunged back down in value since that 2021 peak.
- Cryptocurrencies provide an alternative asset class that is not tied to traditional financial systems or institutions. This can offer diversification benefits for an investment portfolio.
- Some people see cryptocurrencies as a store of value, similar to gold or other precious metals. They believe cryptocurrencies offer a hedge against inflation and protect against devaluation of fiat currencies.
- The technology underlying cryptocurrencies, such as blockchain, has potential for many other applications beyond just cryptocurrency. This technology could disrupt many industries, creating new opportunities for growth and investment.
The argument against investing in cryptocurrencies:
- Cryptocurrencies are highly volatile and risky. Prices have fluctuated dramatically in short periods of time, making them risky for conservative investors.
- Cryptocurrencies are not widely accepted as a form of payment. Nor are they yet integrated into mainstream financial systems. This makes them less liquid and more difficult to use than traditional investments.
- Cryptocurrencies are not backed by any government or central authority, which can make them susceptible to fraud, hacking, and other forms of criminal activity.
- Lack of regulation and oversight in the cryptocurrency market makes it difficult to assess the value and risks of different cryptocurrencies.
It’s important to consider risks vs reward when comparing the investment potential of cryptocurrencies . Traditional investments such as stocks and bonds are generally considered to be less risky than cryptocurrencies, but may offer lower potential returns. Real estate and commodities such as gold can offer some of the same benefits as cryptocurrencies, but also come with their own unique risks and challenges.
Ultimately, the decision to invest in cryptocurrencies should be based on several factors. These include individual circumstances, risk tolerance, and investment goals. While cryptocurrencies can offer high potential returns, they also come with significant risks. You should consider all factors before taking the leap into investing.
One thing for sure is that cryptocurrencies are here to stay, whatever your thoughts on trading them are.
Supply chain management
We’ve spoken about cryptocurrency, but what other applications are there for Blockchain technology? An obvious use case is supply chain management.
Blockchain technology has the potential to revolutionize supply chain management. Potentially it could increase transparency, efficiency, and security. By using a decentralized and immutable ledger to track goods as they move through the supply chain, businesses can reduce the risk of fraud, improve traceability, and streamline logistics.
First of all, what is a supply chain?
A supply chain is everything involved in getting a product to the customer. The traditional supply chain starts with gathering the raw materials needed to create the product, moves on to the manufacturing process, and then involves getting the product to the customer through transportation, warehousing, and distribution.
For example, let’s say you want to buy a new phone. The supply chain starts with the mining of raw materials, such as minerals and metals, needed to create the phone. Then, the manufacturing process involves assembling the phone from these raw materials, testing it, and packaging it for shipment. The phone is then transported to a warehouse, where it is stored until it is shipped to a retailer, who then sells it to the customer.
Effective supply chain management is important to make sure the product is delivered to the customer on time, in good condition, and at a reasonable cost. Good supply chain management identifies opportunities for increased efficiency, at all stages of the process.
How can blockchain help supply chain management?
Let’s use our imagination again for a moment.
Imagine you’re buying a piece of fruit at the grocery store. You want to know where the fruit came from, how it was grown, and how it was transported to the store. But it can be hard to get this information. Maybe the label just says “Product of USA” and you don’t know anything else.
Now imagine that each step of the fruit’s journey is recorded. This from the farm, to the warehouse, to the truck, to the store, then to the customer. In the olden days, this might have been done using pen and paper, or it might even have been done on a spreadsheet that is vulnerable to accidental deletion of corruption.
Nowadays, the information from each step of that piece of fruit’s journey can be stored on a digital ledger, or a “chain” of blocks. Each piece of this blockchain contains information. Where was the fruit and who handled it? At what times was the fruit moved? This chain of blocks is unchangeable, and so it becomes a permanent record of the piece of fruit’s journey from grower to seller.
This is how blockchain can help supply chain management. By using blockchain technology to track products, businesses create a transparent and trustworthy record of each step in the supply chain.
This increases transparency for everybody involved in the process. The supplier, the seller, and ultimately the customer. It helps reduce fraud and errors, as well as help businesses identify and address problems quicker. This in turn improves supply chain efficiencies.
Let’s take another example. Imagine a company that makes clothing. They could use blockchain to track each piece of fabric from the mill to the factory to the store. If there is a problem with the fabric – such as poor quality or, even worse, it was made in a factory with poor working conditions – the company could use the blockchain to identify the problem and take action to address it.
Which businesses are using blockchain to improve supply chain management?
The supply chain management revolution has already started! Here are some businesses around the world integrating blockchain into their supply chain processes.
- Walmart: Walmart has implemented a blockchain system to track the supply chain of its food products. This allows the company to trace the origin of any product in the event of a foodborne illness outbreak, for example. This system has reduced the time it takes to trace the source of contaminated products from weeks to just a few seconds, potentially saving lives and reducing costs for the company.
- Maersk: The shipping company Maersk has created a blockchain-based platform called TradeLens to improve the efficiency of the global shipping industry. The platform allows shipping companies, ports, and customs officials to securely share data about the movement of goods, reducing the need for paperwork and streamlining logistics.
- De Beers: The diamond mining company De Beers is using blockchain technology, tracking diamonds from the mine to the retailer. By recording information about each diamond on a blockchain, De Beers ensures that diamonds are conflict-free and have not been tampered with.
- Nestle: Nestle uses blockchain technology to track the origin of coffee beans. By scanning a QR code on the packaging, customers can see information about where the coffee was grown, when it was harvested, and how it was processed.
- Provenance: Provenance is a UK software company that helps businesses track the origin of products using blockchain technology. The company works with a range of businesses, from fashion brands to fishing companies, creating transparent supply chains that increase trust and traceability.
- Carrefour: The French supermarket chain Carrefour uses blockchain technology to track the supply chain of meat products. By scanning a QR code on the packaging, customers see information about where the meat was raised, when it was processed, and how it was transported.
- BHP: The mining company BHP uses blockchain technology to track the origin of minerals used in its products. This helps BHP ensure that minerals are sourced responsibly and have not been used to fund conflict.
These examples show how blockchain is helping a diverse range of industries and businesses improve their supply chain processes. Clearly, blockchain has the potential to transform the way goods are produced, transported, and consumed.
Blockchain is the digital highway that allows goods to travel securely and transparently through the supply chain. Each block in the chain represents a checkpoint where information is recorded. This allows businesses to track the movement of goods and identify any issues or delays in real-time.
Why isn’t blockchain more popular in the supply chain?
This is a very good question! For a moment, forget about blockchain and think about new technologies in very general terms. There are some patterns that get repeated time and time again…
- Fear of the unknown: New technologies are often intimidating. This is especially true if they involve significant changes to existing systems or processes. For example, Kodak was slow to embrace digital photography because it was unfamiliar with the technology and how it would impact its film-based business model. This resulted in Kodak losing their market-leading position. Kodak went bankrupt in 2012.
- Cost: Adopting new technologies is frequently expensive, especially if significant infrastructure changes are required. For example, cost and time issues discouraged some companies from initially adopting cloud computing technology. Sears, for example, consequently struggled financially due in part to its failure to invest in e-commerce and online operations, ultimately costing the company more in the long run.
- Resistance to change: Change is scary! Some employees may resist new technologies if they perceive them as threatening to their job security. For example, when ATMs were first introduced, some bank tellers were concerned that they would be replaced by machines. This fear is sometimes manifested in negative actions. We can go all the way back to the Industrial Revolution when the ‘Luddites’ smashed modern machinery in the mills of England. Overcoming this very human instinct for self-preservation is for sure a challenge blockchain needs to address.
- Legacy systems: Some companies may have invested heavily in existing technologies and may be reluctant to abandon them for newer, untested solutions. For example, some government agencies still rely on mainframe computers that are several decades old.
- Lack of expertise: Companies may not have the technical expertise in-house to effectively evaluate and implement new technologies. For example, some small businesses may not have the resources to hire dedicated IT staff or consultants to help them assess new technologies.
There are plenty that have died from not adopting new technology. The Blockbuster video rental chain was slow to embrace streaming video and ultimately went out of business in 2013. Conversely, Netflix flipped its video rental business on its head and is now one of the world’s largest TV and movie streaming platforms.
On the other hand, companies that have been quick to adopt new technologies have often enjoyed a competitive advantage and increased profitability. For example, Amazon has been a leader in adopting new technologies. Their adoption of such as cloud computing and artificial intelligence have helped it to dominate the e-commerce market.
Most specifically when it comes to blockchain, there are some challenges that this particular technology faces. These include:
- Lack of awareness: Some businesses may not be aware of the benefits that blockchain technology can bring to their supply chain management. They may not fully understand how the blockchain works, or how it can be integrated.
- Technical complexity: Blockchain technology can be complex to implement. It also requires specialized knowledge and expertise. Many businesses may not have the necessary resources or technical expertise to integrate blockchain technology into their supply chain management.
- Cost: Implementing blockchain technology can be expensive, especially for small and medium-sized businesses. This cost may include the development of customized blockchain solutions, hiring specialized staff, and ongoing maintenance and support.
- Standards and interoperability: There is currently no standardization or interoperability between different blockchain platforms. This makes it difficult for businesses to integrate blockchain technology into their supply chain management systems.
- Regulatory challenges: The regulatory environment around blockchain technology is still developing. As such, there may be legal and regulatory challenges that businesses need to navigate before implementing blockchain technology in their supply chain management.
Blockchain technology is not a silver bullet for supply chain management, of course. But it does have the potential to significantly improve efficiency and security.
“Identity management” is, well, as obvious as it sounds: the management of a user identity. It is just as you would expect it to be. That said, we should probably try and fully understand just exactly what “identity management” means.
What does identity management specifically refer to?
Identity management refers to the processes and technologies used to manage and protect digital identities. This includes managing user access to systems and data, verifying user identities, and ensuring the privacy and security of personal information.
Identity management is a particular concern in industries where personal information is highly sensitive. Such industries include finance, healthcare, and government. In these industries, protecting personal information is critical for maintaining customer trust and compliance with regulations such as HIPAA and GDPR.
- Healthcare: In the healthcare industry, identity management is crucial for ensuring that patient data is kept private and secure. Healthcare providers must comply with regulations such as HIPAA, which require them to protect patient information and ensure that only authorized individuals have access to it.
- Finance: In the finance industry, identity management is important for preventing fraud and ensuring that only authorized individuals have access to financial systems and data. Financial institutions must comply with regulations such as KYC (know your customer) and AML (anti-money laundering) laws, which require them to verify the identity of their customers and monitor their transactions for suspicious activity.
- Government: Government agencies must comply with regulations such as GDPR and FOIA (Freedom of Information Act), which require them to protect citizens’ personal data and provide access to it upon request.
There are a number of traditional methods of digital identity management that you will be familiar with. Take the use of username and password combinations to access online accounts. When you create an account on a website, you are typically asked to provide a username and password.
In this scenario, the username serves as my digital identity, while the password acts as a security measure to protect my personal information. When I enter my login credentials, the website verifies my identity and grants me access to my account.
Websites and data systems often go a step further now and use “2FA” – Two-Factor Authentication – to add an extra layer of security into the process.
However, this traditional approach to digital identity management has several limitations. For example, if your username and password are compromised in a data breach or hack, your personal information is at risk. Additionally, if you use the same username and password combination across multiple websites, a breach on one website could lead to a domino effect of breaches on other websites.
As a result, there is a growing need for more secure and effective digital identity management solutions. These include multi-factor authentication, biometric authentication, and, most crucially, blockchain-based identity management systems.
How can blockchain help improve identity management processes?
We’ve already seen in some detail how blockchain creates secure environments for data storage. Using that secure environment for identity management feels like an obvious extension. Here are some potential ways in which blockchain can help:
- Self-sovereign identity: Blockchain can be used to create a self-sovereign identity system that gives individuals control over their personal data. With a self-sovereign identity system, individuals store personal data on a blockchain and control who has access to it. This eliminates the need for centralized identity systems that are vulnerable to data breaches and hacks.
- Decentralized identity verification: Blockchain can create a decentralized system for verifying identities. This eliminates the need for third-party verification services and reduces the risk of identity theft. For example, a blockchain-based system could confirm the age of customers for online purchases of age-restricted products.
- Secure data sharing: Blockchain can securely share personal information between parties. With a blockchain-based system, individuals can grant access to their personal data to third parties for specific purposes. This ensures personal data is used only for authorized purposes, reducing the risk of data breaches.
- Fraud prevention: Blockchain prevents fraud by creating a tamper-proof record of identity transactions. This makes it difficult for criminals to create fake identities or steal personal information. For example, blockchain prevents identity fraud in financial services by creating secure systems for verifying customer identities.
Anybody who’s ever bought a property knows there is a lot of paperwork involved. There is back and forth between buyer, seller, the respective legal teams. If a mortgage is needed, the bank is heavily involved too. Stakeholders share their documents at each step of the way, sometimes requiring physical signatures or – the more modern method – digital signatures communicated by email or using a service that enables digital signatures.
The types of paperwork involved in a traditional property purchase include the purchase agreement, property disclosure statements, and inspection reports. And then there are the engagement papers required by legal teams.
It can get pretty messy.
Advocates of blockchain believe the real estate industry is primed for benefiting from the technology.
How can blockchain help the real estate industry be more efficient?
Blockchain helps the real estate industry speed up the property sale transaction process by simplifying and automating the steps detailed above.
For example, blockchain-based smart contracts can be used to automate the property sale transaction process. This can include the transfer of ownership, the payment of fees and taxes, and the release of funds from escrow. This helps reduce the time and costs associated with traditional paper-based transactions, which is time-consuming and also vulnerable to errors.
Another obvious application of blockchain in the real estate industry is the ability to create a secure and tamper-proof record of property ownership. This helps reduce the risk of fraud and any disputes related to property ownership.
Here is a summary of efficiencies available if the real estate industry embrace blockchain to its fullest:
- Smart contracts: Blockchain can potentially automate real estate transactions using smart contracts. Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. This eliminates the need for intermediaries such as real estate agents and lawyers, reducing transaction time and costs.
- Title management: Blockchain can be used to create a secure and tamper-proof record of property titles. This would eliminate the need for manual title searches, reducing the risk of fraud or errors. Blockchain is also a more quicker, more efficient way to transfer property titles between parties.
- Property management: Managing property information and processes such as rent payments, lease agreements, and maintenance requests. This would reduce paperwork, increase transparency, and improve the efficiency of property management.
- Tokenization: Blockchain can be used to tokenize real estate assets, allowing for fractional ownership and investment. This would open up the real estate market to a wider range of investors and increase liquidity in the market.
Are any real estate businesses using blockchain right now?
Yes, there are. Here are some US-based real estate companies using blockchain to offer a more efficient service to customers:
- RE/MAX – In 2018, RE/MAX partnered with a blockchain startup called Propy to enable their agents to complete real estate transactions entirely online using smart contracts. The partnership aimed to improve the speed, security, and transparency of RE/MAX’s real estate transactions.
- Keller Williams – Keller Williams, another major real estate franchisor, is another company which partnered with Propy. The partnership includes the use of Propy’s platform to facilitate property sales and purchases using blockchain technology.
- Coldwell Banker – In 2019, Coldwell Banker partnered with a blockchain-based platform called Qualia to streamline its real estate transactions. The partnership aims to simplify the closing process and improve the efficiency of real estate transactions.
These big real estate selling businesses are recognizing the potential of blockchain technology to transform their industry and are actively exploring ways to use it to their advantage.
That said, there aren’t many other examples from the real estate space that we can pick out and include in this list. It does suggest the opportunities for blockchain in real estate are very big.
When will blockchain to become standard in the real estate industry?
It seems clear that blockchain technology has the potential to transform the real estate industry. However, there are several challenges that need to be addressed.
- Regulatory Frameworks: One of the biggest challenges facing the adoption of blockchain in the real estate industry is the lack of regulatory frameworks governing its use. Blockchain technology operates outside of traditional legal frameworks. There is a clear stakeholder need for new legislation and regulations to govern its use in the real estate industry. Without clear guidelines, real estate professionals may be hesitant to adopt blockchain technology.
- Interoperability: Another challenge facing the adoption of blockchain in the real estate industry is the issue of interoperability. There are many different blockchain platforms and protocols, and they may not be compatible with each other. This means that data and transactions stored on one blockchain may not be accessible or usable on another. Interoperability is essential for the widespread adoption of blockchain technology in the real estate industry.
- Integration with Existing Systems: Most real estate transactions involve multiple parties, such as buyers, sellers, agents, and title companies. For blockchain technology to be widely adopted in the real estate industry, it needs to be seamlessly integrated with existing systems and processes. This will require significant investment and collaboration between blockchain developers and real estate professionals.
- Data Standardization: Real estate data is complex and diverse, and there is a need for standardized data structures to facilitate the use of blockchain technology in the industry. Without standardization, it may be difficult to create blockchain-based systems that can effectively manage and exchange real estate data.
- Education and Awareness: Finally, there is a need for education and awareness about the opportunities blockchain technology represents. Many real estate professionals are not familiar with blockchain and may be hesitant to adopt it without a clear understanding of its benefits and risks. Education and awareness programs can help to address this issue.
Blockchain technology has the potential to transform the healthcare industry, much like a revolutionary new drug that cures previously untreatable diseases. Just as a new drug requires rigorous testing and regulatory approval before it can be widely adopted, the use of blockchain in healthcare also faces challenges that need to be addressed.
Blockchain technology can potentially help protect the healthcare industry against cyberattacks and data breaches. By using advanced cryptographic algorithms and decentralized storage, blockchain provides a secure and tamper-proof way of storing medical data. This makes it an ideal solution for healthcare organizations looking to enhance their cybersecurity.
Moreover, blockchain technology helps address some of the biggest challenges facing the healthcare industry today, such as data security and interoperability. By using blockchain to store and share medical data, healthcare providers can ensure that patient information is secure and private, while also making it easily accessible to other providers when needed.
How can blockchain help the healthcare industry be more efficient?
Here are some of the ways blockchain can help in healthcare:
- Streamlining Data Sharing: One of the biggest challenges in the healthcare industry is the fragmentation of patient data across multiple providers and systems. Blockchain technology could streamline data sharing by providing a secure and transparent way of storing medical data. This reduces the time and cost associated with retrieving and transferring medical records, while also improving patient outcomes. Quick and easy access to medial histories could save lives.
- Reducing Administrative Burdens: Blockchain technology could also help reduce administrative burdens. For example, blockchain-based smart contracts can be used to automate the process of verifying insurance coverage and processing claims, reducing the need for intermediaries and speeding up the reimbursement process.
- Enhancing Supply Chain Management: In the pharmaceutical industry, blockchain can provide a transparent and secure way of tracking drugs from manufacturer to patient. By using blockchain to track the movement of drugs, healthcare providers ensure that medications are authentic and have not been tampered with. This reduces the risk of counterfeit drugs and ensuring patient safety.
- Improving Clinical Trials: Blockchain can improve the efficiency of clinical trials by providing a secure and transparent way of storing and sharing trial data. By using blockchain to store and share trial data, researchers can ensure that the data is accurate and tamper-proof, while also making it easier to share with other researchers and regulators.
- Enhancing Cybersecurity: Finally, blockchain technology can help enhance cybersecurity. Through using advanced cryptographic algorithms and decentralized storage, blockchain protects against cyberattacks and data breaches, reducing the risk of sensitive medical data falling into the wrong hands.
How has the healthcare industry been using blockchain?
While the use of blockchain in healthcare is still in its early stages, there are already some real-world examples to look at:
- MedicalChain: MedicalChain is a blockchain-based platform that aims to provide secure and accessible electronic health records (EHRs) to patients and healthcare providers. The platform allows patients to manage their medical data and share it with healthcare providers in a secure and transparent way. MedicalChain has partnerships with a number of healthcare providers and is currently being used in clinics and hospitals in the UK.
- SimplyVital Health: SimplyVital Health is a blockchain-based platform aiming to improve care coordination and reduce healthcare costs. The platform uses blockchain to securely store and share medical data among healthcare providers. SimplyVital Health is currently being used in a number of pilot programs in the US.
- Gem: Gem is a blockchain-based platform that aims to improve the efficiency of clinical trials by providing a secure and transparent way of storing and sharing trial data. The platform allows researchers to securely store and share trial data, while also ensuring that the data is accurate and tamper-proof. Gem has partnerships with a number of pharmaceutical companies and research organizations.
- MedRec: MedRec is a blockchain-based platform that provides a secure and transparent way of storing and sharing medical data. The platform uses blockchain to store medical data in a tamper-proof and encrypted format, while also allowing patients to control access to their medical data. MedRec is currently being used in a pilot program at the Beth Israel Deaconess Medical Center in Boston.
- Philips Blockchain Lab: Philips Blockchain Lab is a research and development unit within the Dutch technology company Philips. The lab is currently working on a number of blockchain-based projects, including a platform for securely storing and sharing medical data and a blockchain-based supply chain management system for the pharmaceutical industry.
The Future of Blockchain
Emerging trends and innovations
The blockchain space is constantly evolving, with new trends and innovations emerging all the time. Here are some of the key trends and innovations that we are seeing in the blockchain space:
- Decentralized Finance (DeFi): Decentralized Finance, or DeFi, is a growing trend in the blockchain space. DeFi platforms aim to disrupt traditional financial systems by using blockchain technology to provide decentralized financial services. DeFi platforms allow users to access a wide range of financial services, including lending, borrowing, and trading, without the need for intermediaries like banks or brokerages.
- Non-Fungible Tokens (NFTs): Non-Fungible Tokens, or NFTs, are digital assets which cannot be exchanged for other tokens on a one-to-one basis. NFTs are used to represent a wide range of digital assets, including art, music, and collectibles, and have been sold for millions of dollars in online marketplaces.
- Interoperability: Interoperability refers to the ability of different blockchain networks to communicate and interact with each other. As more blockchain networks are developed, there is a growing need for interoperability. Blockchain systems need to ‘talk’ to each other to enable data and assets to be transferred between different networks.
- Privacy Enhancements: Privacy is a key concern in the blockchain space. Technologies aiming to enhance privacy on the blockchain include zero-knowledge proofs, which allow for transactions to be verified without revealing any sensitive information, and secure multi-party computation, which allows for data to be processed without being revealed to any single party.
- Sustainability: The energy consumption required for blockchain networks, particularly proof-of-work networks like Bitcoin, has been a source of criticism. As such, there is a growing trend towards more sustainable blockchain networks. This includes proof-of-stake networks which require less energy, as well as the use of renewable energy sources to power blockchain mining.
- Central Bank Digital Currencies (CBDCs): Central Bank Digital Currencies, or CBDCs, are digital versions of fiat currencies issued and regulated by central banks. CBDCs are being developed by a number of central banks around the world. These have the potential to provide more efficient and secure payment systems. More importantly, CBDCs have the potential to take crypto genuinely mainstream.
As blockchain technology continues to evolve, we can expect to see new applications and use cases emerge. Who knows how they might transform a whole range of industries and sectors? Time will tell what exciting blockchain innovations and use cases will emerge in the short to mid-term.
Potential blockchain innovation impact on industries
We all know it isn’t easy predicting the future, but we can make some reasonable assumptions about the potential impact blockchain could have on global industries. We’ve already mentioned a few above (including finance, supply chain, real estate and healthcare), but what other industries might be at the forefront of blockchain innovation? Here are some predictions:
- Gaming: Non-fungible tokens (NFTs) could revolutionize the gaming industry by allowing players to own unique digital assets, like in-game items or collectibles. This could create new revenue streams for game developers and provide players with more autonomy and ownership over their gaming experiences.
- Energy: Blockchain-based energy trading platforms could enable peer-to-peer energy trading, allowing individuals and businesses to buy and sell excess energy from solar panels or other renewable sources. This could create a more sustainable energy system by reducing reliance on centralized energy providers and promoting the use of renewable energy sources.
- Education: Blockchain-based credentialing systems could provide more secure and tamper-proof verification of educational degrees and certifications, reducing the risk of fraudulent credentials and making it easier for employers to verify job candidates’ qualifications.
- Government: Blockchain-based voting systems could improve the integrity and transparency of elections by providing a secure and tamper-proof way to record and verify votes. This could reduce the risk of voter fraud and increase public trust in the democratic process.
- Insurance: Blockchain-based insurance platforms could enable faster and more accurate claims processing by automating the claims verification process and reducing the need for manual intervention. This could also reduce the risk of fraud and provide customers with a more seamless and transparent claims experience.
- Music and Entertainment: Blockchain-based royalty tracking systems could enable more transparent and efficient distribution of royalties to musicians and artists, reducing the risk of unpaid royalties and ensuring that creators are fairly compensated for their work.
- Nonprofit Organizations: Blockchain-based donation tracking systems could increase transparency and accountability in charitable giving by allowing donors to track how their donations are being used and ensuring that funds are being directed to their intended recipients.