What is Blockchain? What can Blockchain Do?

what is blockchain technology

What is Blockchain Technology?

A blockchain, in simple terms, is a protocol for a list of growing records that are linked together using cryptography. These records are bound together to form ‘blocks’, which link up into a string of encrypted data. A blockchain can be millions of blocks long, and they are distributed across the network in a decentralised fashion.

This results in an ultra-solid grid of information, providing the user with a level of trust and permanence that has never been achieved by other data structures before. The blockchain is a foundational technology that promises to bring significant efficiencies to global supply chains, financial transactions, asset ledgers, decentralized social networking and much more. But how is this different from what we already have?

blockchain infograph

The first blockchain created was for the digital currency Bitcoin, and from this virtual currency, we effectively solved the double spending problem without the need for a trusted authority or central server. These transactions are not authenticated by a bank or government, but by mass collaboration powered by collective self-interests.

Essentially, blockchain is an open, decentralized ledger that records its transactions in a permanent way without needing third-party authentication. This process removes the need for intermediaries such as banks or central servers, placing an unprecedented amount of efficiency in the hands of the user. The powerhouse of these blockchains are called miners, and you can learn more about what these are here.

For this reason, blockchain technology can dramatically reduce the cost of peer-to-peer transactions, as well as massively speed them up. But apart from payments, how else will the blockchain change the way we do money?

bitcoins blockchain

How Will Blockchain Change Money?

The way we send money has not changed in decades, and these outdated methods are starting to bite us hard in the butt. When you send your money, it is likely it will go through about five different intermediaries to process and authenticate your transaction. This turtle race can take between four days to two weeks if you’re trying to transfer money across international borders.

With blockchain technology now in our hands, we can send large payments within seconds, anywhere in the world, with extremely low fees and zero intermediaries putting their hands in our pockets. Blockchain has the utility to completely reform the infrastructure for cross-border payments, but this revolution is still in its infancy.

crypto coins

The worlds current largest payment system when it comes to volume is the SWIFT system, a Belgium based organization who processes around 5 trillion dollars per day, or over 1.25 quadrillion dollars per year. These are mighty numbers in comparison to bitcoin, who has only moved 3.5 billion dollars in metric volume within the last 24hrs on the day this article was written.

To add to this, central governments can print and destroy money as they like, however, cryptocurrencies have a pre-set supply, such as Bitcoin’s 21 million. Some people like to pass this technology off as a fad, or a scheme of getting rich quick, but the reality of it is that these coins are the closest thing we have to a universal currency, and they are not going away any time soon.

Will Ripple Kill Swift?
There are several cryptocurrencies that are direct threats to SWIFT’s monopoly on global payments infrastructure, including Ripple’s XRP and Stellar Lumens XLM. Click on the image to learn more.

Currently, in the world, there are a whopping 1.7 billion adults who still don’t have access to a bank account. This means they are either already dealing in total mobile payments, they only have government-issued fiat, or they have no medium of exchange at all. This strikes up multiple issues such as security, convenience, government-induced volatility and control over who owns your money.

Now with the number of cellphones accessible to the masses shooting through the roof, electricity accessibility and costs better then it ever has been, and internet access expanding every day, providing accounts and economic independence to this gigantic invisible population is now on the cards. Think of the benefits to these people and the world economy!

adults without access to a bank account statistics
In India, the number of people without access to banking stands at 191 million while in Pakistan, it’s 99 million. By comparison, the total number of people with no account in the U.S. stands at a still pretty sizeable 18 million.

Cryptocurrency like bitcoin has also done something that we have never been able to do before; add real, add value to the bits and bytes in a computer. Before bitcoin, ‘digital’ was not synonymous with scarcity. Anything digital could be copied with the click of a button. A quick look at the music industry and album sales tells this story convincingly.

Now that we can genuinely distribute information between computers, we have created a whole new genre of digital assets; Cryptocurrency, who is nowhere at all paramount in metric value to any of the other major asset classes, yet. Clearly, from the infographics from the last hyperlink, you can see that the blockchains metric value has plenty of space to grow. Good thing there is only a finite supply of cryptos! 😉

Asset bubbles

Another under-rated application of the blockchain to the worlds financial theatre is how accurate these transaction records are, and what this can do for book-keeping and accounting.  Because the blockchain is a fully contained record keeping system in itself, the ability to automate this data is expected to make a profound impact on the quality and ease of the modern accounting system. This is just the tip of the iceberg for blockchains application, so what else can we do with the blockchain?

Blockchain Applications

How will Blockchain Impact Supply Chain?

Over 100 years ago, supply chains were relatively simple. This is because commerce was local, but jumping to 2018, supply chains have grown to be incredibly complex. Supply chains can have over hundreds of stages, multiple hundred geographical locations, and a multitude of payment systems and several entities and individuals involved.

This has made it incredibly difficult for customers or buyers to truly know the value of products due to a significant lack of transparency. It is also extremely difficult to investigate these complex systems for suspicion of illegal or unethical practices, but this will not be the same for long.

Supply chain image

Blockchain infrastructure has the ability to bring all transactions and operations into one transparent system, where products like bacon can be tracked from the shelf at your supermarket all the way back to the location that the pig was born. This technology is expected to make a significant impact on all logistics systems all over the world to improve efficiency, speed, transparency, and control.

supply chain blockchain ship

Blockchain technology in combination with supply chain will profoundly increase the standard for ethical business practices worldwide. For-profit and non-profit organizations would be expected to operate with total ethicality, as all supply chain information could become public, including who they employ, who they are paying and where their products are going and coming from.

Waste emissions would become a matter of public knowledge, companies would not be able to make dirty deals with other countries without civil unrest, political parties would not be able to take dirty donations and charities would have to fulfill the expectation that their money is going to right where they say it is.

blockchain and supply chain info graph

What Is a Blockchain Smart-Contract?

A Smart-Contract is a computer protocol intended to digitally facilitate, verify and enforce the negotiation or performance of a contract. Smart-Contracts allow the performance of credible transactions without the need for third parties, such as banks, financial institutions, or governments. These algorithm based contracts are traceable, transparent and irreversible, essentially placing a supercomputer like Ethereum’s in the position of authority.  While a standard contract outlines the terms of a relationship (usually one enforceable by law), a smart contract enforces a relationship with cryptographic code.Traditional Contract

Smart-Contracts are essentially like standard contracts, however, a Smart contract network and programming infrastructure like Ethereum‘s is optimized to carry these rules out automatically to mechanically execute when certain conditions are met. The utility for these cyber-agreements is growing larger daily, with a number of tech firms working on optimising the functionality of these contracts for the application of mortgages, transactions, copyrighted content, employment contracts and much more.

Ethereum is the largest and most-established blockchain built for Smart-Contracts out of the hundreds of organisations with the shared goal of revolutionising contracts with blockchain, but It is generally agreed that Smart-Contracts are expected to make a profound impact on the way we currently commit to and execute contracts as a whole.Smart Contract info graphic

What can Smart-Contracts do?

Ethereum, in this case, is just the technological infrastructure, much like what Windows is to your PC. Anyone can create their own Smart-Contracts or token built on Ethereum, just like anyone can create their own computer program or application. It is hard to imagine a world without lawyers, judges and real estate agents, but with Smart-Contracts on the table, the supercomputer can facilitate all these transactions without the need for third parties, eliminating extra cost and the risk of human mistake.

The possibilities of ‘Smart-Contracts’ are endless, but with the integration of blockchain backed digital identity, these endless possibilities rise to a whole new level of endless. Smart-Contracts in combination with digital identity provide a new level of reality for self-managed autonomy, where Smart-Contracts can be used to transfer and distribute ownership of assets, value, intellectual property, wills, land deeds, equity, and much more. Basically, anything that can be transferred via contract through human interaction can be replicated through Smart-Contracts. – What a time to be alive.

Ethereum logo in front of Cables

What is Blockchain Digital Identity?

Digital identity is a critical component of service delivery, but relying on physical identity in this digital age has become not only inefficient but more importantly unsafe. Physical identity has become a breeding ground for identity theft, fraud, and hacking, and the blockchain can provide a better way to let a system know that you are really you.

You probably have about a billion different usernames and passwords for about a billion different accounts on websites or services, and this can be extremely inefficient, unsafe and downright annoying. You also don’t own your identity on these services, and revoking permission to hold your information from these organizations can be a massive pain. Blockchain backed digital identity can not only provide you with full control over who has your information, but also manage ownership rights to various forms of assets that are currently scattered around various organizations in your name.

Digital Lock with flashy lights Digital Identity

Digital Identity is like a digital watermark that can solve this data ownership problem, but identity ownership is just the beginning. As we progress further into the digital ID realm, we will have the ability to link up ownership of other assets to our digital identity, such as the ownership of our cars and the rights to our houses. Consequently, this will also mean we can track the history of the vehicles or real estate down the day they were built, the year they were serviced and the inherent value of these assets. Blockchain backed digital ID can also be linked to other forms ownership such as intellectual property, debt, equity, voting, communications, and of course, money. To learn more about Digital ID, click here.

If you are looking to get in early and invest in this revolutionary technology, head straight to our Bitcoin page!