Blockchain is the revolution in data storage and re-defines the way users store data in the Digital Era. The cliché association with Blockchain would definitely be Bitcoin. However, there’s more to it than meets the eye, Bitcoin is only the tip of the iceberg. Initially Blockchain was bleeding edge technology and quickly becomes widely adopted after resolving some problems during beta testing. Consequently, it becomes a leading edge technology that enjoys exponential growth.
What is Blockchain?
A blockchain, conceptualized by a developer (or a group of developers) called Satoshi Nakamoto, is a data structure used to create a decentralized ledger. Each block in a blockchain functions as a record, containing a set of transactions, a hash of the previous block, timestamp (indicating when the block was created), block reward, block number, and so on. A blockchain is composed of and is strong connection among these serialized blocks, in which every block contains a copy of hash from the previous block to form a “chain”. By this mechanism, the “chain reaction” prevents data of one block from beingmodified or edited separately; but to replace the whole chain. Therefore, for information to be edited or modified to the blockchain, it requires all nodes’ approval (every node1 in the network holds a copy of the blockchain), which is technically called “consensus protocol”.
On the other hand, the hash code matching mechanismalso automatically prevents the generation of error blocks, unless the errors happen right at the beginning. Thanks to the decentralization feature, the information stored in blockchain is transparent and absolutely trustworthy that transactions added into the blocks no longer require the third party to verify and confirm.
What are the applications of blockchain beyond cryptocurrency?
Now, when asking about blockchain, key features should be “transparency” and “elimination of third party”, not “bitcoin”, which are important factors that entrepreneurs should consider cultivating from blockchain. Specifically, apart from cryptocurrency there are at least 5 applications of blockchain which may change the way companies operate: Smart contracts, Cloud storage, supply-chain management and digital voting.
Smart contract is a self-executing contract in of which the terms of the agreement between two parties (or more) are encrypted and automatically enforce those obligationswithout the interference of the intermediaries by adding layers of information onto digital transactions on a blockchain. Therefore, the transactions are traceable, transparent, and irreversible. In other words, smart contract saves traders lots of time and money, free people from unwanted conflicts and allows for more complex transactions than simply exchanging digital tokens for a product or service.
One example of successfully applying smart contracts in business is Fizzy AXA, a French airline in dealing with delayed flight compensation. With Fizzy, the smart contract records the needed information of the customers and composes the command that if a flight delays for over 2 hours, customers will get automatically notifications with compensation options. Once customers make compensation choice, the money is sent directly to their credit cards.
Additional to Fizzy AXA, a number of other companies have already applied smart contracts such as Slock.It and Share&Charge, Etherparty, Propy, Populous and Polyswarm.
Enabling remote maintenance of data, Cloud storage applications have flourished in the last few years but remains helpless with certain drawbacks that blockchaincan solve.
Firstly, Although Data centers are the key elements of any cloud giants, the cost for maintaining these centers are expensive for cloud developers, providers, and users. Moreover, they come with an even higher cost of data failures and security breaches. For example, additional to bandwidth charges, Rackspace and Amazon charge $.15/GB and Google charges $.17/GB per month. From networking equipment and physical servers to other infrastructure demands like electricity, cloud service providers are spending billions of dollars every quarter just to maintain or grow their service offerings.
The second concern of traditional cloud storage is its poor security. According to a new research of Computer Business Review, “a colossal 12TB of data – including confidential intellectual property, penetration test results and other sensitive files in the cloud – can be pulled from exposed Amazon S3 buckets, rsync, SMB, FTP servers, misconfigured websites, and NAS drives.”
Blockchain-based storage, even at its dawn, is emerging as an advancement of traditional cloud storage systems. Thanks to its decentralization features, the decentralized cloud storage is based on autonomous peer-to-peer mechanism. This network is more secure, cost-effective and faster than the traditional centralized cloud storage solutions. This is the optimality of blockchain features such as transaction ledgers, cryptographic hash functions, and public/private key encryption.
The application of technology in voting has impressively enhanced the speed and decrease cumbersome this procedure; however, committing fraud causing rigid election still remains as a more serious threat. By applying blockchain, any vote will become immutable after it is recorded, that none authority can change the data easily like the current penetrable record controlled by the government. Blockchain can totally disrupt this matteronce integrated into this field, especially in accountability mechanisms to provide a perfectly transparent record of the votes cast.
Such a genius idea is originally inspired by proof-of-stake and proof-of-work in consensus protocol in Blockchain that nodes have the right to vote for any important decision of the system, and the influence of votes are fairly counted based on the percentage of stakes that the nodes hold (proof-of-stake) or on their contribution (proof-of-work). In addition, the whole procedure is strictly followed and democratically implemented under the witness of all nodeswithout the interference of any third party. Hence, by reducing a cumbersome system of vote accounting and security crew, blockchain-based voting is expected to save a huge amount of money and human resource for the government.
Supply-chain is a series of stages closely linked to each other in order to creating and distributing goods. In the age of globalization, supply-chain in modern day becomes extraordinary complex for tracking as stages may spread in different countries, involve enormous human resourceand transactions and last for months and years. The transparency, accuracy and instancy of featured in blockchain functions are expected to transform the operation of supply-chain.
By applying blockchain, details of production such as quantity, duration, types of materials etc together with transactions will be recorded exactly in the ledger that is impossible to edit or modify. Moreover, in a supply-chain, certain secret steps requiring high security will be absolutely protected from information leaking via the encryption of documents. In blockchain mechanism, only individual provided with private key can access to the information, totally contrary to the traditional low-protected ways of data storage.
It is apparent that blockchain alone is unable to magically transform the future of supply chain, but to integrate smoothly with many other factors. However, blockchain provides optimal solution for the existing problems in logistic tasks that significantly affect the domain.
1 Computer connected to the blockchain network using a client that performs the task of validating and relaying transactions