Connect with us
Blockchain Use Blockchain Use

Cryptocurrencies

Blockchain and Us: Exploring the Technology Behind Bitcoin

 8 min read / 

Everyone has heard of bitcoin. The cryptocurrency saw a tremendous increase in its value only to lose most of it the following year. While the fluctuation has been written off as speculation, the technology that powers bitcoin is in the limelight for its immense potential to disrupt businesses. However, blockchain is now also being pushed to the front for its potential application to administrative procedures and other unconventional practices.

The revolutionary idea that powers blockchain is that it generates trust without the presence of a middleman. Generally, an online transaction goes through a bank or a similar service provider. These institutions are the ones that keep a record of all one’s transactions. If one were to steal money, one would have to break into their records and change it. The way blockchain works is by encrypting and distributing the ledger. If one were to steal money, they would have to change the ledger completely, from the very start, with the added issues of encryption and it being distributed. This is not an easy task. This leads to people hailing Blockchain as the next technological revolution.

Blockchain: The New Technology in Fashion

Many people have dismissed bitcoin, but are embracing blockchain. They predict a disruption quite similar to the one caused by the internet when it first came around. The internet changed the way companies conduct business. It led to a more connected world and pushed for greater consumer awareness. Blockchain brings the factor of trust. Banks are already trying to incorporate this technology into the services they provide. However, will blockchain be able to live up to the hype?

Gartner, an advisory and research company, came up with something called the Hype Cycle. It says that whenever a new technology is created, there is a lot of hype surrounding it. Various businesses try to incorporate it into the goods and services they offer, even though it might not be ideal. Investors are excited to pour their money into startups that claim to be dedicated to developing the technology. This situation played out during the early 2000s when the internet was relatively new and people did not realise the true capabilities of it, often over-estimating it. This led to the dot-com bubble that saw major companies go bankrupt, such as Pets.com, and even hampered the operations of companies such as Amazon.

There is currently a rise in the number of startups that claim to be centred around blockchain. They are trying to incorporate this into varying sectors such as healthcare and governance, and even in the conventional finance industry. Even established banks have taken this into consideration by rebranding the technology as the ‘Publicly Distributed Ledger’ rather than ‘blockchain’. The blockchain used for bitcoin was open to all, meaning that anyone could be a part of the ledger distribution. However, many companies are trying to come up with a private blockchain system where individuals would be able to host the ledger only by invitation. This goes against the whole point of the ledger being publicly available for scrutiny but it can still prove to be a powerful tool.

Blockchain in Administration

Many countries have taken a strict stance against cryptocurrencies but are open to the integration of blockchain into administrative activities. Blockchains provide a secure method for storing records such as birth certificates, property ownership and the like. The state of Andhra Pradesh in India has publically announced its vision to turn the city of Vizag into a hub for blockchain. They are already trying to use blockchain to store data about property ownership and vehicle registration. They plan to create 500,000 jobs by the year 2020, out of which more than five thousand jobs have already been created as of 2017. Another area where Blockchain shows promise is the voting system. It can be used to eradicate possibilities of fake voter IDs, lending more credibility to the elections.

Blockchain in Healthcare

Healthcare is becoming a major cause of cause for people everywhere due to increasing costs. The US already has the largest share of its GDP dedicated to healthcare. Countries everywhere are experiencing their share increase too as healthcare becomes more expensive. Companies are trying to come up with ways to fit blockchain into healthcare. One way is by loading the records of patients onto a blockchain so that medical service providers can easily access the medical history of a patient with the certainty of it being correct. This might reduce administrative costs, which run high in countries such as the US.

Blockchain in Finance

Bitcoin was the first to use blockchain. It used it to keep a track of all transactions. It was hailed as a breakthrough innovation since for the first time people could make and receive payments without the interference of a middleman. This was a great leap forward since people could trust in one another without something to back the claim. Bitcoin launched an avalanche of cryptocurrencies. Many new coins were launched, raising millions through their Initial Coin Offering (ICO). An unusual coin is the DogeCoin which was created ‘without much real thought’, according to its creators. The name is based on a popular dog meme template. Although its creator might not have given it much thought, it is one of the largest alternative coins on the market. The irrationality in the cryptocurrency market may have worn out with people realising there is speculation behind the price increase. However, this does not seem to be deterring innovators from trying to come up with new ways to apply the blockchain.

Smart contracts are another area where blockchain can help. These contracts are self-enforcing, eliminating the need for a middleman. This can come in handy in the derivatives market, premium payments in insurance and also in more common applications such as paying rent on one’s apartment. This results in a smoother flow of the process, increasing accuracy and eliminating snags.

Unconventional Applications

People are coming up with out-of-the-box applications for this new technology. Bitnation is a virtual nation that lets anyone sign up. It offers everything from an ID and birth certificates to insurance. It is basically a decentralised jurisdiction. It claims to have over fifteen thousand citizens. It is also associated with the Bitnation Space Agency, which aims to make space travel more inclusive by turning it into an open-source initiative. They are trying to launch their first spacecraft soon.

Another interesting use of blockchain is the collectibles industry. The reason behind the baseball cards craze was that they were rare, which caused their price to increase. CryptoKitties is a blockchain-based initiative that allows users to buy and trade virtual kitties. Each cat avatar is unique, and being on the blockchain, it is unique and hard to replicate. It checks all the boxes for the necessities of being a collectible. People have already spent millions of dollars buying these cats. New collectibles based on Anime are also emerging. As for the baseball cards, once companies saw the rising value of their products, they pumped up production leading to excessive supply that could not meet the demand. This led to a drastic decline in the price of the cards. The new collectibles are using an upper limit on the number of products they will create. This will combat the chances of prices falling.

A Blockchain Bubble?

The blockchain is a revolutionary technology, there is no denying it. It will definitely propel some businesses but assuming that blockchain will fit in everywhere is an exaggeration. The excitement around blockchain is pretty evident but is it a good thing? As with the internet, one cannot deny that lives would be drastically different without it. One would not be reading this if it was not for the internet. However, the late 1990s saw a large number of companies emerge claiming to harvest the magnificence of this new technology. This led to the tech bubble which caused many investors to lose large sums of money. There is some hesitation as to whether blockchain will suffer a similar fate. Investors are rushing to put their money into places which claim to be working on the blockchain. However, not all of them will be successful. One needs to keep in mind that despite the fact that the technology is revolutionary, it cannot possibly fix every problem out there. This came to light when everyone thought cryptocurrencies were invincible, yet everyone later saw the rapid depreciation.

The blockchain is unchartered territory. As one saw with Mark Zuckerberg before Congress, the administrative does not really understand these new technologies. This creates a lack of regulation, leaving space for exploitation. It is also highly complex, leaving the average man unable to grasp the real power of the technology. They might be exploited by creating hype around blockchain. One should openly embrace the new waves of technology but one must also peep back into history to understand what over-dependence on a particular technology can do. Prevention is always better than finding a cure.

Have your say. Sign up now to become an Author!

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Send this to a friend