For many crypto enthusiasts, their desire to fully understand the technology behind blockchain and what it holds for the future is on the rise. While the features and utility values of bitcoin and other altcoins have been advantageous to crypto holders or investors in the past few years,bear it in mind that the backbone of all crypto-related projects and cryptocurrencies is the blockchain technology.
Do you know that Bitcoin and other cryptocurrencies are just a tip of the ice-berg of what blockchain can be used for? In fact, Its application is highly ubiquitous. Blockchain technology has the legitimate potential of transforming the world but digging into its nitty gritty isn’t a walk in the park. Amidst its complexity and fascinating characteristics, it is very important that you understand what blockchain is really all about.
What is blockchain technology?
According to Harvard Business Review ,“Blockchain is not a ‘disruptive’ technology, which can attack a traditional business model with a lower-cost solution and overtake incumbent firms quickly. Blockchain is foundational technology: it has the potential to create new foundations for our economic and social systems.”
You can imagine a world where data are stored without worrying about deletion, tampering and revision. In fact, in crypto world, every legal agreement, processes, task and even payment would have a digital record. With blockchain, contracts would be embedded with digital codes and organizations, individuals, machines etc. would freely interact and transact with one another without stress.
The blockchain is a database that is effectively validated by a wider community. It’s not a thing of central authority. Records collected on it are also seen and maintained by all participants in the network instead of relying on single entity such as banks or government. Every ‘block’ stands for a number of transactional records, and the ‘chain’ factor connects the whole blocks with a hash function. When a new record is created, they are validated by a distributed network of computers, once confirmed; it pairs up with the existing block in the chain, thereby creating chain of blocks.
Virtually everyone has heard one or two things about the claims that blockchain is out to revolutionize businesses, redefine companies and global economy. Most of us even share the enthusiasm for its prowess, but we still worry and seek answers to some unclear claims about blockchain technology. This is because things will get funny if we probably rush in headlong without verifying its chances.
Undeniably, the impact of implementing this technology will be enormous, but still, it will take decades for it to fully seep into our economic and social infrastructure. However, before taking a look at its usefulness for the future, let’s look at its roots.
According to a 1976 paper on New Directions in Cryptography, it was discovered that the idea of a mutual distributed ledger – which is what blockchain evidently acts on has long been in existence. Although, it was in 2009 that the awareness on crypto and blockchain technology started becoming clearer. Originally, bitcoin was the starting point and it made its first appearance in 2009, unifying together the basic idea of the mutual distributed ledger, the blockchain, with a digital currency that isn’t controlled by any individual or organization. Moreover,this cryptocoin, known as bitcoin, was developed by an anonymous entity that goes by a pseudonym ‘’Satoshi Nakamoto,’’ who till date, his or her real identity hasn’t been officially known. Moreover, the implementation of blockchain technology has gone beyond being used for digital currency, in fact, many industries ranging from health to politics are gradually remodeling their mode of operation with this technology.
A 2018 survey from Venture Capital Firm on the ‘’future of blockchain technology’’ highlights how blockchain will be disarming any threats or challenges and identifying new opportunities’ in the future. According to Gartner, the business value-benefit of blockchain will soar to over $ 176 billion by 2025, and then it will exceed $3.1 trillion by 2030.
The most current implementation of blockchain technology are not disruptive, this is because Gartner affirms that ‘’the majority of organizations that undertakes blockchain projects find it hard to conceive of systems that are outside of their legacy, centralized models “both business models and technology platforms.” However, a Gartner survey also shows that about 66 percent of business leaders believe blockchain is a business disruption and have set budgets accordingly; meanwhile 5 percent of those surveyed said they will spend over $10 million on blockchain. The 2018 Gartner CIO survey of 3,000 CIOs from 98 countries found that ‘’only 1 percent of CIOs indicated any kind of blockchain adoption within their organizations.
IDC further confirmed that the global spending on blockchain solutions has reached an ‘all time high’ of $2.1 billion in 2018. Which is twice the $945 million spent in 2017. Interestingly, IDC expects the blockchain spending to grow at an exponential pace over a five-year period of 2016 to 2021 with a compound annual growth (CAGR) of 81.2% and the total spending of $9.7 billion in 2021. ‘’Blockchain spending will be led by the financial sector ($754 million in 2018), driven largely by rapid adoption in the banking industry. The distribution and services sector ($510 million in 2018) will see strong investments from retail professional service industries while the manufacturing and resources sector ($448 million in 2018) will be driven by the ‘discrete and process manufacturing’ industries. In the U.S., the distribution and services sector will see the largest blockchain investments. The financial services sector will be the leading driver in Western Europe, China, and APeJC. The industries that will see the fastest growth in blockchain spending will be professional services (85.8% CAGR), discrete manufacturing (84.3%of CAGR), and the resource industries (83.9% CAGR),’’ said IDC.
Obviously, the promises of blockchain are becoming more enticing, and in fact, amidst other technological innovations, this might just leave up to the hype. Here are top 5 usefulness of blockchain in the future.
#1 Blockchain will revolutionize the government operations:
Actually, governments aren’t sidelined on blockchain potentials. This technology, if implemented, will be very useful in some of their operations such as voting, taxation records and so on. At the time of this writing, some government all over the globe are already exploring the use of this technology to enhance their operation.
According to 2017 survey conducted by IBM on 200 government leaders in 16 countries on the topic of blockchain to determine their interest in blockchain technology, it was discovered that about 9 in 10 government organizations plan to invest in blockchain in other to utilize it in financial transactions management, asset management, contract management and regulatory compliance by 2018. Also, 7 in 10 government executives predicted that the blockchain technology will significantly disrupt the area of contract management; and 14 percent of government organizations expect to have blockchains in production in 2017.
In what area can blockchain technology be useful in government affairs?
It can boost government welfare distribution efficiency:
Seemingly, the implementation of blockchain technology will facilitate ‘novel payment model’—this will enable the HM treasury (HMT) and Department of Work and Pensions (DWP) to efficiently distribute welfare support funds and further improve the existing ‘policy delivery’. Research has it that DWP pays out the roughly £166 billion of taxpayer money in welfare support per annual. A whoop £3.5 billion of that sum is overpaid through fraud , claimant error and official error.
However, just by applying DLTs (distributed ledger technology) in the registration and payment process for government grants and benefits, frauds and other errors that lead to financial losses will be tamed. Interestingly, this technology also supports the most vulnerable citizens by offering them with the benefits of full financial inclusion. Blockchain also offer good value for money and place public expenditure on a sustainable footing.
It can protect crucial government infrastructure:
The protection against critical civil infrastructure is no longer a challenge to UK and its government because they’ve implemented DLTs whose efficiency and effectiveness improves large-scale infrastructure and ensure better protection to human life.
It can fix government double taxation:
While value-added technology (VAT) shortfalls occur in all three forms of economy – tax-compliant economy, tax quasi-complaint economy and tax non-compliant economy( aka black market ) due to insolvency, the blockchain Distributed Ledger Technology (DLT) has the potentials of correcting the situation. It has both the growth characteristics and the potential to make transactions more transparent
According to research, it was estimated that the annual shortfalls of EU’s VAT revenue is between the range of €151 billion to € 193 billion; this shortfalls can be further prevented by the mere implementation of DLT. Furthermore, this technology further reduces the administrative burden imposed on companies and other organizations to collect and pay VAT; it also create rooms to assess credit risks more accurately; it also provide data to lenders’ that offer finance to SMEs, including credit factoring; finally, it enables smart contracts between treasuries.
Let’s take a look at how some governments around the world are taking their first-step towards the adoption of blockchain innovations;
Dubai – Global Blockchain Council:
In the world today, Dubai is seen as one of the countries that sets its sight on becoming the world’s first blockchain-powered government. In fact, it has set up the global council of 47 members to explore both current and future blockchain applications. Dubai has launched seven blockchain proof-of-concept trail which are as follows : shipping, tourist engagement, digital wills, business registration, title transfer, diamond trade and health records.
Recently, IBM has partnered with the Dubai government to put in practice the use of blockchain for a trade and logistics solution. The ‘solution’ relays shipment data, enabling major stakeholders to receive real-time information about the state of goods and the status of shipments, and further replacing paper-based document with smart contracts. Evidently, Hamdan bin Mohammed AI Maktoum, the prince of Dubai has declared to the public a strategic plan that will oversee all government documents secured on blockchain by 2020. Amazingly, this same strategy has the potential of saving 21.5 million hours of economic productivity annually.
Delware, USA – Smart Blockchain contracts, public archives:
Delware was the first US state to implement distributed ledger technology (DLTs) in 2016. It was utilized to store contracts and other corporate data on a distributed ledger; Delware’s government also allow companies within the state to store their document or data in more than one location because it’s not just safer, but it also provides a better disaster recovery if it arises.
Singapore – Blockchain Interbank Payments:
MAS ( Monetary Authority of Singapore) has recently completed a proof –of –concept pilot to investigate the use of blockchain for interbank payments. Having partnered with a consortium of financial institutions, blockchain infrastructure was used to create a digital currency issued by MAS, and methods were tested to link bank systems through DLT. Their goal here is to simplify payment process, speed up transactions, enhance transparency and system resilience.
MAS is taking this first step in leveraging blockchain to confirm and reconcile trade finance invoices, verify the performance of smart contracts and deter money laundering.
Georgia – Blockchain Land Registry:
Currently in Georgia, their government is using blockchain to register land titles and legitimize property-related government transactions. In fact, they’ve installed a custom-designed blockchain into their digital records system of the National Agency of Public Registry ( NAPR), and also anchored to the bitcoin blockchain via a distributed digital timestamping service. This digitized timestamping service will enable the government to verify and endorse a document containing a citizen’s vital information and proof of ownership of property. Additionally, this newly improved system will boost land title transparency, reduce fraud, and significantly reduce time during registration process.
UK– Blockchain –as-a service, welfare payment:
The UK government has embrace blockchain-as-a service, and it’s now made available for purchase through the UK’s government‘s Digital Marketplace. This blockchain service has also enabled government to freely experiment, build and deploy digital services based on distributed ledger technology.
In 2016, the UK’s department of work and pension started using blockchain technology to support their financial management especially when receiving and distributing benefit and grants to the exact citizens.
Estonia –Blockchain identity management, electronic health records and e-voting:
Estonia is also globally considered as one of the nations leading in the adoption of blockchain technology. In Estonia, citizens and e-residents are issued a cryptographically secured digital ID card that is powered by blockchain infrastructure, allowing access to various public services. Meanwhile, on the blockchain platform, citizens can confirm the authenticity of their records held on them in the government database.
Estonia is also implementing this technology to not just facilitate unbiased voting, it is also used secure their citizens health records.
#2 Blockchain will eliminate trusted third parties.
Apparently, trust is, and has always been the rock upon which we stand to make our decisions when transacting with one another. And how to determine whether the party we are interacting with is dependable or not has been a problem for not just individuals but large companies as a whole.
Undeniably, its crystal clear that one of the main problems faced by internet users today lies in their inability to determine who to trust, and the constant need of managing trust over the internet has become a large business for some large companies in the world today. For example, escrow : until the transaction is cleared, escrow will safely hold your money. Funny enough this doesn’t end here, most of these third party companies store a vast amount of personal info about their users as part of deciding who is trustworthy while transaction between parties are going on. Unfortunately, these stored personal data could be prone to hacking, presenting another problems in regards to privacy. However amidst this tempest of trust, blockchain technology will entirely reshape this dynamics by creating a system where trust is no longer required during transactions. Here, cryptology completely replaces the need for their parties and act as the governor of trust.
#3 Blockchain will revolutionize and reinforce our existing online security system.
Arguably, blockchain technology has proven to be one of the most interesting innovations in the information age. It’s application goes beyond the vestiges of digital currencies as it can also solve problems faced on information processing system.
One of the ways blockchain guarantee online safety is by protecting our DDoS ( Distributed Denial of Service). DDoS is no doubt one of the most troublesome security threats that can impair the stability of businesses. According to the 2017 global survey by Neustar, on the Worldwide DDoS and Cyber Insights, it was revealed that despite the fact that 99% of organizations that have distinguish DDoS- specific defenses in place, nine in ten are still investing more than they did 12 months ago.
However, implementing blockchain’s unused bandwidth of the collective community will withstand DDoS attacks. In fact, it provides unsurpassed security in an unsecured internet where malware, DDoS and hacks endangers the way business operates globally.
#4 Blockchain will put an end to piracy in the entertainment industries – music, books and movies.
It’s no longer news that entertainment industries have been struggling to keep piracy from destroying their business model. Before the advent of the internet, the entertainment industry used to easily keep track of the number of records or movie they sell; but now it’s no longer the case. A single song or movie could easily get halfway around the world In matter of minutes. This quantum leap of music, books and movies, especially the newly released, is destroying the entertainment business model.
Amazingly, blockchain-enabled solution will put an end to this problem. The same public ledger method will be adopted. Just as it keeps User A from spending User B digital currency, so will it keep User A from playing or duplicating User B’s copy of the song. This technique is returning the former glory of the entertainment industry.
#5 Blockchain will revolutionize Real Estate business sector:
Searching for real estate ownership that goes back more than 20 years simply means visiting a public records building and then searching a massive record books that theoretically defines the history of the real estate in question. Sadly, this process is not just tedious, but it is also vulnerable to mistake, fraud and even worse.
The good news is that blockchain can effectively solve this problem because one of its most basic implementation is to keep public ledger of transactions. The blockchain can be use to record the history of the property from the first owner and also update the record of whoever acquires it later on. Here, nobody has to worry over mistakes, for the record is clear, consistent and easy to interpret.
In conclusion, the use of blockchain in the future is obviously unlimited.