Blockchain Technology: All Your Questions Answered
Blockchain is a shared open source platform where participants communicate in real-time as they conduct their transactions and store their data on its indestructible ledger, which then becomes replicated on its thousands of networks. These qualities make blockchain transparent and make it difficult to crack the system.
What is Blockchain Technology?
Think of blockchain as a peer-to-peer computer network for unmediated and transparent transactions. In contrast to traditional databases that are centralized, namely controlled by select individuals, blockchain ledgers are decentralized, allowing participants to monitor transactions as they cross the platform.
On top of that, blockchain is faster, cheaper and more secure than traditional systems, making it ideal for businesses to network with their partners around the world on everything from real estate deals to payment rights and confidential medical reports.
According to Coindesk, blockchain technology could save global businesses $550 billion a year in wasteful spending. On the flip side, some ledgers use excessive energy, while Blockchain technology is costly.
There’s no question, however, that blockchain is the face of the future.
Companies testing blockchain include Walmart, Maersk, British Airways, UPS and FedEx. Educational website Edureka reported that in 2019 about 40 million people used blockchain technology. TechJury projects that by 2030 blockchain will impact a resounding 80% of the population!
How does blockchain work?
In contrast to centralized websites like your password-controlled website or blog that gives only you and authorized users access, blockchain is a chain of decentralized websites. Any one belonging to any particular blockchain ledger can see the transactions of all other participants on that ledger, any time, any moment, anywhere. They can communicate with those participants, see their past histories and retrieve their stored records. Nothing on the blockchain is lost since all transactions from that platform’s beginning are encrypted on that ledger.
Blockchain ledgers belong to single companies or span countries. The newest country, the Free Republic of Liberland, founded 2015, runs entirely on its own EOS blockchain. Its two vice presidents, five ministers, 20 ambassadors, legal systems, insurance companies and banks, real estate sector, healthcare industry, marriage/ birth registry, vehicle registration department, meetups groups, police force (there’s no taxation system or army), and so forth all communicate with each other, adjudicate and operate from its DAO-Stack blockchain.
Why do we need blockchain technology?
Blockchain could well be the biggest revolution in our time and for good reason. For starters, Blockchain technology is:
- Transparent – David Zimbeck, developer of the first smart contract, called BitHalo, told me it was the blockchain’s transparency that attracted him. He’d been cheated enough in his 27 years. On the blockchain, people see each other’s transactions in real-time and catch fraud on the spot. Likewise, the furor around Trump’s disproved voter fraud claims briefly pushed for blockchain voting, where participants could actually SEE the votes as they were processed. There would be no Dominion-controlled hidden voting here, but a transparent system where anyone could watch and, maybe vote, just by signing onto that ledger.
- Fast – Blockchains process transactions faster than traditional methods. In 2018, I watched as a man sold his cottage in Scotland to someone who lived in New York over BitBay´s ledger. It would normally take him – or any of us – weeks, if not months, to process any real estate transaction. We would need to hire an army of realtors, brokers, appraisers and insurance agents, among others. With the blockchain, each of these stakeholders transparently communicate with each other in real-time on the platform, and buyer and seller completed their transaction within the hour. No need for a notary, since all blockchain participants witnessed the transaction and could flag it if problematic. The seller received his money (digital crypto that he later converted into dollars), and the buyer had a cottage in Killin, near Loch Tay, to call his own the next day.
- Cheap – Blockchain membership and transaction fees vary with each company, but in general they are far cheaper than the regular fees for wiring money. Most of the time, blockchain’s transparency also ditches the additional fees that come from needing to hire third parties, like notaries, real estate agents, brokers and realtors in the BitBay property transaction example.
- Accountable – How do you know that what you’re buying is real? Fraudulent merchants like to dupe us about the origin or identity of their products. What if you ate pencil shaving thinking it was Parmesan cheese? That’s precisely what happened to consumers of Castle Cheese back in 2016. That’s extreme but incidents of food fraud or product fraud, when your food/ product is mislabelled, misrepresented or tempered with, happen every day.
Back in 2016, it took a WalMart team more than six days to track the farm that harvested certain mangoes. Since then, Walmart uses blockchain to prevent foodborne illness and food fraud. Blockchain technology also helps its managers identify and improve inefficiencies in their supply chain, performing “fact-finding” rather than “fault-finding” when issues arise.
On a universal scale, blockchain helps 55 million unbanked, or underbanked. people receive money in one to two days that otherwise they would only receive much later – or not at all. Many of these people have no account at a bank or other financial institution and are out of the mainstream. With blockchain technology, they can receive digital money from anywhere and use a cryptocurrency exchange to convert that crypto minutes later into their own currency.
Basic Blockchain Vocabulary
What are smart contracts?
My best analogy is slotting money in the vending machine. You want that Coca-Cola, you push the button, you insert the coin and out rolls the can.
In our BitBay example, both parties transacted their real estate deal through smart contracts. The buyer put in his crypto (to buy the cottage); out rolled the contract. If he’d put in an incorrect amount, the contract would have stalled. If it had been the seller who defrauded, likewise no contract.
As David Zimbeck told me: “I thought if I could make a contract where both parties lose if one cheats, it would be impossible to break your word because the investor is doing it at his expense. People don’t have to feel afraid of being cheated. You don’t need lawyers to protect you. ¨
What are digital tokens?
Digital tokens facilitate the blockchains transactions. Example: Back in 2018, I was involved with cannabis-based ICOs that were starting to roll their products out on blockchains. To legally sell cannabis-based wellness products, they had to prove their items were quality-controlled and regulated. One of these platforms, Budbo, certified its products with its BUBO tokens, used by Budbo consumers and regulators to view the company’s encrypted data, so they could monitor the seeds and trace their origins. Other Budbo participants used the tokens to conduct research or interact with platform participants.
What are digital currencies?
Blockchain participants use digital currencies for transactions and to incentivize participants. The oldest and most famous cryptocurrency is Bitcoin (BTC) followed by others like Ethereum Litecoin, Monero, and Dash, among 2,957 altcoin variations. Each cryptocurrency has its own type of ledger and particular function. For example, you can buy different types of privacy coins to anonymize your online transactions.
Blockchains Technology across industries
Blockchains are everywhere from pacifier-selling vendors to freelancers wanting to hop on a new platform. The blockchains I’ve been asked to contribute to have ranged from the hilarious, like giving kids their pocket money, to the more rewarding like innovative stablecoins. Each enterprise thinks it’s unique and each is prepared to invest tens of thousands of dollars for its ¨special¨ blockchain.
Of the 58 big industries that blockchain serves, here’s a scattering for starters:
- Healthcare – Healthcare stakeholders use the ledger for securing confidential healthcare data, monitoring and tracking drugs and patient healthcare, and updating and sharing medical research and information, among other items. In 2018, Philipp and Jeremias Grenzebach told me of their DentaCoin dental practice run off the blockchain with 90,000 patients, 108 companies and stakeholders in 29 countries. Blockchain technology helps them eliminate costly insurance, which helps them make dental care more affordable and accessible to all.
- Law – Blockchain participants use smart contracts for all sorts of situations, such as financial derivatives, insurance premiums, property law, and crowdfunding agreements, ditching the cost and time that comes with hiring intermediaries.
- Music/ Entertainment – Blockchain’s transparent ledger helps artists and other creatives receive their royalty payments, curb counterfeit tickets and instantly pay all artists who contributed to songs, albums or other media. The blockchain also gives non-fungible tokens (NFTs) their exclusive value through its nonduplicate encryption properties.
- Agriculture – A blockchain ledger records and updates the status of crops from planting to harvest to storage to delivery. Blockchain tracking also allows growers to meet government regulations and consumer expectations, among other benefits.
- Finance – Blockchain makes financial transactions transparent. It encrypts financial records, eliminates the muddle of claims-processing by storing claims in one place and rushes cross-border payments, among other benefits. One of my earliest assignments was for CompareRemit, a US money transfer service. Its CEO told me blockchain helped him remit payment in one day, in contrast to bank wires that take up to five days for cross border transactions. Now that was after blockchain had just come out. Blockchain transactions are hugely faster today.
Blockchain technology is huge! Unlike the more controversial topic of digital currency, I think there’s actually potential here, since Blockchain serves a need. It brings the world together, it makes business more honest, it privatizes medical and financial records, it helps the poorest people in their distant villages get their meals for the day. Some people may find the technology scary, as in alienating. After all, it feels so much better to slip real coins into the parking meter than flip digital ones on your mobile. Want the opinion of American entrepreneur Brock Pierce? The Blockchain is going to change everything more than the Internet ever has.