The Various Uses And Applications Of Blockchains

There’s one simple concept that needs to be understood to make sense of the mountains of technobabble that will be thrown at you when you learn about cryptocurrencies or blockchain, and that is the concept of Hashing. Hashing really is just a mathematical magic trick for getting fingerprints of data.


What a good hashing function does is this: if you give it a piece of data, no matter how large or how small, it gives you a fingerprint of that data.


This fingerprint is just a long word full of gibberish, but the cool thing about it is that no other piece of data in the world will give you the same fingerprint, and you can’t reconstruct the original data if you’re given only a fingerprint.


Every time you or anyone else takes a fingerprint of the data, the fingerprint will be the same, and even a minor change in the data will give you a vastly different fingerprint.

Hashing Is Used For Many Applications

For example, social networks share with each other the fingerprints of illegal images. They check the fingerprints of any images received on their social networks and automatically ban any whose fingerprints are found in the blacklist. This fingerprint obtained from a Hashing algorithm is also sometimes referred to as a hash or signature.


Blockchain systems are simply a chain of records or “blocks”, such that each block includes a fingerprint of the previous block in addition to the data contained in the block. This continuous chain of records with fingerprints added at each stage is special because it renders the records tamper-proof.

This tamper proofing is truly successful only when the blockchain itself is shared freely among the people that are using it, and is an example of trust by consensus. When a blockchain is shared among multiple entities, there’s no way of tampering with it unless you modify every single copy (or more than half of the copies) of that blockchain.


The beauty of this system is that it’s decentralized. Instead of having a trust a list of records maintained by a central authority such as a bank or government, you only have to trust the consensus of those who maintain a copy of the blockchain.

A single organization can be corrupt, but it’s very hard to compel millions of people to become corrupt in the same direction, and that’s what modifying any established blockchain entails. This is why blockchain is here to stay even if cryptocurrencies aren’t, as a system for implementing trustable distributed ledgers.

Please note that despite the strong association with cryptocurrencies, blockchain is a distributed virtual ledger technology that is separate from them and can also be used to implement systems that don’t have anything to do with cryptocurrencies or money.

Here are some ways in which blockchain is being used to solve real-world problems:

Cryptocurrencies And Money Transfer

Almost all cryptocurrencies such as Bitcoin and Litecoin rely on blockchain to record transactions. The number of cryptocurrencies in the market right now is staggering and more are added every month, often built for transacting with specific industries and countries.

Many big players are also introducing their own cryptocurrencies. For example, Facebook is working on a cryptocurrency of their own according to an announcement made in May 2018.

Arguably, the most logical use for blockchain is as a means to implement the transfer of funds from one party to another.

Transactions processed over a blockchain can be settled within a matter of seconds using a network of nodes that function 24/7 for the purpose and don’t have to involve any banks or humans, leading to major cost and time savings.

Smart Contracts

Blockchain-based smart contracts are proposed contracts that can be partially or fully executed or implemented automatically and without human interaction. For example, automated escrow is one of the main objectives of a smart contract.

An IMF staff discussion reported that intelligent blockchain contracts could reduce moral hazards and optimize the use of contrast. Smart contracts can be built on top of a blockchain and operate as decentralized applications.

Ethereum is the leading cryptocurrency and smart contract system that is set to revolutionize the industry. Decentralized applications running on the Ethereum system are called apps.

Wealth Management, Banking, And Money Transfers

The blockchain is being used by various banks to speed up back office settlements and support financial instrument trading systems. Barclays, UBS and JP Morgan Chase have announced blockchain based distributed ledger systems.

Wealth management is also one of the most exciting applications of the blockchain. For example, SwissBorg is a democratic ecosystem where you can manage a portfolio of crypto assets, whether you are an individual, a DAO (decentralized autonomous organization) or a financial expert. "

Online Voting

Blockchain makes it possible to create an unalterable record of votes that can be verified by the public and is safe from manipulation by any entities, no matter how powerful. This can be a strong defense against electoral fraud and help maintain the integrity of election results and public trust in democracy.

For example, Democracy Earth and followmyvote.com are non-profits working on combining voting with blockchain.

IoT (Internet of things) And Device-To-Device Transactions

The Iota cryptocurrency uses a special type of blockchain called a tangle and was created to enable permissionless zero free micropayments between devices in the IoT model.

A system like this can be used, for example, by an autonomous self-driving vehicle to pay for the use of an electric charging station without any human intervention. VW and Bosch are developing systems based on Iota.

Digital Identity

Blockchains offer the opportunity to create a strong digital identity system that is not based on accounts and permissions associated with accounts but based on push transactions, and because ownership of private keys is ownership of the digital asset, it provides a new and secure way to manage identity in the digital world.

Digital identity managed using a blockchain has the added advantage of decentralization and independence from any central authority while still maintaining trust.

Decentralized Social Networking

Social networking sites are centralized and make a ton of money off of their users while acting dictatorially over censorship. Decentralized social media platforms such as Steemit mitigate this problem by financially rewarding the content creators and making arbitrary censorship impossible.

Electronic Health Records

Blockchain is being used in the EHR industry to put control over medical records in the hands of the patients who hold the digital key required to access their records. This provides protections over and above HIPAA requirements.

Hu-manity.co is an IBM startup that lets patients make money by selectively giving pharma companies access to the medical histories.

Conclusion

There are so many ways that blockchain technology is working its way into our daily lives. As it gains more press attention and popularity, people will start recognizing its practical uses. It’s only a matter of time before it truly changes the way we live.

Natalie Stevens is a blogger and a startup business owner. Lately, she has been gaining interest in the Blockchain systems for which she writes some blog posts. In her free time, Natalie prefers to spend some alone time.