Bitcoin has been in the mainstream news several times before since its inception in 2008 and often mentioned as the favorite form of cryptocurrency of hackers, the dark web, and the criminal underworld. Yet, its underlying technology has seldom been explained in any depth by the news media. Soon after the mysterious figure, Satoshi Nakamoto, had released the first batch of his digital currency, it gradually became adapted within the tech community because of its originality in providing the perfect way to pay peer-to-peer anonymously and without the possibility of counterfeiting.
The best way to explain the basic function of the blockchain, this ingenious tech, it works as if every Bitcoin holder had a bank account, but all participants would share a single anonymized bank statement that’s instantly updated whenever somebody withdraws money, makes a deposit or pays another participant in the group. And because everybody holds the same statement, there is an incorruptible record in multiple copies stating who has how much and who pays who. Except, there is no bank and no real money, only a long chain of data, which is updated in identical copies to all Bitcoin holders and grows by a block with every new transaction.
Because of the robustness, independence from nations’ currencies and financial institutions, Bitcoin’s value has grown from 0.32 USD in 2011 to close to three thousand dollars per coin as of June ’17. The underlying technology has also helped to create not just other new digital currencies but its present and future uses offer the possibilities of decentralized, secure ways to conduct business, manage data, share, collaborate, audit and govern. Particularly one later entry, Ethereum, brought significant improvements into the technology, such as writing smart contracts directly into the blockchain and speeding up the additional block verifications from close to 15 minutes to a matter of seconds. These new features already allow the early adoption of using blockchain at government and business circles in several countries.
Sweden and Georgia are now using blockchain-based registries to record land ownership. The government of Dubai is planning to move all of its ledgers to blockchain-based registries by 2020 to create perfectly transparent and incorruptible records of its activity. The central government of Ukraine has set out to implement the same thing with similar intention but also as a major weapon against corruption. The country of Latvia found another use of the technology. It’s taking steps to register its citizens’ national health records on blockchain for quick access, efficiency, and security.
The future use of blockchain can affect our daily life even more so than today’s internet, and some technologists are already speaking about the emergence of Web 3.0. The sharing economy, such as Uber, eBay, various digital wallets and Airbnb, where transactions are done between individuals can become even more efficient than today’s practice by cutting out the central controlling intermediary that now stands between parties. Voting in the political process can also be immediate, remote but still perfectly safe. In the economy, supply chain auditing of sources of manufacturing and agriculture can become easily traceable and simplified. Blockchain can also provide a safe and robust alternative for today’s file storage of all sorts, making cloud storage completely decentralized and virtually unhackable or indestructible. The protection of intellectual property, an important issue for today’s content creators wanting to receive proper reimbursement without licensing their work to large distributors, can also be made more simple as the content owner deals directly with the content receiver and passes the property over with a unique and traceable signature.
As billions of new smart devices and measuring data points will come online in the next few years and following decade, the internet of things, IoT, will emerge as a new and much larger layer of a global network than what we currently use. Blockchain will help these devices seamlessly update and communicate. With the rapid adoption of power generation and storage at the local level — mainly through roof-mounted photovoltaic panels and in-home battery packs — neighborhood microgrids will slowly supplement, but over time supplant, the centrally organized electricity distribution. These grids will also need the peer-to-peer network feature of blockchain technology.
The possibilities are almost endless. As Web 3.0 emerges, the individual’s very identity and relationship to society and to various economic entities will be reordered but much better controlled from a personal standpoint. If a person can control who accesses their data and are able to track all transactions and communications without an overseeing intermediary or outside involvement and in complete privacy, it will permit a much more confident engagement with those networks. This, in turn, creates a more efficient society, better citizens and open, transparent economic and political structures – all thanks to the amazing capabilities of blockchain technology.
Author: Attila Meszaros