What is blockchain
For a simple explanation, let’s take a look at Johnny, who has a shop called “Johnny’s candy.”
Unfortunately, dear Johnny has no idea how taxes work. He asks for help from his friend Randy (an intelligent IT specialist) to help him write a Smart Contract that will automatically take care of everything regarding taxes. He simply needs buyers to show him the QR that Randy gave him.
Let’s say Annie comes to buy sweets. She needs to scan the code with her phone and send the necessary amount to the Smart Contract that Randy made.
The contract automatically takes care of everything. It both pays for the sweets and orders them. The sweets are already on the way to the “Johnny’s Candy” shop. The taxes are all calculated, and the Smart Contract takes care of storing them, alongside providing the necessary information for the taxman. All of this happens in the blink of an eye.
After that day, Johnny buys a football game ticket using the money he received from Annie (minus the taxes). He simply needs to copy the address code which the stadium ticket counters provide. He sends the necessary amount of money and the game information to the address. The amazing Smart Contract of the stadium ticket counters sends him the ticket back.
A blockchain is a decentralized database, where there is no central point of authority. That implies that there is no central point of failure, or theft. Here are a few reasons why blockchain is a gamechanger:
- Having a trusty party has its drawbacks. Let’s say you want to submit a payment via Paypal. You are not the person who changes the ledger on Paypal. You have absolutely no power over your payment. You are the one asking Paypal – who has absolute authority over your money, to change the ledger (add 20 to Annie, and -20 from Paypal). The same applies to your local bank. These central authorities have the power to freeze accounts, block payments, or change the amounts however they seem fit.
- There is no middle man – no authority to block payments. You can literally send payments to anyone using blockchain technologies, a prime example being Wikileaks. On the contrary, this means people who have restrictive capital controls (e.g., Turkey) have freedom.
- The transaction is irreversible. In real life, if you transfer money to someone, it is final. The recipient has full power over the money, and if you want a refund, you have to request that person directly. A physical exchange is also much more straightforward, and more importantly, cheaper. There is no need for identification and filling out forms when you give a dollar to buy bread. The seller does not need to know who you are. Precisely because it is physical, you know that that amount has been transferred. Thanks to Blockchain that can be done in the digital world.
- Thanks to blockchains’ open and accessible nature, anyone with access to the internet can connect to it from virtually anywhere on the planet.
- There are no restrictions. A bank, for example, does not operate on bank holidays, weekends. Blockchain does. The transaction could be .003213 cents. It could be 1 Billion. It could be an 11-year-old kid.
- Since it is an open network, it’s very similar to the internet itself. Someone in a garage could connect to it and do whatever they want with it. You cannot do that on Paypal’s protocol. As a generalization – it’s more “Internet of money” instead of “money for the internet.”
The process of voting is very rigid in a lot of countries where democracy is not striving. Blockchain’s power has thousands of implications – from being a simple ledger for people to make transactions to a tool for democracy. With Blockchain, voter fraud will be reduced, and inefficiencies with verifiable audit trails will also be decreased. Government fraud will be minimized while digitizing most of the process. Government officials will be under increased accountability and compliance: identity validation; integrity of citizen registry data.
This implies that if blockchain technologies are correctly used, one of the most important history problems – voter fraud and inefficiencies with voting will be reduced substantially. This could allow for true democracy prosperity.
Charity donations have been the food and water for millions of people who have no access to basic needs. Unfortunately, in our not so perfect world, most funds going into charity do not reach their designated destinations. They go into the pockets of greedy officials and individuals where democracy is not striving. With blockchain technologies, donations can be tracked from beginning to end – where and how it was used. The complexity of donating will also be reduced since smart contracts can take care of everything. Blockchain allows for accountability, a much-needed factor when it comes to donations.
There are many problems in law enforcement – mainly coming from the fact that evidence gets lost at some point, or even worse, falsified. With Blockchain, evidence will have integrity, resistance to falsification of cease data. Everything will be documented and time-stamped in the Blockchain to fight falsification. This can indeed be a game-changer in law enforcement since this is a continually evolving field to become a more democratic and lawful institution. Currently, we are far from that.
Overall there are dozens of blockchain use cases ranging from media, to healthcare, from real estate to travel. As such, Blockchain is an emerging technology, and people have not yet uncovered its true potential, the potential to change the world for the better. If the three points mentioned above truly become Blockchain-based, the world will in itself become a much more democratic world where opportunities to grow even further will be relished, not thrown aside.
All the mentioned projects of-course have their impact on the value of cryptocurrencies. Taking a look at the ethereum price history for example, you will see that it was influenced by the economic changes in the real-world as well. The main currencies like Bitcoin, Ether and Ripple are increasing in their popularity, so it’s to be expected that they will become more stable as well. We are living during the blockchain revolution, let’s see what new implementations will follow.