What is Blockchain Technology?
It all began in 2008 when Satoshi Nakamoto published his whitepaper describing what was to become the most famous cryptocurrency on the internet, Bitcoin. The world turned its gaze towards the cryptocurrency and its use of blockchain technology due to the numerous advantages it promised.
Unquestionably, blockchain technology is one of the most innovative internet-based technologies in the world today. Since it came as a platform on which Bitcoin was to function on, it has experienced tremendous growth and development ever since.
Also, though Satoshi Nakamoto initially presented blockchain as the base on which cryptocurrency was to function, he did not see the other use cases of this technology.
Since 2008, we have seen the cryptocurrency market grow rampantly, reaching a peak market capitalization of $770 billion in January of 2018 and currently holding a market capitalization of over $290 billion.
On the foundation of this cryptocurrency boom sits blockchain technology. Many people are now eager for an in-depth understanding of the different features and benefits of blockchain technology and of the cryptocurrency markets.
Blockchain technology is an innovative and exciting piece of technology that is already being used all over the world for numerous benefits. The growth and development of this technology is likely to transcend its current potential.
Understanding Blockchain Technology
Blockchain technology is a publicly distributed ledger, which is the backbone of most cryptocurrencies on the internet. It was initially designed for Bitcoin, but developers and investors have found other use cases for blockchain technology.
You could also consider the blockchain as an immutable record of data that stands as a block timestamp. This immutable ledger is managed by clusters of computers known as nodes that are not possessed by any single person.
When a transaction is carried out, miners (or Masternodes) create a block of financial records. After authentication and verification of these blocks by all of the other miners on the network, they are then chained together on the existing chain of previously existing blocks of transactions. Hence the name, blockchain technology!
Each of these hashed blocks of record keeping data is bound to one another by cryptographic standards and laws. One way to interpret this is that there are a set of mathematical proofs and algorithms that ensure the system cannot be corrupted or misused by any third-party adversaries.
One of the major reasons why there is a massive frenzy around blockchain is because it does not have any centralized administrator. There is no central bank, retail bank, or other kind of organization that is the sole controller of the network Due to the publicly distributed ledger, this becomes a more democratic system that boasts of transparency and accountability.
Blockchain technology has a lot of advantages and applications in decentralized uses. It provides internet users with the capacity to produce value and verify information on the digital space. For its applications, most businesses have turned towards blockchain and the decentralized sphere in total for their use cases. With this being said, there is still more work that needs to be done within the blockchain space to make the ecosystem more friendly to scaling and high demand situations as well as improving the speed at which the blockchain system functions.
How Does Blockchain Technology Work?
In truth, blockchain technology works with blocks. As it concerns blockchain technology, blocks are a comprehensive collection of transactions collected over the network. This data is added to other blocks on the network created through the use of miners as mentioned previously.
The connection of different blocks of data over the network and a chained network of blocks which are linked together is called the blockchain network. The first block that is generated over a blockchain network is known as the genesis block of data.
The blockchain is a publicly distributed ledger which is spread across the network of peers on the blockchain network. Ultimately, this results in each member on the distributed network holding a copy of this ledger.
Because of the decentralized and distributed nature of blockchain technology, there is very little opportunity for manipulation to occur. For manipulation to occur by a third party adversary, it would need to gain control of a majority of the nodes on the network to validate its manipulated transaction. In most cases, this isn’t feasible. Because every node serves as a policeman to the entire system, blockchain networks are difficult to corrupt or manipulate data on.
The publicly distributed ledger over the network is a unique solution. This solution ensures that the list does not get tampered with because every node on the network has to agree with its current state. To tamper with data on the bitcoin blockchain for example, you would have to take control of a majority of nodes on the network, or 51% of the nodes. This would not be feasible in practice and nearly impossible to do.
In addition to its security protocols, cryptography is used to guarantee even more safety to the blockchain network. This ensures that the publicly distributed ledger is tamper-proof and protected from cyber attacks.
Blockchain technology also works with time stamps. This real-life application helps it to store data in chronological order. This time-sequential order enables it to become immutable to any form of changes on the stored data because the entire network permanently records what point in the chain the data was originally stored.
To illustrate a timestamp, let’s say that on some arbitrary blockchain there exists three blocks of data at time 1, 2, and 3 respectively. Each of these three blocks is time stamped with their respective times. If an attacker were to try to replace a previously existing block with a new block, it would be impossible to replace it with an exact copy because the time stamps would differ and the system would instantly realize the changes and therefore, reject it.
Using the blockchain provides the characteristic of consensus. In essence, all the nodes on the network have to agree to a certain state to accept a change. While blockchain technologies can differ, the bitcoin blockchain requires that at least 51% of the nodes on the network agree to a change before they implement it. Through proof of stake or proof of service, the blockchain can keep up with the ledger in real-time through consensus. Through this consensus, the decentralization uses of the blockchain are accessed.
There is no central administration wielding control over what happens on the publicly distributed ledger. This is the definition of decentralization. This is why in the case of bitcoin, it is both decentralized & distributed. The transactions on the ledger are validated and authenticated using specific criteria which are well stated on the blockchain protocol. The block of authenticated data is then added to the other chained blocks upon the consensus among the peers participating in the network.
A node on the network starts a transaction through the creation and digitally signing the transaction using its unique private key. On the blockchain network, this transaction could represent several things. It could be the trading of cryptocurrencies, exchange of digital assets, tokenization of assets, and so on.
Transactions are then validated upon consensus by the miners before they get chained with the other blocks recorded on the ledger. These transactions are reconfirmed in the moment when there is a newly created block of data. Technically, most networks require about six confirmations before finally confirming a transaction.
Use Cases of Blockchain Technology
Blockchain on its own is a beneficial piece of technology on which other decentralized applications can be successfully built. With the various features associated with blockchain technology, numerous benefits are being enjoyed by blockchain users for whatever solution they need it for whether that’s security, anonymity, or decentralization.
Furthermore, the potential of blockchain technology to revolutionize the way things are done is truly transformative from what we have come to know. Here are some of the main use cases:
One of the main problems which were aimed to be solved with the development of the first cryptocurrency (Bitcoin) back in 2008 was the problem facing payment methods in our society. Specifically, the problem centered around the ability to send money globally.
In today’s current centralized environment, if you send money to another party the process usually is not instantaneous and you will have to pay high fees to whatever financial institution you’re trusting to carry out your transaction. Billions of people around our planet do not have easy access to money, especially in the developing parts of the world. The introduction of these cryptocurrencies through blockchain technology is revolutionary for this reason alone.
Cryptocurrencies are digital currencies developed as a means of exchange. This can be used for buying and selling purposes and as a source of exchange for fiat currency. It is also widely used as a source of investment and store of value.
The distributed digital ledger utilizes the extensive use of the automated contracts that executes agreements when specified terms are met. These terms and conditions could be between two or more users and are specified between the parties early on in the negotiation phase.
The smart contract is beneficial for carrying out business transactions and ensuring transparency as well as trust. This feature was realized through Ethereum, which is an open-source blockchain project specifically designed for this purpose.
The smart contract is programmed to execute transactions once the instrument’s benchmarks are met. With Blockchain technology, the smart contract feature is available to both customers and developers.
Blockchain technology is specifically designed to checkmate the continuous activities of cybercriminals. This is achieved by the decentralized network of nodes used in storing data in their individual nodes. Here, there is no central administrator. Hence, there is no one server for the data.
Under the current client-server model of the internet, hackers can work to attack a single server to access data, steal it, or change it. However, with the use of blockchain technology this would be nearly impossible as every node would have the copy of data making it impossible to change and through the use of advanced levels of anonymity making data impossible to steal.
Blockchain technology is an immutable public distributed ledger that cannot be written on. This makes it extremely difficult to carry out fraudulent activities on the blockchain.
Also, the public distributed digital ledger can be useful in tracing financial transactions in cases of fraud or financial misconduct. These records are public to everyone on the blockchain network.
The introduction of blockchain technology and creation of digital assets has transformed the way investments are made. Now, with the tokenization of these investment opportunities, people can place their money in investment opportunities in bits.
For example: if a group of developers are creating a new blockchain technology to solve a certain problem they can offer a token sale to raise money for their product. This token sale is referred to as ICO, or an initial coin offering.
Through this means, blockchain technology is useful for a more efficient investment scheme. Using blockchain technology also allows for transparent processes of the investment proceeds and return sharing.
Supply Chain Management
Management and coordination of products and goods are now being conducted in a more efficient manner using blockchain technology. Supply chain management now incorporates blockchain technology for the efficient management and full digitalization of goods and products from the manufacturing stage to the delivery stage. Product data now stored on the blockchain for tracking purposes.
For example, diamonds can now be tracked efficiently and easily to prevent blood diamonds from falling into the supply chain. Moreover, we can incorporate this type of supply chain management to ensure the use of fair trade goods are true to their classification.
Governance And Voting
Blockchain technology has also been a major talking point for the voting and governance processes. Through its digitized publicly distributed ledger, blockchain technology can be used to carry out transparent voting and decentralized governance systems.
The votes of the people in a democratic state are their voice. Once this is taken, dictatorship is what is left. With paper voting, there are cases of ballot box snatching. For online voting, there is a high risk of hacking the voting system.
With blockchain technology, it is tough for hackers to alter the information on the blockchain. This is due to the tamper-proof characteristic of the blockchain.
Blockchain technology can be used as an excellent database for storing the data of the patients in a hospital such as the Mayo Clinic. It will be easier for medical staff to understand the history of the patient’s medical condition and have some knowledge about past medications. It can also be used for the verification and authentication of drugs.
Blockchain technology is a well-known tunnel through which crowdfunding activities are carried out. Funds required for the development and completion are gathered, and investors share the token of the project. This facilitates investment in these projects and the funding of these promising ventures.
It is also used in funding specific charity projects which are essential for the development of some areas around the world. Different people donate to charity also through this crowdfunding channel.
Internet Of Things
For the security and interconnectivity of the data on different devices, blockchain technology facilitates a network that is useful as the internet of things. This network of nodes is used for the storage and transaction facilitation on the network.
How Can Blockchain Help Sports?
Since the invention and the utilization of blockchain technology, the various use cases of this technology has been applied to several different industries. This application is also found useful in the sporting industry through a variety of ways. Several use cases are already being used while some are currently being developed.
Because of the immutability and the security provided by the blockchain technology, there is little surprise to its use in the financial aspect of the sporting industry. Consequently, the blockchain technology platform has been used over its short period of existence as a means to carry out various sport-related transactions.
The blockchain technology is an immutable publicly distributed ledger that has been used as a data bank for the storage and secure sharing of personal information between interested parties. As concerning the sporting industry, blockchain technology can also be applied to this end.
The information of teams, sports brands, and its professional athletes can be stored on this unchangeable distributed ledger. This will completely eliminate any form of faulty data.
Interestingly, it is a source to be considered for the storage of statistics to log everything about professional athletes. These days, it all comes down to the numbers that are being produced by these athletes. The statistics and biometrics from the athletes are essential to the sporting industry. Therefore, a safer and immutable data bank for these statistics is significantly important.
Furthermore, blockchain technology is also an excellent platform to set up a pay-per-view streaming for popular sporting events. The cryptography involved in blockchain technology can be used as an authenticating medium for online users. This will completely automate the process and remove the need for intermediaries and extra middlemen fees.
The rise in doping activities have been alarming, and the sporting industry has been trying to put its athletes under check. The integrity and scrutiny involved in the game have been under a lot of tests lately due to the doping allegations on athletes across various sporting activities.
Using blockchain technology in sports, the medical records of these athletes can be recorded and stored on the blockchain network. This secured network management on the blockchain can be the answer to the prescription and test result problem.
Due to the blockchain protocol, the verification process of the uploaded information has to take place. This irreversible upload cannot be altered in any way. Of course, there will be several regulations that will guide this process; the data being uploaded will have to be tested reliably.
The security of the data is left to the incorruptible strong cryptography of the blockchain technology. This is all aimed to protect the integrity of the sport and its professional athletes.
One of the most mainstream sporting activities which generated a hefty amount of cash flow yearly is fantasy sports. Most popular is fantasy football which has reportedly made over $3 billion in handle.
There is, however, the issue of people paying their dues when they realize their picked team is no good. The collection of payment has always been the main problem source in this industry.
Smart contracts would due away with this issue as they can be set to automatically withdraw payment from people’s accounts if when certain conditions are met, for example if your fantasy football teams lose a game.
Already, there are talks to use tokens for sporting activities. In this scenario, the token is used to unlock favorite characters on the fantasy sports platform. This will optimize the brand and increase profitability.
Benefits of Blockchain Technology
As mentioned earlier, blockchain technology has a lot of offer. Some of these benefits include:
1. Low transaction fees
Compared to the rate which is charged for standard transactions, utilizing the blockchain platform provides for low transaction fees for the transactions carried out on the network.
The blockchain platform accounts for transparency. It counts on an interface that serves as security, which makes it totally impossible to cheat.
3. Quick Transaction
Blockchain technology facilitates for the quick transactions carried out on the network. In matters of seconds, transactions are completed.
For data on blockchain technology, the security setup guarantees you maximum security through the immutable ledger. You can rest assured that there is a maximum guarantee on your data.
Due to the setup of the network, your data is stored and can be recovered in case a node crashes. You can be assured of getting your data back.
To Wrap It Up...
Blockchain technology is a specific trend to transform the way processes are being carried out. With obvious applications in different sectors and industries, blockchain technology is being applied to diverse systems every day. The use cases are increasing, and the benefits of the technology are mind-blowing!
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