Blockchain: the basic concepts and applications ideas

28 Feb 2020
Kate, copywriter
Time-traveling is easier than hacking blockchain. To change the info in the blocj you will have to pick thousands of hashes on thousands of computers. It’s like traveling to numerous dimensions.
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Three rules about time-traveling and blockchain

  • If something happened, it happened.
  • Traveling into the past is hard – but maybe not impossible. Changing a single detail can create Time Paradox, so watch – don’t touch.
  • We travel into the future all the time. Second by second. While you were reading it, you have already moved ahead in 10 seconds to the future.

Now let’s imply these rules to our topic:

  • If the block is created, it’s created.
  • Changing the existing block is hard – but maybe not impossible. By altering a single piece of information, you can create Chain Paradox and it will not work.
  • We create new blocks all the time. 5 seconds for one. While you were reading it, there are already 2 blocks built.

So what is this Blockchain? 

Blockchain is a system of computers that we use to share, store, and secure data. This can be anything: a well-known bitcoin, personal documents, photos of your cats or any other piece of information people decide to share. Every transaction and information sharing creates a new block. It is connected to the previous ones, building up a chain. This chain of blocks is a blockchain. Yeah, the name of the technology is very straightforward. So, how does it work?

Jack wants to send me 45 bitcoins. If he sets a small commission fee, I will get it in a day, or half a day, or several hours. Miners do not like to be underpaid so they put priority to the orders with higher commission. If he pays more I get my money faster. As soon as the transaction finishes successfully a new block is added to the system of chains and it contains the information about the sender (John), receiver (me), and amount of bitcoins (45). The blocks are being built in chronological order. However, it’s not the only connection they have. What makes them truly united and secure is a hash. Just as your fingerprint, voice, and face are unique to you, the hash is unique to each block and its information. It consists of 32 digits. Anytime the miners create a block – the hash is generated. Any time you alter the information in the existing block, the hash changes as well.

Let’s say I want to rob Jack and alter the information about the transaction. I come up with a plan. First, I change the number of bitcoins I obtained to 20 instead of 45. Then I call John and tell him that he cheated me and underpaid. If John doesn’t believe, I show him the info about the transaction and get my additional 25 bitcoins. Sounds pretty easy, if there wasn’t for the fact that each block contains not only its own hash but also the hash of the previous block. To deceive Jack, I will have to change the hashes in all subsequent blocks that were built after mine so that they would match. In theory, it is achievable. However, there are thousands and millions of them.

transaction in blockchain

Let’s say, I am determined about stealing Jack’s money and ready to change as many hashes as possible. Here’s how blockchain hacks the hackers. It is decentralized and open to all users so to break in the block you will have to change the info in the computers of all users.

Now let’s continue developing the analogy of time-traveling. How do you think: why is there a rule stating we shouldn’t change the past events? Because everything has cause-and-effect relationships. The best example – you! If your grandfather didn’t go to the party where your grandmother was, well, you wouldn’t be reading this article now. Same with blocks – a simple change in the chronological set of data makes inconsistencies.

However, if time-traveling existed it would be easier to change events in the past than changing the information in the blockchain. Your rival can get rid of you just by persuading your grandfather not to go to the party. To change the block in the chain you will have to pick thousands of hashes on thousands of computers. It’s like traveling back to a specific time to numerous dimensions.

What can you do with Blockchain?

You can buy a pizza.

On the 22nd of May, in 2010 an IT-guy opened up the door and took two pizzas he had ordered. He was so glad because it cost him just 0.5$ for each instead of 30. This was one of the first deals where bitcoins were involved, and they were cheap during that time. Laszlo Hanyecz paid “only” 10000 bitcoins and had a nice dinner! If it were now he could have bought… Actually, what can you buy for 88 734 000 dollars? A lot of things, apparently.

The rise of bitcoin’s popularity revealed the existence of blockchain to the broad community. It was built in the 1990s and for 10 years nobody needed it or knew about it. Who could expect that cryptocurrency would have such great popularity nowadays?

So, yeah, the info that with blockchain you transact money is like telling that 2+2 = 4 and the Earth is not flat. If you don’t know it (we hope you do) the next picture is for you.

Transaction process (on an example of John and me)

  • Josh states the address and amount of bitcoins he wants to send into his wallet;
  • He confirms the transaction by including his key;
  • A miner creates a new block;
  • The nodes confirm that the info is valid and there are no inconsistencies;
  • I get my money.

For now its the leading application of this technology. That is why when you hear blockchain you unconsciously recall the word bitcoin. Of course, there are many other types of cryptocurrency. There are Ethereum, XRP, Tether, and others.  You can transfer money and buy goods. You can lend them and borrow them. You can donate and accept charity. However, cryptocurrency is quire vulnerable just like any other currency. Good thing, blockchain in potential can be used not only for financial transactions. If you provide services, like insurance or healthcare, then there is a possibility to implement smart contacts in your business.

Smart contracts

Here’s where blockchain can replace the notary, accountants, and legal practitioners. In an offline world to get the contact, you need to hire a lawyer, who will help to prepare all the documents about you, your mother, your little dog, and the pen you are writing with, and this guy who once worked in the building near you… (hi, bureaucracy!). The manual remittance, 2-3 days of waiting, long confirmation process and tons of paper. Also, what are the chances all parties will act as it is written in the contract? With the right amount of money laws can be dodged (hi, corruption!).

You cannot bribe blockchain. Smart contracts are secure. To conclude it with a company you will have to wait several minutes. The remittance will be automatic, as soon as the system checks all the requirements and conditions, confirming their validity. With a smart contract, you can fire your lawyer. It automatically detects if all the conditions are met and decides whether the asset goes to another person, stays with you or gets a full refund. Contracts provide business logic to the blockchain.

The advantages of using it for your product:

  • Automatization. All the requirements for the deal are written as a coding algorithm;
  • Speed. The code immediately checks all the information about the actions or violations;
  • Directness. No banks, lawyers or notaries in between the process of making the contract and maintaining it;
  • Saving money, for there are no additional fees, no paying for services;
  • Transparency. All the info about actions will be available in the blocks that are extremely hard to hack.

Where are smart contracts implemented today?

Logistics and supply chains. Maersk and IMB introduced the new type of shipping solution called TradeLens. It unites almost 100 different companies and organizations and creates a unified concept of secure transportation. Some of the biggest causes of logistics delays are problems with documentation, failures in packing supply, informational delays and so on. Blockchain solves most of these problems.

Medicine. Hash Health serves the medical business by allowing doctors/pharmacists/federals to conduct contracts with each other and reduce the usual administrative burden. Another of their products compares the prices and quality of health maintaining products so the consumers can shop more efficiently. Also, Hash Health provides a database for medical workers with info about their credentials.

blockchain application

 

Gambling and lotteries. FunFair created a gaming space based on blockchain. They promise a world of honest casino and fair results. Also, they provide game developers with the possibility to make their games fairer.

Personal data security. Sum&Substance provides the possibility to verify your identity when you use online services. It also helps to reduce fraud on the Internet because as soon as you find any paid service and want to use it, the system checks their documentation on validity.

Art and music. Ascribe collects digitally based artworks and allows artists to create licenses. The works of digital artists are easy to copy without the loss of quality. So Ascribe provides them with the possibility to have copyright protection.

Internet of things. Robonomics allows building trust between the robotic services and the users of it, allowing to track the processes.

Best opportunities for blockchain business opportunities

By means of exploring the projects that are already developing, you come up with the new startup ideas. You see, blockchain is a relatively untouched field where you can be the first in something. If you invest in the domain that is still not implemented with blockchain then, who knows, maybe you’ll provide a good future for your grandchildren who will live in the BLOCKCHAIN ERA! The bravest predictors state that there’ll be one day when we will vote on elections using blockchain and that smart contracts will reach the degree that if you don’t pay the rent it will block the door to your flat. For now, take a look at the fields for blockchain project ideas.

Crowdfunding. This type of money-raising allows companies and organizations to take small investments from regular people, like you and me. However, you will not give money to any organization just because you believe in their ideas. The ideas can be made up to manipulate feelings. Because of the lack of trust, only 78% of campaigns are successful. Blockchain application can provide a platform for secure and trustworthy money raise.

Wills and testaments. The vague will or the lack of it creates great conflicts in both small families and great communities. If the famous artist dies, who gets his paintings: family and friends or national art galleries? Unfortunately, wills can be altered. Backing by blockchain will not only help to avoid these situations. Also, it will enable to make sure all testaments from the will are met by all parties.

Social Media. With the increased concerns about the vulnerability of personal data and the doubts in the trustworthiness of Facebook and Google, there is increasing popularity of secure platforms. Using service and sharing info without the fear of being attacked by targeted advertisements is a new black. Steemit, Earn, Social X are blockchain-based secure social media. However, they have not spread as much as Facebook. So it’s another potential blockchain application.

Cybersecurity. Blockchain is reliable because of the cryptographic connections between its blocks and the shared control by all users. There is a point in building blockchain projects that prevent data leak, identity frauds, and hacker attacks.

Banking and Real Estate. Smart contracts can enable the trustworthiness of a person who rents an apartment or takes a bank loan. Also, the money transfer can be performed in any part of the world. So, if the credit options in Germany are not satisfactory, with blockchain technologies, you could live in Berlin and borrow money from American banks.

Artificial Intelligence. Data is an inevitable part of AI development. Analyzing the information AI learns. It’s in our interest to make it valid and coherent which is easier with blockchain.

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