Saturday, January 19, 2019

What is Blockchain? Explained!!

A Blockchain Demo

It’s money 2.0, a huge huge huge deal.”—Chamath Palihapitiya 

Indian smartphone users must have done some google search when they heard Millenium actor Amitabh Bachchan invested in bitcoins. Well according to the above person who mentioned this (bitcoin) must have some other thoughts to call it money 2.0. Technology has made us travel at a faster pace. Isn’t this so amazing we once saw the transfer of money online was one of the most amazing innovations of all time and now we are standing at the verge of new era where we can see money has different and modified versions apart from online treasure, cash, bonds, economic assets like homes, companies etc. But we are ready to adapt to the transformations going in financial things. 

What is Blockchain?

What made us come to bitcoin? It’s a Blockchain. The blockchain is today not a phenomenon but a side of new financial institutions blended with greater security and supervisions to stop any malicious activity one can observe in the system. 
Blockchain has become one of the most trusted entities which one can call to board a flight to the future of finance and economics. Investment in Bitcoin, Ethereum, Bitcoin cash, and stellar lumens are the new types of wallets. It is an incorruptible ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value. Blockchain is a distributed network that stores information in a tamper-proof form which can only be appended but not modified by valid ‘users’ 
The blockchain technology generally has key characteristics of decentralization, persistency, anonymity, and auditability. With these traits, blockchain can greatly save cost and improve efficiency. Since it allows payment to be finished without any bank or any intermediary, blockchain can be used in various financial services such as digital assets, remittance and online payment. 
But perhaps the fundamental difference with blockchain development is that it has largely been orchestrated in the open-source environment. Bitcoin, the original blockchain system, was birthed in open source. Accordingly, in an effort to better understand the development of blockchain and its ecosystem, we have conducted an extensive data analysis of blockchain projects in an open-source environment. 
Also read: Trending Technology of 2019

Scrounging Past: 

  • October 2008: Satoshi Nakamoto introduces a white paper in blockchain and bitcoin 
  • January 2009: the first genesis block was mined 
  • January 2009: 1st bitcoin transaction takes place 
  • October 2009: 1st bitcoin market established 
  • May 2010: bitcoins are available to get purchased 
  • February 2011: bitcoin exchange value reaches parity with US dollars 
  • March 2013: Market capital of bitcoin crosses 1bn $ 
  • July 2014: 1st Ethereum project launched 
  • April 2015: NASDAQ releases blockchain trial 
  • September 2015: Blockchain tech company R3 is founded by a consortium of financial institutions including Barclays, Credit Suisse, Goldman Sachs, JP Morgan, and RBS 
  • December 2015: Linux launches Hyperledger product 
  • August 2017: Bitcoin circulation reaches 16.5 bn 
  • January: Switzerland becomes the first country to accept tax payments in bitcoin 

What is Blockchain technically? 

As revolutionary it echoes, Blockchain is truly a mechanism in itself to bring everyone to highest accountability and transparency.  
  • Blockchain is a sequence of blocks, which holds a complete list of transaction records like a conventional public ledger. 
  • With a previous block hash contained in the block header, a block has only one parent block. It is worth noting that uncle blocks (children of the block’s ancestors) hashes would also be stored in Ethereum blockchain. 
  • The first block of a blockchain is called genesis block which has no parent block. 

  • The block header includes: 
  1. Block version: indicates which set of block validation rules to follow 
  1. Merkle tree root hash: the hash value of all the transactions in the block.  
  1. Timestamp: current time as seconds in the universal time since January 1, 1970.  
  1. nBits: target threshold of a valid block hash.  
  1. Nonce: a 4-byte field, which usually starts with 0 and increases for every hash calculation. 
  2. Parent block hash: 256-bit hashes value that point to the previous block.  

The block body is composed of a transaction counter and transactions. The maximum number of transactions that a block can contain depends on the block size and the size of each transaction. Blockchain uses an asymmetric cryptography mechanism to validate the authentication of transactions. 
The blockchain holds the potential to disrupt any form of transaction that requires information to be trusted. This means that all intermediaries of trust, as they exist today, are exposed to being disrupted in some form with the advent of blockchain technology. 
A blockchain network can either be public or private based on who is authorized to participate. The essential difference between a public and private blockchain is that one operates in a decentralized open environment where there are no restrictions on the number of people joining the network, while the other operates within the confines defined by a controlling entity. A simple analogy is a difference between the Internet and the Intranet. While the inherent technology for networked computers remains the same, there is a big difference between the dynamics and utility associated with a closed network (such as a home network) and an open network (such as the Internet). 

Interpreting the mortality rate of blockchain projects: 

The stark reality of open-source projects is that most are abandoned or do not achieve meaningful scale. Unfortunately, blockchain is not immune to this reality. Our analysis found that only 8 percent of projects are active, which we define as being updated at least once in the last six months. Here, organizations are a positive differentiator; while 7 percent of projects developed by users are active, 15 percent of projects developed by organizations are active. 

Essential Prerequisites of Blockchains: 

Blockchain technology is suitable only when multiple parties share data and need a view of common information. However, multiple parties sharing data is not the only qualifying criteria for blockchain to be a viable solution. To better understand the effectiveness of a blockchain solution, we empirically define a cut-off of three out of the following five success criteria: If at least three of these criteria are not important, then blockchain is not needed and the current solution is satisfactory. 

To summarize, blockchain technology is definitely not a solution to all transaction-related problems: 
  1. Multiple parties update data 
  1. Requirement for verification  
  1. Intermediaries add complexity 
  1. Interactions are time sensitive 
  1. Transactions interact  

When actions undertaken by multiple parties need to be recorded and the data coming from multiple parties needs to be updated when it is necessary to build trust amongst parties and make them understand that their actions that are being recorded are valid When a transaction is dependent on multiple intermediaries and their presence increases the cost and complexity of the transaction When it is beneficial for the business to reduce delay and expedite a transaction When transactions created by multiple participants interact and depend on each other. 

Also read: What is Dark Web?

Where to Apply? 

  • Maritime Industry: The maritime industry has established itself as a key supply chain stakeholder over the years, either by its sub-industries or by supporting businesses and allowing their growth. Shipping itself has also become a differentiator among enterprises and an advantage for them in enlarging their market reach. Data is the focus of shipping digitalization, mainly driven by the offshore and containerized shipping, as poor information management can account for up to 20% of an operational budget. The maritime transport and logistics have been applying data-driven technologies application for some time, with several examples, including the first blockchain application by Maersk. 

  • Developer’s Paradise: At present, the development of blockchain applications and services requires a highly specialized skill set, and the state of the blockchain developer toolkits is immature (Aru, 2017). The introduction of Blockchain as a Service (BaaS) platforms such as those by Microsoft (Azure) and IBM (Cloud) provide an inexpensive environment for developers to rapidly prototype on test blockchains before deploying to live ones (Sofia, 2016). Other examples in this space include technology platforms that enable secure sharing of data across industrial networks through blockchain’s tamperproof ledgers (e.g. Xage3), and technologies that offer blockchain enabled verification of data transactions (e.g. Guardtime4). These BaaS solutions form the basis for programmable trust, ownership, and identity, and also facilitate the operation and governance of enterprise blockchain applications and services. 

  • Smart Contracts Utility: Smart contracts provide a programmatic interface to blockchains. Smart contract utility is defined as “being able to perform useful functions to create, maintain or augment the value of digital assets”). The smart contract, when triggered, transacts value based on digital assets. The utility is captured in code and stored on the blockchain. This code is executed when a predetermined condition occurs. Activities often managed by third-party central authorities are mitigated to the blockchain instead, disintermediation transactions. 

  • Agriculture: Blockchain technology can be used to increase transparency, reduce complexity and cost in food-based value chains by enabling trustworthy provenance and traceability from farmer to consumer. Other possible applications include the use of blockchain technology to record and manage agricultural land records as well as agriculture insurance. 

  • Energy: Blockchain technology can be deployed to create a marketplace for electric power supply. Microgeneration of electricity through home power generation using solar energy supplements traditional power supply and promotes the use of renewable energy sources. Using smart meters, a record of produced and consumed electricity for each user in the grid can be maintained on a blockchain with credits/currency allocated to the user for surplus power supply and credits redeemed for power consumption. This essentially creates a transparent, hassle-free and efficient energy market. 

Contemporary and future blockchain-based innovations span a myriad of use-cases and industries beyond digital currency and the financial sector. 

1 comment:
Write comments

Featured Post

WhatsApp New Privacy Polices Explained - Updated

WhatsApp New Privacy Policy & Its Issues There is a constant tussle going around data privacy. The data fiduciaries and soc...