There is certainly a hype around Bitcoin and other crypto currencies, which has helped blockchain technology gain traction on a global scale. Increasingly, people associate crypto currencies with the blockchain technology, and many people are of the opinion that blockchain is just another tech jargon used to identify Bitcoin and other crypto currencies, which is fundamentally incorrect.
Blockchain in fact is the underlying technology that supports the functionality of crypto currencies, but there are many other use cases of this revolutionary technology.
Even though blockchain is often referred to as a technology in its own right, it’s rather a combination of 3 technologies.
(Source – Coin Desk)
The end product of these 3 technologies is blockchain, and it supports the transfer of any digital property between two parties without the need of a third-party. The very core objective behind the blockchain technology is to enable two (or more) different parties interact with each other and complete transactions without the need of a third-party institute to approve and process the transaction.
How does the blockchain technology work?
The blockchain technology helps store valuable information regarding transactions including the date, time, product, and the value of the transaction in a block. The unique nature of the technology ensures these information blocks are different from one another, regardless of thousands of blocks being stored on a daily basis. The differentiator between these blocks is the unique code stored by every block, which is called a hash. Once the information contained in a block is verified (which is an automatic process that involves the integration of thousands of networks across the world), the transaction, or the information block, can be accessed via a public ledger, which eliminates the need of a third-party institution to verify and approve the transaction. The Bitcoin public ledger is a classic example of this.
In the absence of a third-party institution, can we manipulate the blockchain technology?
The most common question raised by people is whether the technology and the information it contains can be manipulated by others as there is no third-party institution such as a bank or a government agency to avoid malpractices from happening. Even though we cannot completely eliminate the possibility of malpractices, the truth is, it’s extremely difficult to get around the technology.
A quick look at the below screenshot from the Bitcoin blockchain reveals that there is a column for “height”.
(Source – Blockchain.com)
Hash codes function in a way that it includes a unique hash code for one transaction, which is derived from the hash code of the previous transaction. All these hash codes are sorted in a chronological order, which is reflected in the “height” column. As such, if a hacker tries to manipulate the technology and the blocks, the person has to change all the hash codes and blocks of the transactions that has been executed after the specific transaction that he’s trying to manipulate. This makes it extremely difficult to manipulate the blockchain technology.
What are the use cases of blockchain technology?
Undoubtedly, facilitating crypto currency transactions is one of the most prominent use cases of the blockchain technology. Without the blockchain technology, crypto currencies would never have made it into the big leagues as it would have been impossible to verify the transactions considering the decentralized nature of crypto currencies.
There are many other use cases for blockchain, and these are continuously exploited by tech investors around the world. There’s indeed a plethora of use cases for blockchain, and the technology can be used virtually in every industry and sector to make a difference in the way how things operate today.
(Source – Adva Optical)
At present, the blockchain technology is primarily used in the financial services industry, but in the near future, we can expect the technology to be used in various sectors across the globe. The increasing adoption of the technology could dynamically change the way how businesses operate in the future. It is even predicted that the blockchain technology would be used to vote in elections. In fact, during the mid-term elections in November 2018, this was successfully tested in West Virginia.
The future outlook for the blockchain technology
There are arguments for and against the blockchain technology. Regulators around the world are turning the back to the growth of blockchain technology and some governments have even taken steps to ensure the technology does not evolve in their jurisdictions. The most compelling reason prompting regulators to curb the growth of the blockchain technology is the increasing use of crypto currencies to complete illegal transactions including money laundering and terrorist financing. In the absence of a third-party financial institution, Bitcoin and other crypto currencies have become the preferred choice of criminals to execute transactions. Crypto currencies are used in the darknet as well to pay for illegal products and services.
Even though regulators are not supportive of the growth of blockchain technology, the very measures taken by regulators could boost the appeal of crypto currencies and the blockchain technology in the future. For instance, the continuous crackdowns by regulators to curb the growth of illegal use of Bitcoins will exert pressure on the price of the crypto currency in the short-term, but will attract many institutional investors as illegal usage of Bitcoin falls to negligible levels. This will certainly fuel the growth of blockchain technology as well.
In conclusion, we believe that blockchain technology will prove to be a disruptive growth force in the future, and various industries will function better, and in a customer centric way in the future as the blockchain technology is adopted by companies representing such industries.