Blockchain or Blockchains is a digital ledger in which transactions are made in bitcoin or any other crypto currency which are recorded chronologically and publicly. This is an incorruptible digital ledger that is programmed to record financial transactions and everything of financial value. Blockchains are embedded within a network, thus by definition is public. Altering any information within the blockchain would require a huge amount of computing power to be able to override the whole network.
Blockchain is somewhat similar to something we are all familiar with, “Wikipedia”. Like Wikipedia, blockchain entries are not coming from one specific publisher only. No one person controls the information and many people can write entries into a record of information. A community of users can then control how the information records are updated and amended. A user with permissions associated to the specific account will be able to change Wikipedia entries stored on a centralized server. Whenever users access a wikipedia page, they will get the updated version of the ‘Master Copy’ of that specific Wikipedia entry. The control of the database remains with the administrators allowing permissions and access to be maintained by a central authority.
Allowing digital information to be distributed, but not copied has enabled blockchain technology to create a backbone for a new type of internet. It was originally devised for the digital currency, Bitcoin. Now, the tech community is constantly finding ways to make use of blockchain technology. Wikipedia has a digital backbone that is very similar to the highly encrypted and centralized databases that insurance companies, banks and the government uses. Blockchain technology has a fundamentally different backbone. This is also an important and distinct feature of the blockchain technology. Compared to Wikipedia, wherein one user edits the entry and all users will be able to see the updated version, Blockchain technology will have to have each node in the network update the record independently whenever a contributor updates information. The most popular record will then become the de-facto official record, instead of having the traditional master copy.
With this striking difference, it sets the blockchain technology apart from others and makes it very useful. And yet, blockchain technology is not a new technology. It is rather a combination of proven technologies applied in a new way. The particular orchestration of three technologies specifically the internet, protocol governing incentivization and private key cryptography has made the idea of the bitcoin creator, Satoshi Nakamoto very useful.
Blockchain Technology is a system for digital interactions that does not need a trusted third party. The work of securing digital technologies is already supplied by the elegant but robust network architecture of the technology itself. For blockchain technology, private key cryptography provides a strong ownership tool that fulfills authentication requirements. Possessing a private key is ownership. It also prevents a person from having to share more personal information than they actually need, thus preventing them from hackers.
Bitcoins are now being dubbed as the currency of the future. It’s a form of payment because you can use Bitcoins to pay for stuff. Most retailers are also now accepting Bitcoins as a payment method. Aside from paying stuff, you can also send Bitcoins to in small amounts to people in other countries without having to worry about the exchange rates and conversion fees.
The value of Bitcoins have fluctuated over the years based on the law of supply and demand. The more people who want to use them, the higher the value. Bitcoins were originally envisioned as a trustless exchange. In other words, you can transact with anyone in the world, without having to supply them with your personal information and credit card information. The receiver of the payment will not get any information about the buyer and thus cannot use it to steal any money from the sender in the future. However, once the payment has been made there is no way of stopping it. Should you have any disputes, you’ll have to settle with the other party.
Information regarding every Bitcoin is recorded in a digital ledger which we all know as Blockchain. You will need to buy in the ledger by purchasing one of a fixed number of slots either with cash or by selling a product or service in exchange for bitcoins. The book and page number does not change, only the owner. Similar to when buying a house, the ownership gets transferred to someone else. Thanks to technology, no one will know who the current owner of that slot is, nor who the seller was. That information is encrypted and cannot be decrypted without the digital key.
Finance currently offers the strongest use cases for Blockchain Technology. For example, International Remittances. The World Bank estimates that in 2015, over $430 Billion US in money transfers were sent. At the moment, there is still a high demand for blockchain developers.
Blockchain has the potential to cut the middleman for these types of transactions. Due to the invention of the Graphical User Interface which took a form of a ‘desktop’, personal computing has become accessible to the general public. The most common form of GUI that was devised for blockchain are those ‘wallet’ type of applications which are widely used to to buy things using bitcoin and other cryptocurrencies.
Another use for blockchain is to store people’s online identities. Then, that identity is linked to scores and reviews on marketplace and sharing economy sites. P2P lodging sites like Airbnb, HomeAway and OneFineStay has already begun to transform the lodging industry by making a public market in private housing.
Blockchain technology can also be used to protect intellectual property. As we all know, digital information can easily and can be infinitely reproduced thanks to the internet. This has given web users an infinite supply of free content. Unfortunately, copyright holders aren’t so lucky since they are losing control over their intellectual property and suffering huge amounts of financial losses. Mycelia uses blockchain to create a P2P music distribution system. Mycelia is founded by the UK singer and songwriter Imogen Heap. This app enables musicians to directly sell their music to audiences. It also produces license samples to producers. All these features are being made automatic by smart contracts. The capacity for blockchain to issue micropayments is a sign that blockchain has a huge chance of success.
Currently financial institutions must perform a labor intensive process for each new customer. Anti money laundering and ‘know your customer’ are currently being adapted to the blockchain. This in turn could reduce costs incurred through inter-institutional client verification. Polycoin has an Anti Money Laundering and Know your Customer solution that involves transaction analysis. Transactions that are identified as suspicious or fraudulent are forwarded to compliance officers. Another Startup Tradle, is developing an app called Trust In Motion. TiM allows users to take snapshots of their documents such as passport, utility bills, and the like. Once verified by a financial institution the data is cryptographically stored on the blockchain.
BitProof is an online notary which is based on the Bitcoin blockchain. Users may drag and drop files, then it goes through numerous cryptographic functions and gives you a blockchain certificate proving your ownership and timestamp of the file. This is one of the numerous documenting timestamp apps that have emerged over the recent years. Free versions of this exist, however BitProof offers more services. This also includes one that targets intellectual property protection. Just recently as well, BitProof has partnered with Holberton School in San Francisco to have their student academic certificates on the blockchain. This totally re-engineers how diplomas and student certificates are used and handled. Everything on the client’s side is encrypted. Users are encouraged to pick a very strong password when signing up and reminded to remember it since BitProof Administrators have no way of decrypting your files or altering your certificates.
What BitProof does for files and documents, Uproov does for photos and videos. Your data can be made public or private on the blockchain. Pictures and videos that you take can be relied upon as authentic. Anything that you want to prove that existed at a certain point in time, like insurance claims or police brutality can be used in the future. Once you upload your recordings, a unique time stamp key is generated and integrated into the blockchain ledger. Pre existing photos may also be Uprooved, they will be stamped with Red Ezy-id.
Genecoin, although it sounds like Bitcoin is to a cryptocurrency. Rather, it is a novel service that ‘backs up your DNA’. Genecoin gets your DNA sequenced and places a copy of your genome on the blockchain. Aside from the Sci-fi tendencies that comes with making a copy of yourself, there are legit medical uses for keeping your DNA accessible. Once you sign up, you’ll receive a kit to collect your spit sample which then gets forwarded to a DNA sequencing provider that creates the data version of your genome. After that, your genome gets stored in the Bitcoin blockchain. By defaullt, genomes can be very large. A human genome can contain up to 3GB of data if it was encoded incorrectly. However, with Genecoin’s methods, a full genome will only be approximately 750MB.
Most users will be concerned about their privacy and will most likely want their genome to be encrypted before uploading it. Users have the option to keep their information as private as they want. They have the choice to encrypt the data with their own computer.
Everledger uses blockchain to track features like diamond quality, color, clarity and cut. This also helps monitor diamonds from war zones. This tracks individual diamonds from the mine to the consumers and beyond. The diamond Industry is continually growing. Jewelry sales alone currently in excess of $72 Billion every year. According to the World Diamond Council, roughly 30% of all diamonds are used for jewelry while the rest are sold for industrial applications like cutting, grinding, drilling and polishing. Tracking a diamond from the mine to the retail store is considered very tricky, and the process is far from perfect. And instead of recording these assets from owner to owner, Everledger is combining data from police departments, certification houses, and insurance companies.
Their goal is to provide an accurate database that is available to everyone on blockchain. It gives consumers a global ledger and global transparency over the chain of custody of the diamond as well as the supply chain. In a 2013 insurance fraud survey conducted by Fair Isaac Corporation and the Property Casualty Insurers Association of America, 31% of insurers estimate that up to 20% of claims are the direct result of fraud. 57% of the insurers surveyed said they anticipate a rise in losses due to fraud on personal insurance lines, which are policies that were designed to supposedly protect individuals and families.
Everledger was built as a platform for law enforcement and insurance companies to combat fraud. According to Leanne Kemp, CEO of Everledger “Identification of fraudulent claims help to uncover the sale of stolen valuables and can aid their recovery. We work alongside crime agencies to assist in the identification of cross border transactions, money laundering, and counterfeit goods.”
She explained during a podcast with Consult Hyperion the life cycle of a diamond before Everledger existed. After cutting and mining, the diamonds are then sent for certification. The Certification houses then inspect the diamonds while laboratories grade them using the 4 C’s of diamond classification – Cut, Clarity, Carat and Color.
Certification Houses typically sterilize the diamonds and then they issue physical certificates with all the attributes of the diamonds. This includes the girdle dimensions and even hand-drawn line pictures. These certificates then go with the diamonds to the retail stores which help increase the value and price of the stones significantly.
Certificates previously belong to the certificate houses which are not made readily available to the public. Certificate houses are also not immune to corruption. Kemp then explained that insurance fraud is one of the biggest global problems with incomplete global statistics.