What can a blockchain do?
Overtime, financial institutions have funded the disruption of a huge amount of industries; they know what a revolutionary technology can do to static ideas.
To remain a step ahead, most banks have proactively set up R&D labs by building test centers and maintaining partnerships with blockchain developers in other to be aware of the strength of this revolutionary technology. Financial institutions took the first step even though academia, governments and consulting firms had studied the technology. All of this is in addition to what developers and entrepreneurs are engaging in either by exploring new use of the Bitcoin or Ethereum blockchain’s or creating a whole new blockchain.
While this exploration has been ongoing for years, the results are starting to become evident.
Here are some of what the blockchain is capable of:
Establish digital identity
The identity aspect of the blockchain technology is achieved through the use of cryptographic keys. The combination of both the public and private key brings about the possession of a strong digital identity.
The public key is how the masses identify you (like an email address) while the private key serves as your consent to digital interactions. Cryptography is a key player in the blockchain revolution.
Serve as a system of record
Blockchains are an innovation in the collection and dissemination of information and are great for storing both static data (a registry) or a dynamic set of data (transactions), hence, making it a new method of record keeping.
In the case of use as a registry, data can be stored on a blockchain in any combination of these three means:
· Unencrypted data – fully transparent information accessible by participant in the blockchain.
· Encrypted data – can be accessed by blockchain users with the help of a decryption key which provides access to the information on the blockchain and can be used to determine when data was added and by whom.
· Hashed data – presented together with the function that created it to confirm it wasn’t meddled with.
Blockchain hashes are done with the aid of the original data stored off-chain. Digital ‘fingerprints’ are often hashed into the blockchain while the main part of the information is kept offline. A shared system of record keeping can entirely change the methods which contrasting organizations function together.
With the current method of data saved in private servers, there is a huge cost attached to carrying out inter-company transaction which involves procedures, processes and records verification.
This feature of the blockchain entails that it has a history of itself and are therefore sometimes called ‘immutable’. Consequently, it would be complex to edit an entry in the database as it would require the change of all the data that follows on every single node making it more of a system of record than a database.
Serve as a platform
The first platforms to use the blockchain technology are the cryptocurrencies however people are beginning to explore the platform for smart contracts, more than just the exchanging of crytocurrencies. The term ‘smart contract’ has become more of a phrase, meaning so many things, but the concept can be divided into different categories:
The ‘vending machine’ smart contract, coined by Nick Szabo, where machines engage on the reception of an external input (e.g. cryptocurrency), or else sends a signal that set off a series of blockchain activities.
The smart legal contracts, also called Ricardian contracts, are based on the concept that the contract is a meeting of the mind and is merely an agreement to conclusions made by the parties consenting to the contract. So the contract can be a combination of verbal and written agreements with a mix of important functions of the blockchain like the timestamps, auditing, document coordination or business logic and tokens.
Finally, the ethereum smart contracts are programs that control the blockchain asset and are executed over interactions on the Ethereum blockchain. Ethereum is a platform for smart contract codes.
Blockchain’s aren’t developed from brand new technologies but are a unique mix of three existing technologies: Private Key cryptography, Peer-to-Peer Network and the protocol (set of rules).