What is a blockchain?
January 31, 2022
If you bought a bitcoin for one dollar in 2011, you could have sold it for $19,000 in December 2017. Because of this miraculous rise in price, bitcoin has been the talk of the town for months. But is it an overrated hype, or the digital revolution of our payment system? One thing is certain: cryptocurrencies could largely replace traditional money – just as WhatsApp and Facebook have revolutionized communication. But how did bitcoin come into being? How is it mined? And what is blockchain technology all about? In this book, Tim Schreder provides answers to the most burning questions about digital currencies and explains the basic mechanisms behind them.
Real-world application examples
Probably one of the best-known examples of the use of a blockchain are financial transactions. In particular, the cryptocurrencies mentioned at the beginning of this article illustrate how the technology can be used in the financial world. In the course of a blockchain, individual transactions are verified and distributed to the so-called nodes. This results in high data consistency and a particularly high level of transparency. These properties are the basis for banking transactions. Encryption – this is done by using a hash function – secures the data and protects it from manipulation.
Blockchain technology not only offers the four advantages mentioned above, but can also be used in all business areas. Above all, transparency, decentralization and security play a supporting role. Already today, numerous companies are discovering the possibilities of the technology and developing their own products based on a blockchain. Many experts see enormous future potential in the technology, so developments in the coming years are likely to be particularly exciting.
The future of blockchain
A blockchain is a decentralized database – an electronically distributed ledger or list of records that can be accessed by different users. Blockchains use cryptography to log, process, and verify every transaction, making them secure, durable, and transparent. That’s why you should buy KardiaChain, the super-fast future in transactions.
In a study by TechRepublic Research, 70% of professionals surveyed said they haven’t used blockchain yet. But 64% of respondents said they expect blockchain to impact their industry in some way, and most predict a positive outcome.
- By 2022, only 10% of companies will achieve radical transformation through the use of Blockchain.
- By 2022, at least one innovative company built on blockchain technology will be worth $10 billion
- By 2026, the value created by blockchain will grow to just over $360 billion and to more than $3.1 trillion by 2030.
Cybersecurity is one of the most promising areas where blockchain technology is projected to grow. Data tampering is an ongoing challenge for companies of all sizes. Blockchain technology can be used to prevent tampering, keep data secure and allow participants to verify the authenticity of a file.
Other areas of use
Picasso was yesterday: digital art is rapidly gaining ground. What’s more, it’s a market worth millions. In the spring, London auction house Christie’s auctioned off a collage of 5,000 digital images by U.S. artist Beeple for an impressive $69.3 million. The artwork was encrypted using Non Fungible Tokens (NFT) stored on the blockchain, making it unique and forgery-proof. NFTs could also have a future in the music industry. Pop musician Grimes, with whom tech pioneer Elon Musk has a son, has already sold digitally encrypted music and videos. German artist Fynn Kliemann auctioned 100 jingles for a total of 250,000 euros through NFT platforms Rarible and Open Sea.
Health
As with textiles or food, blockchain could also help make the value chain of medicines more transparent. For example, illegal trade in counterfeit pharmaceuticals could be prevented because the entire manufacturing process and transport route would be stored on the blockchain. The German Federal Ministry of Health held an ideas competition in 2019. The result: blockchain solutions could, among other things, prevent narcotics abuse or help with patient consent for organ transplants, for example.
Cybersecurity
Whether Internet of Things, business intelligence or Industry 4.0: data is becoming increasingly valuable for companies and their processes. This makes it all the more important to protect it from cyberattacks. In the future, distributed ledger technology could ensure that sensitive data is well protected on the blockchain. Cryptocurrencies and the financial industry are already impressively demonstrating that and how it can be done.
The blockchain future has just begun, or rather: blockchain technology is constantly reinventing itself. The blockchain with a future is the third generation. In the future, it will not only be about Blockchain proving its worth when investing in Bitcoin or buying Altcoins, but also covering entirely new areas (for example, in industry and services).
Companies are increasingly relying on the blockchain technology future. At nextmarket traders can trade future: with CFDs on important internet currencies.
Does blockchain have a future? This is a question that many users and experts are asking themselves. Looking at the Blockchain variants, it is noticeable that the technology has been constantly developing in recent years. Therefore, the Blockchain future seems to be assured in the future. If users answered the question “What is Blockchain?” a few years ago with a decentralized chain, nowadays Blockchain is much more. In the meantime, there is even another generation, the Blockchain 3.0, which ensures that transactions are processed even faster and on a completely different level.
Originally, the blockchain was intended for cryptocurrency investment, in order to process transactions securely and decentrally. In the meantime, however, it is not only used for trading with an Internet currency, but above all in the economic sector. In particular, Blockchain 3.0 has great potential due to its innovative technological approaches.
Outlook
The Blockchain Future prospects are no longer defined only by Blockchain transaction, but more and more governments, companies or other institutions are using Blockchain advantages for themselves. For example, the Blockchain Future could be in the application of elections, because the technology is safe from manipulation. For the evaluation of elections and the voting department, this is therefore optimal to stop fraudulent machinations and to automate voting transparently. However, many experts also do not rule out that the blockchain future lies in government currency.
It is no longer the euro, USD or other fiat currencies that are to be the government currency in the future, but Internet currencies instead. Compared to the traditional fiat alternative, cryptocurrency is more efficient, offers shorter settlement times as well as better traceability. Cryptocurrency can also be backed by real assets, similar to fiat currency, and its price can be artificially manipulated through numerous controls (e.g. monetary policy to “print” more tokens).
Internet currencies especially for developing and emerging markets
Buying cryptocurrency can be particularly interesting for emerging or developing countries, where often not all people have secure access to classic fiat currencies. In many places, banks in such regions are also extremely corrupt, so few customers actually receive their money or have confidence in the account offering. Nevertheless, in order to be liquid as well as have access to monetary funds, the blockchain future could provide this.
Internet currencies have gained acceptance as an adequate alternative to fiat currencies, particularly in African regions, where they are utilized for everyday needs. In order for these transactions to be processed, blockchains are required. Accordingly, as the number of transactions increases, the blockchain future is also assured. However, those who want to use the internet currencies for their daily needs need a blockchain wallet to manage the coins.
Future Prospects
Blockchain applications in the future are not limited to being able to trade cryptocurrency, but there are much more ambitious possibilities. The Blockchain Future can also provide an ID for everyone. With blockchain technology, each user holds their own identity solution that is non-manipulative and transparently traceable. Through this ID, for example, users can store all their data and decide for themselves who to share the information with. Identity platforms based on blockchain are the new goals, which many experts do not consider so unrealistic.
Since there are numerous possible applications, the blockchain future seems assured here as well. For example, government records (including date of birth) can be managed via the ID, or reputation and trust values (for example, creditworthiness) can be recorded. It is also conceivable to deposit certificates and attestations (school, university or training) or to use it for healthcare and medical records. Not to mention tax identification records as well as employment records.
Technology Future
However, the Blockchain Future can also make its way into the use of IoT devices. Smart refrigerators or aircraft engines are already equipped with these smart chips. By their very nature, IoT devices are constantly connected to the Internet. They collect, store and transport unique data sets. Blockchain provides a secure, reliable and efficient mechanism for these devices to transact with each other. Blockchain records all interactions immutably and enables instant payment processing (e.g., two IoT devices transferring assets between each other). It is also conceivable to control or summarize the data conveniently via a blockchain app so that users have an overview of their virtual assets at all times.
An example of virtual assets would be crypto kittens, fictional cats that exist in a virtual game and live on the Ethereum blockchain. With the blockchain, these virtual objects are transformed into tokenized assets that have their unique identities similar to physical assets.
Blockchain 3.0
Bitcoin started the blockchain future, and the mother of all Internet currencies will also help the blockchain continue to improve. Bitcoin itself has given rise to countless other cryptocurrencies, though not all have succeeded. Bitcoin has also fallen far short of its ambitious initial goals of being a decentralized means of payment. As more and more investors are turning to alternative means of payment due to banking crises and corruption, and the economy also offers opportunities for alternative payments, Bitcoin’s acceptance is steadily increasing.
Therefore, the cryptocurrency is one of the currencies of the future. However, the original Blockchain 1.0 on which Bitcoin is based is not a Blockchain future. Instead, there are innovative further developments: the Blockchain 3.0. It manages to make up for the former disadvantages of the original Blockchain and sets new technological accents. Business and industry in particular will increasingly rely on these applications in the future in order to work more cost-efficiently.
Blockchain against poverty
The blockchain future can also help fight poverty. Poverty and income inequality are arguably the most difficult problems facing humanity. More than 10 percent of the world’s population, more than 750 million people, live on less than $2/day. More than 2 billion people are considered unbanked and lack access to financial services. Although the overall standard of living is rising and the world’s GDP is growing, the rich are getting richer and the poor are getting poorer.
Blockchain technology has the potential to close the poverty gap. It can increase financial inclusivity, reduce corruption, and enable decentralized access to value-added resources. For example, blockchain technology can reduce corruption by creating transparency in official records. All assets, including land, are recorded in a transparent, tamper-proof distribution ledger that can be viewed by the public.