The Building Block(chain)s of the Future
I’ve gathered you all here today to breakdown every person’s first Google search once we heard the word blockchain:
What in the world is the blockchain?
Thankfully, I found the perfect answer (bear with me): The blockchain is an open and immutable ledger that stores data electronically in a digital format with identical copies on every computer connected to it. This makes each user a root user.
Makes sense? I didn’t think so either, but that’s the first thing that showed up.
Let’s try again: The blockchain is a digital ledger that sits on top of the internet, tracking every transaction that occurs. Every computer that is connected to the blockchain has a copy of it that updates every time a transaction occurs.
Let’s break that down: Similar to how accounting ledgers track the transactions of a business, every time a transaction occurs, it is recorded on the blockchain. Certain computers ensure that the transaction (referred to as a block), is added to the blockchain and linked to the transaction before it (hence the word chain). A block is added using cryptography and is chained to the block before it. This results in a database sorted in chronological order accessible to all users. The blockchain is the main piece of technology in the new iteration of the internet, Web 3.0.
Bitcoin mining is the process of computers executing intense math operations to ensure that the block is chained irreversible, and in return the person ‘mining’ is rewarded with a token.
How does the blockchain work?
Now that you know what a blockchain is, let’s dive into the history. The blockchain was invented during the pitch for bitcoin. In 2008, the Bitcoin Blockchain was born, but it is important to note that there are multiple blockchains that exist with unique properties. We know the Bitcoin and Ethereum blockchains to be the most popular ones.
Principles of the Blockchain
Distributed Data
The data on the blockchain exists on all computers. Each computer has access to the database, and its entire history. Due to this fact, nobody controls data, and more importantly, companies no longer own your data. Companies today use your data to create algorithms tailored to you but can also use their private network to censor information or even manipulate you.
Decentralization
Since the blockchain exists on every computer, there is no central node. You no longer have to use one platform to execute a transaction. Communication can occur from one machine (node) to another. This includes monetary transactions, the exchange of assets, and more.
Virtual Identities
Everybody has a blockchain address which is a string of 30+ alphanumeric characters unique to each user. Being that you now own your data, you can choose to release your identity or remain anonymous. This virtual identity allows for an added layer of security and has great potential for the future… but we will dive into that shortly.
Unmodifiable Records
Blocks added to the blockchain are linked using complex algorithms to ensure that this link is permanent and unmodifiable. Thanks to this, it is much easier to prove ownership of assets and can prevent fraud.
Computational Logic
Thanks to the digital format that the blockchain uses, it can be programmed in unique ways. Users can set up algorithms, agreements, and more to be automatically triggered upon the fulfillment of set requirements. This principle has amazing untapped potential.
Blockchain today
The blockchain is at the earlier stages of a technology’s lifecycle. Currently, only the early adopters are using it, but they are actively trying to get more Web 3.0 believers. The blockchain is more valuable the more people use it because it makes it more legitimate.
Digital Currency
The most popular use of the blockchain today is cryptocurrency. Crypto has a lot of skepticism attached to it, largely due to a lack of education regarding the true benefits behind using it. Cryptocurrencies, such as, Bitcoin, Ethereum, and even Dogecoin, are valuable because it is exchangeable based on peer-to-peer transactions. Currency can be exchanged from one bitcoin address to another, without the need for a bank.
Traditionally, if you wanted to send money to family overseas your process would look like this:
You tell your bank you want to send money to somebody.
Your bank grabs your money and tells a bank in a different location you want to send money to someone. This step repeats until it’s reached the bank of the correct recipient.
Your money is deposited in the appropriate account.
The problem with this process is that it is expensive, and it takes a long time. You are able to use remittance platforms to speed this process up, but they are expensive and open you up to risks.
Not to fear…blockchain is here. The blockchain’s decentralized nature allows for interactions directly between nodes. The digital currency you want to send to someone changes ownership, which is then recorded on the blockchain. This process is much faster, and cheaper.
Virtual Identities
As outlined before, every user on the blockchain has a unique blockchain address. This address allows people to verify the owner of any asset on the blockchain by viewing that asset’s transaction history. You may also use this identity to verify access to different services, or in the future, do much more!
Smart Contracts
Smart contracts have the most potential of all future blockchain uses. NFTs are the most popular users of smart contracts today, and it works like this:
Imagine you’re an artist who is having a concert. Your tickets have sold out and people have started reselling them at a profit (congrats, you’re popular!) Unfortunately, you’re not making money from their sales. With smart contracts, you can program each ticket to kick you back a fee every time that ticket is resold. This is how many popular NFTs work today.
Smart contracts oversee an entire process from facilitation to execution. Using the computational logic principle of the blockchain, smart contracts can be used in a variety of ways, and we’ll dive into that ‘tomorrow’.
Blockchain tomorrow.
The blockchain has infinite opportunities for innovators and disruptors. The potential behind blockchain technologies is untapped, meaning many industries will experience a dramatic change. Large companies such as Amazon, Google, and Meta (Facebook) are already building around Web 3.0 and the blockchain, but companies that build on the blockchain will be the true disruptors. Here are some of my favourite future uses of blockchain:
Surprise Surprise, NFTs.
NFTs are equivalent to real life assets, but they only exist on the blockchain. Possibilities with them are endless and still unexplored. At this moment, they are traded or used in virtual realities, but in the future, you may be able to buy real life assets with them or prove ownership of assets. You can also receive benefits like Bored Ape Yacht Club’s yacht parties, maybe you’ll see Steph Curry there (you really might).
Digital Banking
As outlined previously, transactions that occur on the blockchain are not only faster, but cheaper. Banks haven’t yet implemented blockchains solutions, but by 2025 it is projected that 66% of banks will! That means banking will have new business models, more services, and with smart contracts, you will no longer be restrained by banking hours.
Virtual Identities Will Save Your Life
Imagine you have a medical emergency, but the ER doctors are unable to access your medical records. If only the healthcare industry adapted blockchain technology, allowing your medical records to be accessible through the open web (with your approval.) This would allow healthcare workers to use your virtual identity and treat you appropriately.
Loans & Mortgages
A large part of the loaning process is KYC (Know Your Customer), which can take up to 45 days to finish. This process involves identity verification and other due diligence. If everything was tracked on the blockchain, smart contracts could be programmed to approve you if you meet a set of criteria! Smart contracts can even be scaled to job contracts, sponsorship deals, and more.
Remote Voting
Using virtual identities, users could verify their identity and vote using blockchain technology. This means their vote would be immutable, preventing fraud. Thanks to the removal of controlled & censored media, countries could become better represented.
The Future
Blockchain may seem scary, and it definitely seems confusing. The good news is that it truly is for the better. You (as a user) will regain authority over your data. Your identity is safer than ever. Most excitingly, we are about to see the new generation of innovators arise. Remember the dot com boom? We are about to witness the Web 3.0 boom, and it will be like nothing ever seen before! Companies that refuse to change with the times will become dinosaurs. Remember Slashdot? Me neither.