Exploring Blockchain Technology: Definition, History, and Use Cases
Almost all of us may have heard the word ‘Blockchain’ and also heard that blockchain technology could radically change the entire internet system. But, many of us may not have a clear idea about blockchain technology. In today's article, we will discuss in detail what blockchain is, how it works, and what innovations it can add to the internet system which is the reason why it is so hyped.
Definition of Blockchain:
Blockchain is basically a combination of two words. Block means a specific structure (eg, box shape), and Chain means chain.
Terminologically speaking, Blockchain is a collection of blocks or records connected to its previous blocks in the form of a chain by cryptography. Data is stored separately in each block and each block has a unique number known as a hash for security. Each block contains the hash information of its previous block. It works through peer-to-peer and decentralized networks.
How Blockchain Works:
Each block of the blockchain contains some information. The first information that is stored in a block is the necessary information of that block, such as in the case of Bitcoin, the transaction information of the coin is stored in the block. The information is then stored in a unique hash code created for that block and then the hash code of the previous block of that block is stored.
A hash is basically an identifier. Each block's hash is its own and unique to everyone. That is, the hashes of two blocks can never be the same. So the hash of a block is stored in the next block and the hash of the next block is stored in the next block. In this way, the hash of each block is stored in the next block and thus a chain is created. And the block which is created first and the hash of any other block accumulated in the block is called the genesis block.
And for this reason, we can see the history of any block at any time. I can see what is happening in which block. Due to this all the blocks are very secure and no one can change the information of any block at will. Because if the data of a block changes then the hash of that block will change. with that block's Hash as the next block's Hash is associated with it. So the hash of the next block of that block will also change. And thus the data of all subsequent blocks of that block will be lost. So no one can change any block information at will.
History of Blockchain:
Scientist W. Scott Stornetta and computer scientist, cryptographer, Stuart Haber invented blockchain technology in 1991. "How to Stamp a Digital Document" in an article titled "Blockchain Technology" they discussed in detail.
Scientists Stuart Haber and W. Scott Stornetta comes up with a computationally practical solution for time-stamping digital documents so that they cannot be tampered with or altered.
The system used a cryptographically secure chain of blocks to store time-stamped documents, and in 1992 the design added Merkel trees, which made it more efficient by allowing multiple documents to be stored in a block. This invention, however, remained unutilized, and the patent expired in 2004, four years before the introduction of Bitcoin.
Hal Finney (Harold Thomas Finney II), a computer scientist and cryptography campaigner, invented RPoW, or Reusable Proof of Work, in 2004. The system worked by accepting a non-fungible or a non-fungible HashCash-based proof-of-work token and generating an RSA-signed token in exchange that could then be transferred from person to person.
Finney's RPoW system solves the problem of double spending by owning tokens registered on a trusted server, which was designed to allow users anywhere in the world to verify its correctness and integrity in real-time. RPoW can be considered an early prototype and a significant early step in the history of cryptocurrency.
In late 2008 a person or group using the pseudonym Satoshi Nakamoto posted a WhatsApp post on a cryptography mailing list introducing a decentralized peer-to-peer electronic cash system – called Bitcoin.
Based on the HashCash Proof of Work algorithm, double spend protection was provided in Bitcoin with a decentralized peer-to-peer protocol for tracking and verifying transactions, rather than using a hardware-dependent computing function like RPoW. In short, Bitcoin is "mined" by individual miners using a proof-of-work method to obtain rewards and then verified by decentralized nodes in the network.
Bitcoin came into existence on 3 January 2009 with the first mined Bitcoin block by Satoshi Nakamoto. He was awarded 50 Bitcoins. On January 12, 2009, Hal Finney got 10 Bitcoins from Satoshi Nakamoto in the world's first Bitcoin transaction.
Use Cases Of Blockchain Technology:
• Bringing Data Breach Costs Down:
Organizations can reduce the costs of data breaches by using blockchain. They can also avoid litigation, losses, compromised customer data, and interruption or downtime costs related to the breaches.
Consider that data and information security is costing organizations more than 20% of their IT budgets. Part of these is malware costs which are to the tune of $2.4 million per year on average. Furthermore, it takes months to repair the damaged systems. The annual cost of data breaches now stands at $3.2 million, up by 12 percent in five years according to a recent report by IBM.
• Bringing Down the Costs of Cross-Border Transactions and Remittances:
Cross-border transactions are expensive for banks and other businesses. For instance, most of these transactions take a model 3 days or longer to complete. Organizations such as Ripple – whose network is now available in over 40 countries and six continents, are now using blockchain and cryptocurrencies to overcome these barriers. Blockchain helps achieve near-instant cross-border transactions at a fraction of the cost.
• Removing Supply Chain Inefficiencies And Lowering Costs:
In supply chain and trade finance, the verification of documents takes several days for transactions to complete. This is due to manual documentation. There are high inefficiencies, and fraud, and the process is also rated for the high cost.
To address this issue, many blockchain systems are being used. These include IBM's Batavia, R3's Marco Polo, several banks' Digital Trade Chains, and the Hong Kong Trade Finance Platform. For example, they enable these transactions to be completed in a matter of minutes for a fraction of the cost.
• Blockchain In Healthcare:
Tracking Drugs Throughout Supply Chains And Securing Data:
Blockchain is being applied in the tracking and tracing of prescription drugs throughout supply chains. This has been demonstrated in the Drug Supply Chain Security Act Interoperability Pilot program in the United States. Using this program, it is possible to prevent and control the distribution of counterfeit drugs and to recall ineffective and harmful drugs very easily and quickly.
Securing customer data is a top priority in healthcare as is the sharing and distribution of this data that helps to facilitate the better provision of healthcare services across hospitals, governments, and research institutions. Amchart, ARNA Panacea, BlockRx, and many other firms are good examples of startups embracing blockchain to secure data exchange in this domain.
• Governments are utilizing blockchain to secure national identity data:
Furthermore, governments are utilizing blockchain for digital identity management. A good example is Estonia, which is using blockchain-based for digital identity to digitize national identity records, secure citizen data to reduce identity fraud and reduce inefficiencies of legacy digital ID management platforms such as high costs.
• Copyright Protection Application:
Several firms are utilizing blockchain to provide their consumers with Intellectual rights protection. Once artwork is registered on the platform, customers can protect their work from being used illegally without their permission. The owners can also pursue legal injunctions in case of violations using the certificate provided on the platforms.
For instance, Blockai and Copyrobo use blockchain and artificial intelligence to help artists to protect their art on the internet in seconds. They can generate a timestamp or fingerprints on the blockchain and receive a copyright certificate to confirm their ownership. These platforms discourage the infringement of copyrights and encourage licensing.
Blockchain is also used by Bernstein Technologies GmbH and other firms to assist businesses throughout the innovation lifecycle. Businesses can utilize the site to register innovations, designs, and evidence of usage. This, hence, creates a trail of records on the Bitcoin blockchain. This way, companies can secure their trade secrets and other notarized information using blockchain.
• Notary Services:
Users may upload digital certificates and documents to blockchain-based online notary services and have them confirmed in minutes. These services can be used by those licensed by governments to authenticate the signing of documents, for instance when applying for VISAs.
Proof of Existence, for example, is a service that employs blockchain in this manner. It also allows the transfer of virtual currency from computer to computer and users get the privacy and anonymity they need, all without the need for a middleman. The documents are secured and cannot be modified by hackers or government representatives illegally.
• Blockchain And Voting:
Russia's alleged interference in US elections and voting processes is nothing new, and it has sparked widespread outrage around the world. Still, the most important issue remains, how can we secure digital voting?
Blockchain has emerged as a key issue in debates on secure voting. Although electronic voting addresses most of the problems of traditional manual voting, lack of voter privacy, voter fraud, high cost of legacy digital voting platforms, and lack of transparency remain major concerns.
Blockchain, through smart contracts and encryption, can make voting safer, more transparent, and more private for voters. In this regard, GenVote leverages blockchain to achieve these and also allows customization of the voting process using different types of ballots and allowing logic-based voting. It is being applied in University-scaled elections.
Organizations can reduce the costs of data breaches by using blockchain. They can also avoid litigation, losses, compromised customer data, and interruption or downtime costs related to the breaches.
Consider that data and information security is costing organizations more than 20% of their IT budgets. Part of these is malware costs which are to the tune of $2.4 million per year on average. Furthermore, it takes months to repair the damaged systems. The annual cost of data breaches now stands at $3.2 million, up by 12 percent in five years according to a recent report by IBM.
Cross-border transactions are expensive for banks and other businesses. For instance, most of these transactions take a model 3 days or longer to complete. Organizations such as Ripple – whose network is now available in over 40 countries and six continents, are now using blockchain and cryptocurrencies to overcome these barriers. Blockchain helps achieve near-instant cross-border transactions at a fraction of the cost.
In supply chain and trade finance, the verification of documents takes several days for transactions to complete. This is due to manual documentation. There are high inefficiencies, and fraud, and the process is also rated for the high cost.
To address this issue, many blockchain systems are being used. These include IBM's Batavia, R3's Marco Polo, several banks' Digital Trade Chains, and the Hong Kong Trade Finance Platform. For example, they enable these transactions to be completed in a matter of minutes for a fraction of the cost.
Tracking Drugs Throughout Supply Chains And Securing Data: Blockchain is being applied in the tracking and tracing of prescription drugs throughout supply chains. This has been demonstrated in the Drug Supply Chain Security Act Interoperability Pilot program in the United States. Using this program, it is possible to prevent and control the distribution of counterfeit drugs and to recall ineffective and harmful drugs very easily and quickly.
Securing customer data is a top priority in healthcare as is the sharing and distribution of this data that helps to facilitate the better provision of healthcare services across hospitals, governments, and research institutions. Amchart, ARNA Panacea, BlockRx, and many other firms are good examples of startups embracing blockchain to secure data exchange in this domain.
Furthermore, governments are utilizing blockchain for digital identity management. A good example is Estonia, which is using blockchain-based for digital identity to digitize national identity records, secure citizen data to reduce identity fraud and reduce inefficiencies of legacy digital ID management platforms such as high costs.
Several firms are utilizing blockchain to provide their consumers with Intellectual rights protection. Once artwork is registered on the platform, customers can protect their work from being used illegally without their permission. The owners can also pursue legal injunctions in case of violations using the certificate provided on the platforms.
For instance, Blockai and Copyrobo use blockchain and artificial intelligence to help artists to protect their art on the internet in seconds. They can generate a timestamp or fingerprints on the blockchain and receive a copyright certificate to confirm their ownership. These platforms discourage the infringement of copyrights and encourage licensing.
Blockchain is also used by Bernstein Technologies GmbH and other firms to assist businesses throughout the innovation lifecycle. Businesses can utilize the site to register innovations, designs, and evidence of usage. This, hence, creates a trail of records on the Bitcoin blockchain. This way, companies can secure their trade secrets and other notarized information using blockchain.
Users may upload digital certificates and documents to blockchain-based online notary services and have them confirmed in minutes. These services can be used by those licensed by governments to authenticate the signing of documents, for instance when applying for VISAs.
Proof of Existence, for example, is a service that employs blockchain in this manner. It also allows the transfer of virtual currency from computer to computer and users get the privacy and anonymity they need, all without the need for a middleman. The documents are secured and cannot be modified by hackers or government representatives illegally.
Russia's alleged interference in US elections and voting processes is nothing new, and it has sparked widespread outrage around the world. Still, the most important issue remains, how can we secure digital voting?
Blockchain has emerged as a key issue in debates on secure voting. Although electronic voting addresses most of the problems of traditional manual voting, lack of voter privacy, voter fraud, high cost of legacy digital voting platforms, and lack of transparency remain major concerns.
Blockchain, through smart contracts and encryption, can make voting safer, more transparent, and more private for voters. In this regard, GenVote leverages blockchain to achieve these and also allows customization of the voting process using different types of ballots and allowing logic-based voting. It is being applied in University-scaled elections.
Conclusion:
In conclusion, blockchain technology has the potential to revolutionize the internet system and various industries. Its decentralized, secure, and transparent nature makes it an attractive option for organizations looking to improve data security, reduce costs, and streamline processes. With ongoing advancements and new use cases being discovered, it is clear that blockchain technology is here to stay and will continue to shape the future of our digital world. As we continue to explore the capabilities of blockchain, we can expect to see further innovations and exciting developments in the years to come.
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