Updated: May 27, 2022
Blockchain is a watchword being thrown out in the wind more than the breeze itself. Chances are, you too have caught a whiff of that tantalizing scent and now wish to know more about what the hype is all about. While we are on the subject, chances are also that the cookie-cutter definition on the subject was not able to sate your curiosity or cure that cluelessness for that matter.
What is this Block-chain?
The What? Let us begin with a completely clean slate, a blank canvas. The blockchain is a digital ledger that records or stores data of any kind. This ranges from records of cryptocurrency transactions, Smart Contracts, and the internet’s new favorite meme, NFTs.
Let’s break that down
Now Imagine you have a notebook where you journal all of your transactions made that day. That notebook is called a ledger. That specific ledger is the “Chain” in “Blockchain”, whereas the singular pages where you detail the transactions are your “Block”.
Simple Enough right?
If that was the only case then why would it even need to exist, multiple conventional databases do the same thing.
Close, but not quite.
What makes Blockchain special is the fact that it is completely Decentralised. Meaning that it is not maintained by one singular entity but by multiple computers across a network. To put it simply, take that same ledger of yours, imagine that multiple people who deal with the same currency as you do, have the same ledger and every time one of you makes a transaction it automatically gets updated within that ledger. This means that multiple identical copies of that database are maintained on multiple computers on that network, those specific systems are called nodes.
How does it work?
The How? Now that we’re aware of what the Blockchain is, let us get down to how it works. We know that the digital ledger is your chain and that individual pages of data are your blocks. On every instance of data being added to that chain, a new block is added to it. This is where the “decentralized” part comes into play, at any and every instance of new data or a block being added to the chain, all the nodes on that network get updated on their ledgers, keeping all the ledgers identical. What makes blockchain extremely secure is the process through which new blocks are added to the blockchain. For any new data to be added as a block, the legitimacy of that data must be confirmed and verified by a majority of the nodes on that network before it is added and updated to every ledger on the network. For example, let’s take cryptocurrency. Verifying new blocks for a cryptocurrency could include ratifying newer transactions to make sure that any of the new transactions are not fraud. Therefore, contrary to a database or an excel sheet administered by a singular entity which is subject to oversights, mistakes, fraud, and a whole slew of other things you don’t want happened to you or your money, data stays secure in a blockchain and is under constant scrutiny by all nodes. Upon verifying the data, it is then recorded and distributed across all the ledgers present, and a new block is added to the blockchain. Specific to this example, transactions made in cryptocurrency are secured using cryptography or simply, really complicated mathematical equations. The new amounts of that specific cryptocurrency are given to the nodes for validating the changes to the shared data as rewards for the job.
Where will I see it being used?
The Where? Now that you finally and hopefully are clear on what Blockchain is and how it works look at some of the mainstream uses for blockchain. Cryptocurrency
A cryptocurrency is an all-digital form of currency that is encrypted and decentralized which means that unlike any conventional system of currency, there is no central body regulating and maintaining the value of the currency. This is left entirely up to the ones that use cryptocurrency over the internet. Cryptocurrencies or as it is widely known today, crypto, can be used as regular currency to buy things and to pay for services but for the time being, it is far more prevalent in the trading scene where people invest in different cryptocurrencies as they would in stocks or metals like gold. This comes with a fair warning as well because if learning about blockchain-related crypto trading was what brought you here then let me be the one to tell you that it comes with its own set of risks. Even though trading in crypto is a relatively new concept brought out to the mainstream media, garnering a lifetime’s worth of attention, it, like all of the stock market, requires a great amount of research to fully understand how things work. While crypto, no doubt, is a novel idea working on one of the marvels of modern digital technology, it is its very own mixed bag of surprises, some pleasant and some, not so much. “Because cryptocurrencies are volatile, they are not yet used much to purchase goods and services. But that is changing as PayPal, Square and other money service businesses make digital asset services broadly available to vendors and retail customers,” notes Patrick Daugherty, senior partner of Foley & Lardner and lead of the firm’s blockchain task force. NFTs
The internet’s new hot thing, NFTs or Non-Fungible Tokens. NFTs are essentially digital assets like art, music, videos, and even screenshots that are often dealt with online via cryptocurrency. The Non-Fungible part means that every NFT is supposedly unique and thus, can’t be replaced. Any crypto coin is fungible meaning that you can trade one of that coin for another of the same and end up with quite literally the same thing. This, however, is not the case with NFTs. Often encoded with the same software as multiple cryptocurrencies, many NFTs are a part of the Ethereum Blockchain. While NFTs were created in 2014, they have caught mainstream attention only recently, and even though it is an interesting concept, relatively fresh in the grand scheme of things, it found itself amid a meme swamp existing solely to dunk on the very mention of NFTs. The reason is, that buying an NFT gives you only the ownership rights to the piece, it does nothing to prevent the everyday internet onlooker from simply right-clicking and saving that image, video, and an infinite gif of the Nyan cat, everything is free real estate. Whatever be the case, NFTs are here to stay for the time being and they seem to be making quite the impact if you want to get into the NFT market then similar warnings like the previous case imply here as well although not to the same severity. Smart Contracts
Yet another fairly interesting concept that the blockchain has brought into discussion is Smart Contracts or self-executing contracts. There is not a whole lot to say here honestly. Smart contracts are digital contracts set to execute automatically as soon as the conditions are met. A simple example, the payment for an item can be released instantly as soon as the prerequisite conditions are met by the seller. There’s a whole lot more to this list but we could be here all day if I sat here listing all of them.
Why is it so Popular?
Blockchain technology brings a lot to the table and it's not just the new terms for us to learn and memes to collectively laugh at.
Blockchain technology has enabled and is continuing to enable highly accurate and extremely secure transactions. The way this system works with nodes verifying every tiny fragment of data makes it much easier to catch errors and borderline impossible to make them.
This also makes it so that fraudulent transactions over crypto, in theory, are extremely difficult to execute and pretty much impossible if you think about it practically.
This doesn’t just end with security as it also has efficiency on its side. Financially, it is a game-changer as it can allow people to make transactions at any time and not have to look at their watch and wonder if their banks will process something on time.
How Can You Integrate it into your businesses?
While the primary objective of this blog is to educate you enough that you don’t feel lost while traversing the lofts of the internet and getting down and dirty with the nitty-gritty details of the Blockchain world. However, if I am to suggest one basic method of integration or application of Blockchain into your businesses then it would be the application of Blockchain into Supply Chain Management. Supply Chains are complicated logistical systems that take care of the process through which goods are transported from a factory to the consumer. These chains often span across countries and managing them is a task that has only become more challenging as time has gone by. The Blockchain can be used here to ensure that managing that complex web of systems is a relatively smooth task without causing disruptions. Since blockchain acts as a decentralized ledger, it means that all the parties involved can update the ledger upon receiving proper permissions and ultimately allow the overseer to be updated on the statuses of all the interconnected systems in real-time. This permits transparency throughout the chain and ultimately diminishes fraudulent activities. Don't get me wrong, Blockchain as mentioned prior has the power and versatility to be applied in numerous ways but Supply Chain management is a field where this technology can fit in rather snugly and act as an example simpler than some of the others out there.
While we were busy figuring things out, Estonia had already implemented the Blockchain into the fabric of its functionality. Estonia has transcended to become a completely cashless society with 99% of all its financial transactions taking place digitally.
This innovative leap has made it a hub for FinTech investment and a hotspot for related start-ups.
Blockchain - The building blocks to Smart Cities
All these advanced technological concepts are harnessed by utilizing the power that Blockchain has to offer. It plays a key role in solving multiple latent issues and now it has even begun giving a hand with efficient urban management.
Blockchain has enabled data exchange with a surprisingly high level of security, reliability, and transparency. All of this is done without the need for a centralized administrator overlooking everything.
Urban services in modern cities primarily encompass a flow and exchange of data among the inhabitants and the stakeholders of the city.
To transform modern cities into truly “Smart Cities”, technologies like Blockchain are being harnessed. An amazing example of this initiative is Dubai which under its “Dubai Blockchain Strategy” is undertaking over 545 projects in blockchain alone with the intent to change the way its people interact with the city.
This stratagem aims to bring well over fifty percent of the government transactions over to the blockchain and will allow Dubai to become one of the first cities to operate entirely on blockchain.
So, is that all?
No, my curious little Padawan, this is but a kickstart into the world of Blockchain, it is a ginormous world-encompassing idea and an amalgamation of technologies that even I can’t quite wrap my head around. The primary goal of the article was to make sure that you no longer feel left out when your friends talk about the latest trend on the Blockchain or that one person on your social media tries to promote a new form of Cryptocurrency. There’s a whole lot of reading, learning, and researching to do from here and I can only hope that this could help you kickstart that journey.