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The tech world is constantly bursting with the game-changing trends. For those who are the beginners and are discovering new tech wonders, we have prepared a concise guide to blockchain ecosystem. Find out how your business or work can benefit from this outstanding technology.
1. How would you describe blockchain to someone with no technical background?
Blockchain is a distributed ledger of any transactions programmed to record any kind of information. The blockchain network is built on the consensus mechanism meaning that each executed transaction is compared and agreed. Data stored in blockchain has no single location because it exists in the ledger as a shared and constantly reconciled database. There is no centralized unit that controls all the transactions since information is simultaneously hosted by all network users. Hence, if you make an agreement in blockchain, you will not be able to change or fake it whatsoever. It is especially useful when parties don’t trust each other and want to ensure a fair and transparent deal.
Potentially, any industry can adopt blockchain technology to optimize and streamline business processes ensuring security, immutability, transparency of all records and their transactions.
2. How does Blockchain differ from Bitcoin?
Blockchain and Bitcoin are very much related while bearing different functions. Blockchain (aka a distributed ledger technology) serves as a decentralized network for transacting cryptocurrencies, such as Bitcoin, Dash, Ethereum, and many others. Think of blockchain as an operating system, while Bitcoin would be an application running on the distributed ledger system.
The principal difference between public and private blockchain is based on data privacy and authentication.
Unlike public blockchains, private blockchains are closed networks for authorized members only. Usually, such blockchains are permissioned and available for invited users only. Generally, blockchain can be applied to tangible, intangible and digital units carrying value, e.g., insurance, copyright, cars, photos, videos, etc.
Bitcoin Blockchain is open to the public, which means that anyone can become involved in the transaction confirming his existence by complex cryptographic challenges called mining. Yet, ensuring stability, security and safety of Bitcoin network require a resource-intensive mining and processing power (hardware, energy, time) to approve transactions. Hence, everyone in a private blockchain network knows whom they are dealing with. At the same time, mining and intensive computational power become unnecessary.
3. How secure is blockchain?
Blockchain is secure from data tampering and censoring. It is a decentralized system meaning there is no central control over it, unless at least 51% of the validators’ power belongs to a single person or a particular group. However, gaining control over Bitcoin network would be unreasonably expensive and next to impossible. Even then, in the case of the so-called 51%-attack, an invader can only alter his own transactions in the recent blocks – perform double operations and censor his transactions. Yet, he won’t be able to forge other people’s operations or gain control over their funds.
All that distinguishes blockchain from other traditional systems, where an attacker can easily steal funds or vital information from someone’s account without the owner’s consent.
4. What are some of the digital assets blockchain can protect besides bitcoin?
As a technology, blockchain is used for both protection and exchange of various cryptocurrencies and other valuables, such as documents or agreements, intellectual property or land ownership rights, domain names, SSL certificates, etc. The list of possibilities is endless, and many new projects nowadays aim to power assets protection with blockchain. For instance, with the help of Ethereum Blockchain, you can easily create tokens, which can act as the company’s or application’s specific assets, e.g. the loyalty point.
5. What benefits does blockchain offer over other security tools?
Traditional security in large distributed systems is based on trusted intermediaries, who store and manage your assets. A break-in or manipulations of a third party may cause damage to the business. This is where blockchain can help – it empowers end-users with full control over their funds and data, and allows them to regulate each transaction.
The unique benefits of blockchain over other security tools are:
- Elimination of counterparty involvement in transactions;
- Central point is no longer needed to manage private data records and transactions which reduces risk of corrupting data;
- Users control information and transactions themselves in blockchain;
- All transactions, as well as changes, are transparent to the public, thus, it becomes more difficult to manipulate data.
- The data of deals or transactions are encrypted and hashed in the blocks, accessible only to those involved in the network. Thus, any record in the distributed ledger is close to impossible to temper since changing one data unit in the whole network requires immense computing power.
- Selective endorsement allows participants to choose and check who validates transactions in their private network.
6. What’s the biggest misconception about blockchain?
Many people consider blockchain to be a magic wand that can solve any challenge. Due to the blockchain boom, it may seem that any traditional centralized business could be rebuilt or transformed with blockchain.
The truth is, blockchain won’t replace all traditional methods. As blockchain is still an experimental and evolving technology, business owners should consider all risks and potential benefits of blockchain for their companies. Before implementing a blockchain project, an in-depth analysis of business and its needs should be conducted.
7. What companies support blockchain development?
Investments in the Blockchain technology are growing exponentially. In 2016 alone, financial and tech companies invested $1.4Bln in blockchain development.
Among large companies that support and invest in this new technology are IBM (blockchain for supply chain), Microsoft (blockchain on Microsoft Azure), Bosch (blockchain for securing vehicle data), the Linux Foundation (Hyperledger Project) and many other influential companies like Samsung, Visa, MasterCard, Goldman Sachs, Cisco, AXA, etc. For instance, Samsung SDS started cooperation with Blocko to implement a concept of applying blockchain to credit cards. MasterCard, in its turn, has focused on the development of blockchain APIs, whereas Visa has initiated adding blockchain to interbank transfers.
The broad applicability of blockchain technology allows integrating it with such technologies as IoT or Cloud. E.g, IBM has invested $200M in its blockchain / Internet of Things (IoT) initiatives, to pair that with other IBM’s projects such as Cloud Blockchain Security Service or a resolution for transaction disputes.
8. How easy is it to get started with blockchain?
One needs to have a good understanding of the system itself. Learning the basic concepts may take some efforts. The easiest way to jumpstart is to watch some online tutorials or videos about Blockchain and Bitcoin, e.g. talks by Andreas Antonopoulos on YouTube.
In addition, there are many online platforms, offering all necessary developer tools and financial instruments to start working with Blockchain and Bitcoin ecosystems. For example, with the help of this site, you can create a web wallet and connect your browser to Bitcoin Blockchain. Another platform, Etherscan, is a web entry point to Ethereum Blockchain. Lastly, Chain.com can help you build your own Blockchain-based system.
9. What are other blockchain use cases?
Blockchain can be applied to any industry, including healthcare, insurance, government, automotive, and other sectors in need of the transparent, decentralized and secure system. Today, banking and finance are the leading industries that heavily invest and vastly utilize blockchain technology.
Infopulse, as a provider of blockchain related services, also contributes to this revolutionary technology development. Our company has created an application for the banks and financial institutions elaborated jointly with a parent company EVRY. It is an interesting use case of blockchain for securing and streamlining the process of loan syndication. Watch this video for more information:
Moreover, Infopulse is currently involved in Ukrainian blockchain-oriented start-ups REMME and FLUX:
- REMME implements a passwordless user authentication system by augmenting the Bitcoin Blockchain protocol to render it PKI-enabled. This solution eliminates such hack attack vectors as phishing, keylogging as well as the need for a centralized database storing user credentials. It also removes the human factor since social engineering is no longer possible. Furthermore, with the help of REMME platform, managing access and entitlements will change in future.
Finally, this blockchain solution can be used to protect critical infrastructure, modern vehicle networks, Medicare, cryptocurrency exchange, etc.
- Another example is a decentralized gaming platform FLUX. It builds a system to unite all stakeholders within the gaming industry by providing them with useful tools to interact with each other.
Blockchain offers a ton of new opportunities and possibilities, many of which are yet to be explored. Investing more resources in blockchain can surely simplify its adoption by different industries. Right now, we are relieving the dawn of the blockchain technology, while the breakneck growth is yet to come in a not so distant future.