We can say Blockchain the new breed technology has arrived. While the global purchasing power parity (PPP) is $110 trillion, the Blockchain enabled cryptocurrency totals to $150 billion offering a tremendous opportunity to expand. It is a matter of time for citizens, institutions, and governments to fully hook on to Blockchain. The blockchain is progressing beyond proof-of-concept and leaning towards implementations that provide real value. With Blockchain’s cross-industry promise, new entrants developing quick solutions and services have huge net new revenue potential. Early starters are investing in building use cases and products providing a complete view of the blockchain-technology landscape and potential business implications.
I am dedicating this page to highlight the basic principles of Blockchain, trends, technology realities and evolving use cases. Invite your inputs.
Basics of Blockchain – How Blockchain Works?
The blockchain is a distributed ledger, an essentially append-only data structure maintained by a set of nodes which do not fully trust each other. All nodes in a Blockchain network agree on an ordered set of blocks, each containing multiple transactions, thus the Blockchain can be viewed as a log of ordered transactions. In a database context, Blockchain can be viewed as a solution to the distributed transaction management where nodes keep replicas of the data and agree on an execution order of transactions. However, a traditional database system works in a trusted environment and employs a well-known concurrency control techniques to process transactions. Blockchain’s key advantage is that it does not assume nodes trust each other and therefore is designed to achieve Byzantine fault tolerance. Key players of Blockchain are a Sender, Receiver, Miner, a Network Participant, and many Blocks. A typical workflow depicting Blockchain functioning is shown below.
Blockchain Technology Framework and Realities
Looking deeper into the basic workflow depicted above, a layered framework enables the core functioning of Blockchain. Gurus in this space have identified the following four abstraction layers of Blockchain technologies.
Blockchain gained initial popularity with the success of Bitcoin, the first unregulated cryptocurrency created by Satoshi Nakamoto in 2008. Now the market is proliferated with 1500+ cryptocurrencies. Bitcoin was launched with the intention to bypass government currency controls and simplify online transactions by getting rid of third-party payment processing intermediaries. Bitcoin is a distributed ledger on a peer-to-peer network that is open, public and anonymous. Bitcoin is more of a “Public Blockchain” which are “permissionless Ledgers”. A public blockchain network is completely open and anyone can join and participate in the network
But as the businesses started adopting Blockchain, the need evolved as corporations focus on assets over cryptocurrency, identity over anonymity, and selective endorsement against just “proof of work” that public Blockchain has been promoting. Corporations needs let to the origination of “Private Blockchain”, which is a “Permissioned Blockchain”. A private blockchain network requires an invitation and must be validated by either the network starter or by a set of rules put in place.
The real application of Blockchain is tied to making an ecosystem of public and private blockchains function seamlessly to realize the full potential of digital purchase power parity (DPPP). The following chart represents the predominant cryptocurrencies on Public vs Private Blockchain.
Blockchain technology landscape encompassing protocols, data models, runtime environments, and applications is constantly evolving and a viewpoint is presented below. Recent research in this space is pointing out that the current Blockchains are not well suited for large-scale data processing performance and workloads. Significant technology advances are paramount important to next level of Blockchain success rate.
The blockchain is the TCP/IP of the digital commerce:
Blockchain and other forms of distributed ledger technologies are altering market transactions and be the single largest driver of future markets. The first advantage is Blockchain can lower fees i.e. 2.9% in credit card fees disappear which is tax you pay when you buy and sell anything on the internet today. Second, Blockchain makes middleman disappear from e-commerce transactions – no need for 3rd parties to guarantee that money moves hands in purchase transactions (ex; PayPal). Global businesses are focusing on building partnerships with Ripple, Enterprise Ethereum Alliance, Hyperledger etc. to win in digital commerce.
International transfer of funds
Blockchain can enable quick, cheap and safe transactions between peers without a third party with bitcoin or altcoins. With fast, cheap payments, businesses will be able to start making smaller, more frequent transactions. This is leading to design systems that can handle this change. Users will start to expect real-time transactions across international borders, and applications that will continue to alleviate on 3rd party clearance.
Blockchain enabled Integrated Utilities:
Peer-to-peer (p2P) Energy Trading
Blockchain in conjunction with Cloud technologies is creating a marketplace that does not require physically centralized resources leveraging integrated utilities made up of both large power plants and microgrids powered by distributed energy resources such as solar power. This shift is prompting the industry to focus on blockchain’s potential to make peer-to-peer energy trading a reality with an integrated trading system that would permit businesses to trade their option to use electricity during a given time frame. For example, one business entity could sell few minutes of unused power during a downtime to a different entity that needs additional power. Trading grid flexibility in this way could provide large efficiency benefits for grid operators.
Blockchain tokenization is transforming Music Industry:
Cryptocurrencies like Tokens are becoming digital representations of physical goods, digital goods, services or promises. A token can have a number of utilities that can be added at any point in time by any party. For example, a tokenized ‘music album’ can provide a user with access to listen to the album, a 5% discount to a partner store, access to a VR experience.
Blockchain powered AV charging stations:
Global peer-to-peer (P2P) marketplace for electric charging is enabled by blockchain. Owners and small-to-midsize enterprises can share their charging stations, thereby helping to advance e-mobility and convert personal charging stations into a revenue making avenues. EV drivers can employ easy-to-use payment options, such as the real-time settlement of highway tolls and peer-to-peer roaming.
Blockchain is re-imagining Advertising:
The blockchain is creating a marketplace where brands, publishers, and agencies can buy and sell future ad inventory. Digital ad buy-in and contract execution can be automated without. Cryptocurrencies like adToken which incentivizes people to determine whether a publisher can be whitelisted or not can help brands decide to spend money only on those publishers. Similarly open protocols like adChain on the Ethereum blockchain tags a piece of creative and follows it on the internet to make sure someone sees it, determining who it was as well as what actions were taken afterward.
Blockchain is enabling smart contracts across industries:
- High-value contracts are being processed with Blockchain. Loyalty payments of Artists are calculated & distributed as per defined contract guidelines.
- Processing peer-to-peer payments as per defined contracts in utilities & energy (as described above), lending, insurance, real estate etc.
- Another key advantage is multi-signature approval processing letters of credit and bill of lading in international logistics and port payments.
- Blockchains are processing health rewards. Tracking of health-related actions of consumers via Medical Internet of Things (MIoT) with sensors enabled devices for automatically processing rewards as per defined targets
Blockchain and Quantum Computing:
With the advent of Quantum Computing, encryption methods used by today’s blockchains could become vulnerable. Quantum computing threatens all computer security systems that rely on public key cryptography, including blockchain. Hence all security systems, including blockchain, need to consider post-quantum cryptography to maintain data security for their systems. But the easiest and most efficient route may be to replace traditional systems with blockchain systems that implement quantum-resistant cryptography.
The Quantum Resistant Ledger (QRL) is attempting to address this threat with its distributed ledger project and released ERC20 tokens, which are the standard protocol for cryptocurrency to function on Ethereum network. QRL is planning to launch an independent enterprise-grade blockchain protocol and network. Few unique value propositions of QRL project is the use of stateful XMSS signatures to secure addresses, the Ephemeral messaging layer, and custom hash-based proof-of-stake (POS) algorithm generating randomness using hash-based PRF and iterative keyed hash-chain. Quantum Computing collusion with Blockchain in future endeavors may progress both the technologies further close to reality in creating unprecedented value.
Blockchain, the “currency internet” adoption is a journey and I am welcoming an extended dialogue on Blockchain via email@example.com.
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