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For over a decade, the main argument against cryptocurrencies has been that they have no purpose or use in the real world, that they rely purely on intrinsic value and won’t be able to replace cash without providing more benefits to the average person.
In this blog, we will explain exactly what the blockchain is, how it is used to create real-world value and some thoughts on what lies ahead in this innovative technology’s future.
In recent years we have seen the rapid development of the blockchain, along with smart contacts, that have revolutionised the way we store, share, and secure information online.
At its core, a blockchain is a decentralised and distributed ledger of transactions that are verified and recorded in a secure, public manner.
The most well-known example of a blockchain is the one that underlies Bitcoin; however, this sequence only performs the core functions of a blockchain, using PoW (Proof of Work) to validate, secure, and publicly display user transactions for all to see.
But the capabilities of blockchain go far beyond this.
In order to get a basic understanding of how different blockchains can be utilised in today’s world, let’s break down some of the main methods of blockchain validation.
Methods of Blockchain Validation
PoW (Proof of Work)
- This is the first consensus mechanism used by the original blockchain, Bitcoin.
- In this process, network participants (miners) compete to perform intensive mathematical calculations in order to validate transactions and create new blocks to farm rewards.
- This method has been criticised due to the sheer amount of computing power and energy it consumes, but it remains an integral part of many blockchain platforms.
PoS (Proof of Stake)
- Used by Ethereum and Cardano, among others.
- Validators are selected to create new blocks and validate transactions based on the amount of cryptocurrency they hold and are willing to ‘stake’ – like a deposit.
- This method is seen as more energy-efficient than PoW as it requires much less computational power and results in lower carbon emissions.
PoV (Proof of View)
- This is a much newer method of validation and definitely one to watch in the future.
- The PoV verification system can be used to automatically compare the content view data with the block on the blockchain.
- This will aim to look at the user’s internet history and behaviour on the platform to validate views and stop bots or view farms that have taken over the internet in recent years.
Note: This is not an extensive list; some other consensus mechanisms include PoET (Proof of Elapsed Time), DPoS (Delegated Proof of Stake), and PoB (Proof of Burn) – to name a few.
So, how have cryptocurrencies leveraged this new technology to automate and develop traditional industries? Here are some key examples:
Decentralisation
The most obvious use of blockchain technology in today’s world is the Decentralised Payment System which allows users to send and receive payments without the need for intermediaries. Blockchain technology streamlines this process, making it faster and cheaper.
DAOs (Decentralised Autonomous Organisations): These are organisations that are not run by a central authority, using the guidelines set by intelligent smart contracts. DAOs have the potential to revolutionise the way that organisations run and how people collaborate by creating a new form of governance that is more transparent, fair, and democratic.
Supply Chain Management
Blockchain technology has revolutionised the process of managing supply chains. Some ways the technology has been used are:
- Traceability: Companies can track the movement of goods whilst keeping an accurate record of locations and times to mitigate the risk of fraud, counterfeiting, and contamination.
- Authenticity: Smart contracts can be used to ensure the products that companies receive are authentic and have not been tampered with along the way.
- Real-time Visibility: Companies have real-time visibility into moving goods through the chain of supply, increasing transparency and allowing for quick reactions to any problems.
- Increased efficiency: Eliminates the need for intermediaries, thus, streamlining the flow of information, which in turn reduces the traditional cost of moving goods.
Health Care
- Medical records: Systems based on the blockchain can be used to store electronic medical records (EMRs) securely and share them with authorised stakeholders (healthcare providers, insurers, patients etc.)
- Clinical Trials: Securely store and manage data from clinical trials to ensure nothing is tampered with, increasing transparency, and reducing fraud risk.
- Drug Traceability: Track the supply of drugs from the manufacturer to the consumer, reducing the risk of counterfeit drugs being supplied.
- General Health Data Management: Blockchain technology can be used to store and secure sensitive information such as claims, lab results, and other health information.
Media and Entertainment
- Digital Rights Management: Blockchains can enhance the protection of digital rights, such as copyrights, trademarks, patents etc. Digital signatures can be created for content allowing for efficient and secure tracking and management of ownership rights.
- Content Distribution: As previously mentioned, the blockchain can remove the need for intermediaries allowing content to be distributed openly, allowing content creators to retain more control over their work and receive a larger share of the profits generated.
- Engagement and Monetisation: Blockchain technology can create decentralised platforms for fan engagement and monetisation, which would allow fans to interact directly with content creators and support them through cryptocurrency donations or by purchasing digital goods and services.
- Advertising: Blockchain technology can be utilised to prevent ad fraud, improve the targeting of ads, and increase the overall efficiency of the advertising process.
Note: See our blog on our ‘3 Undervalued Cryptocurrencies‘, which provides more detail on Verasity and how it strives to achieve the above.
With its decentralised and secure structure, the blockchain provides a level of transparency and accountability that has the potential to transform the way we store and transfer information of value.
As technology continues to evolve, we can expect to see more innovative uses of this technology as it continues to offer new solutions to age-old problems.
Whether you are a tech enthusiast or just looking for new ways to streamline your operations, it is certainly worth investing the time to understand the power and potential of this new blockchain technology.
