By now, you have probably heard of Bitcoin. Bitcoin has brought several advancements to the cryptocurrency field. It has spawned other cryptocurrencies that rival it in many areas. Bitcoin’s extreme popularity and demand, however, have exposed some weaknesses. Stripe recently announced it is discontinuing its support for Bitcoin, citing a number of reasons including increased transaction failure rate, and an increase in transaction fees. But Bitcoin is NOT a blockchain.
A blockchain is simply a data structure with an ordered list of blocks linked to each other. These blocks contain data. In the context of Bitcoin, the blockchain is the digital ledger in which Bitcoin transactions are recorded. Every Bitcoin transaction—such as you sending $1 to a friend—lives in a block. It is imperative, especially with Bitcoin, that the transaction history is totally secured from tampering—hence the extensive use of cryptographic techniques to ensure a truly foolproof, secure system.
What Makes Blockchain Unique?
The blockchain helped solve the double-spending problem that plagued several digital currencies that preceded it, thus paving the way for digital currencies to become mainstream. Most importantly, it has spearheaded crucial innovations in several sectors, especially finance. The fact that there is no limit to the problems a blockchain can help solve makes it even more interesting.
The Various Kinds of Blockchains
The Bitcoin Blockchain doesn’t fit every purpose. Thus, there is a need for different kinds of blockchains.
- Private Blockchain
As the name suggests, a private blockchain is private and limits its access. The entity that owns the blockchain has authority in deciding membership or the rules of membership. Many argue a private blockchain is needless. On the contrary, it makes sense if you examine its use. Take a look at Georgia’s private blockchain to register land titles.
- Public Blockchain
Unlike the private version, a public blockchain doesn’t have anyone in charge. Everyone has freedom to use the blockchain. The typical example is Bitcoin’s blockchain. Anyone with a computer can read and write to the blockchain. Another popular example is Ethereum.
- Permission Blockchain
In the case of a permissioned blockchain, a central authority determines which entities are allowed in the network. Hyperledger Fabric and Ripple are common examples. For Ripple, MIT is one of the validator institutions.
Some Special Use Cases
The following list of use cases gives a glimpse of the power and potential of the blockchain.
1. Multinational Insurance Policy
AIG, IBM, and Standard Chartered Bank teamed up to build a multinational system that improves transparency and trust in delivering insurance all over the world. The project demonstrated how fraud and errors can be reduced drastically using a blockchain. In summary, the blockchain provided a better experience by making the process seamless. Read more on the project here.
2. Identity Authentication
With a blockchain, ShoCard has pioneered a secure Identity Management System for sharing personal information that is less susceptible to hacking. ShoCard proves useful for financial institutions to verify users, and web and app logins. In addition, airlines can use it to verify customers. Check out this site to find out exactly how the technology works and how to get started with the SDK.
3. Online Voting
Voting fraud is not unheard of anywhere. In some places, voting fraud has led to extreme violence. Follow My Vote, however, has an open-source platform based on Blockchain to make online voting more secure and transparent. Follow My vote makes it possible for users to track elections in real time and see if their vote was counted. (Read more on Follow My Vote.)
Blockchain has several benefits. It is only a matter of time before we’ll find more innovative applications for it. If Julie Ferris were to revise BIg Ideas That Changed The World, then Blockchain would surely make the list.