It’s almost becoming hard to recall a time when the terms “cryptocurrency,” “bitcoin,” and “blockchain” didn’t exist in our daily vocabulary. However, while terms like these might have been new or obscure at one point, the rise of cryptocurrencies like bitcoin and ethereum has not only made us more familiar with cryptocurrencies, but has also opened our minds to the many possible uses of the underlying technology. Accordingly we’ve come to understand the above-listed terms more clearly – and blockchain, in particular, has proven to have a more expansive and significant meaning than many of us realized at first.
In addition to actually making bitcoin transactions possible, and setting a sort of foundation for other cryptocurrencies, the decentralized public ledger that is blockchain technology has proven to have real-world applications in myriad areas – including cybersecurity, entertainment, and contract design. We’ll explore the tech in each of these three areas below.
Modern ways of doing business (which is to say, primarily, doing it in the digital realm) have brought about the herculean task of protecting massive amounts of data. This task can be addressed in all sorts of ways, but some tech giants – like IBM, to name a big one – have come around to the solution of using blockchain technology to improve cybersecurity and guard their own data and that of their customers alike. Because it is a decentralized network, blockchain makes a single point of attack or theft virtually impossible. By nature, it requires a “consensus” of the nodes that make up its network in order to approve or allow any transaction, which effectively locks out cyber criminals. In other words, a cyber criminal can make attempts to alter or tamper with information, but will only prove successful, in theory, if all of the nodes on the blockchain network “agree” to it. That’s not something that can simply be achieved via clever hacking work.
Blockchain tech also places a heavy emphasis on timestamps that make fraud easily traceable in the event its somehow occurs in the first place. That is to say, if a transaction is somehow corrupted or redirected toward a cyber criminal, the blockchain will show exactly what happened and when. And as a final note on the protection of data via blockchain on a corporate level, the technology can also eliminate the need for third-party organizations where sales are concerned. Such organizations are increasingly infamous for selling consumer data without consent, which is naturally of concern to customers. In this sense – by cutting out these problematic third-party actors altogether – the blockchain keeps data less exposed in a very direct and natural manner.
The long-problematic pirating of countless books, movies, and songs may soon become a thing of the past, if and when blockchain technology gains more influence within entertainment industry sales. Distributing media through the blockchain will essentially make it impossible to replicate content and farm out copies (which is how a lot of media pirates ultimately make their money). Essentially, if an independent party – a would-be pirate – wants to sell, say, a digital song file on his own, he can do so – but will have to pay for it in the first place in order to acquire it (rather than making a copy and selling that over and over).
Another form of entertainment that blockchain technology may soon disrupt is the ever-expanding betting business, which is becoming steadily more relevant in the U.S. We tend to think of online betting, if at all, as pertaining to European football leagues, British horse races, and other events of that nature that tend to have international appeal. But with favorable legislation spreading across the U.S., there are now more opportunities to bet on baseball, speculate about NBA futures, and more becoming legal and regulated for the American market. As these activities expand in the U.S. though, the companies behind them are going to look to any and all tech they can find to ensure fairness and security, and convince potential bettors that they’re on the level. Blockchain technology is a perfect fit in this regard, capable of tracking bets, guaranteeing payouts when they’re earned, and preempting disputes. In this case, adoption of the technology actually seems just about inevitable, even if it may take some time.
We don’t tend to talk about it this way, but the transfer of bitcoin from user to user is actually a basic example of what is now known as a “smart contract.” What some don’t realize though is that blockchain tech is not limited to arranging this sort of contract agreement only for the direct transfer of bitcoin. A smart contract more broadly is essentially an arrangement that ensures the fulfilment of agreements between two parties without the need for an intermediary. The blockchain itself makes it such that finances are exchanged in a fashion agreed upon in advance.
Naturally this is what happens when one simply buys something with bitcoin. Two parties “agree” that a given amount of bitcoin can be exchanged for a given product or service, and the transaction is completed. Beyond basic financial transactions though, you can exchange property, shares, and other assets through such contracts, which are essentially established via computer code on the blockchain. Once agreed upon, these contracts are transparent, traceable, and most importantly, irreversible. So, for instance, in a real estate transaction, after a price has been agreed upon and a deal has been struck, neither party can go back on it or negotiate further. When a payment is made, the contract is automatically fulfilled via the transfer of the property deed to the buyer.
All it takes is a quick search or two online to see that blockchain has dozens of potential applications even beyond the ones mentioned here. It’s likely to be put to use in traditional banking systems, it may become useful in travel booking, it has implications in health care, and on and on. But the uses outlined above are among the ones that will impact our day-to-day lives most directly, and help to illustrate just how significant this technology is.
Hello everyone! This is Richard Daniels, a full-time passionate researcher & blogger. He holds a Ph.D. degree in Economics. He loves to write about economics, e-commerce, and business-related topics for students to assist them in their studies. That's the sole purpose of Business Study Notes.
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