Everyone has heard about it. Everyone thinks that others are doing it. But very few have actually done it. Yes we are talking about the blockchain! The internet if filled with explanations and interpretations about blockchain. Here’s our take. A blockchain is a distributed list of records that is maintained in many machines across the internet. Think of it like the list of all the mischievous stuff you did at school. All the teachers and students know what you have done. There is no one place which contains your ‘list’. Thus it is distributed. You have no way of altering what you have done. Everyone knows that it is you who spray painted the neighboring girl’s school’s wall. Thus it is immutable. Even if you try to spread a rumor that it was done by that guy you picked a fight with last term, it will soon get overwhelmed because people will only believe what a majority of their friends state. Thus any record cannot be altered without theconsensus of the majority.
In a nutshell- Blockchain gives you the ability to maintain a list of records in a distributed manner whichcannot be manipulated by anyone easily. In contrast, how would you normally store a list of such records? In a central database in a server with strict security controls, which should work fine in many occasions. But going fully distributed using a technology like blockchain will unlock new opportunities for sure.
One such is the Bitcoin. Money is something you do not trust with anyone for any reason whatsoever. Most of our monetary systems around the world depend on simple market dynamics such as demand and supply which are open but prone to subtle manipulations & unrelated charges. Blockchain makes it nearly impossible to do any manipulation which makes it a good candidate for handling monetary transactions. This is why crypto-currencies such as Bitcoin took the world by storm. It is this promise that led to a steep increase in the demand for Bitcoin and hence the huge peak.
The original creator of Bitcoin is a gentleman called Satoshi Nakamoto who published a paper on bitcoin. You can find the original paper by him at https://bitcoin.org/bitcoin.pdf which is pretty descriptive and surprisingly easy to understand.
The world has moved on a lot since then. Ethereum foundation published their sophisticated app platform based on blockchain. It included a host of modifications to improve scalability as well as functionality. The term ‘smart contracts’ was coined during the same time since the new Ethereum platform paved the way to have programmable transactions. Simply put, smart contracts allow you to program payments, refunds etc. The fundamental properties of blockchain, coupled with programmable smart contracts open a large variety of use cases which were not possible or not very convenient previously. Therefore do not compare a present day use case which works nicely on a centralized system with a blockchain based approach and come to the conclusion that blockchain is an overkill. In many cases it would be an overkill. But there might be new applications with proper business models which might be well suited for blockchain. We will see in a later post how blockchain can be used for a ticket reservation system with a real use case.
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Author – Mobitel Innovation Center – Akalanka De Silva