What is Blockchain and what are its use cases
Updated: Jan 24
The concept and first prototype of blockchain were originally created in the early 1990s when physicist Scott Stornetta and computer scientist Stuart Haber had the idea of applying cryptographic techniques in a chain of blocks to secure digital documents from data tampering. Their work inspired many more cryptography enthusiasts and computer scientists to further develop the concept and eventually led to the creation of Bitcoin.
Blockchain is essentially a digital ever-growing list of data records composed of many blocks of data ordered chronologically, linked together, and secured using cryptography. In 2008 with the publication of Bitcoin’s whitepaper and its release, the concept was applied for the first time to a decentralized electronic cash system, or cryptocurrency, known as Bitcoin.
Bitcoin used blockchain technology as a key core underlying component of its network, ensuring decentralization and allowing for a distributed and public digital ledger to keep a record of all previous transactions (chain of blocks). Transactions on a blockchain occur via a peer-to-peer network, where computers globally act as nodes, maintaining a copy of the record of blocks whilst securing the network. This technology allows Bitcoin to be decentralized, censorship-resistant, and borderless and doesn’t require third-party intermediaries. This use of distributed ledger technology (DLT) is specifically useful in cryptocurrencies as it allows the network to be highly resistant to modification and fraud, such as double-spending. This essentially makes Bitcoin a database of records that cannot be altered easily and would require a high amount of electricity and computing power to be tampered with. This makes Bitcoin an innovative and secure technology.
Bitcoin is secured using what is known as the Proof of Work consensus algorithm, a concept that allows a network to operate in an autonomous and decentralized manner even if some of the participants, known as nodes, display dishonest behaviour or errors in functionality. This occurs with a process known as mining, where the nodes of the network mine the cryptocurrency by solving a complex algorithm, securing the network, and updating the record of transactions. When solving the algorithm correctly, the node will receive a reward or amount of cryptocurrency for its efforts.
Examples of Blockchain use cases
Cryptocurrencies are the most widespread use case for blockchain technology. However, it is not the only one. Many other implementations of this technology can allow for ordinary processes to become more efficient whilst benefiting from added security.
Documents Securing especially with freelancing and other online activities, sensitive documents such as contracts and NDA need to be shared and modified online, making them vulnerable to data breaches. Chronicled, and used blockchain technology to secure this process, allowing users to share, edit and protect sensitive data.
Elections fraud with many questions surrounding elections and many people skeptical of the actual results, blockchain is a great use case to ensure no interference and to guarantee high cyber security. In this case, the application of this technology allows for more transparency in the whole process whilst ensuring validity, reliability, and accuracy.
Refugee aid during times of crisis or wars, traditional systems, such as the banking one, might not be able to operate normally, leaving refugees in poor conditions and in need of financial aid. An example of this was the humanitarian crisis in Syria. With blockchain technology, funds can be diverted easily, requiring just an internet connection from the recipient to access the funds. In 2017, in Syria, the United Nations World Food Programme (WFP) designed a system for cryptocurrency-based vouchers that could be redeemed in participating markets. This allowed over 10,000 refugees to purchase food items such as olive oil, pasta and rice.
Medical records often contain very sensitive and personal data that is often vulnerable to cyber attacks. MedRec used blockchain smart contracts in order to create a decentralized content-management system for healthcare data, across different providers. This allows for secure record access while providing means for auditability and data sharing. Join us on Twitter and Discord to talk about crypto trading.