Why Is Blockchain Technology The Future?

These days we are increasingly moving towards automation in every aspect of our lives. We’ve come far from the days when we would know the phone numbers of our friends by heart. Thanks to our phone contact books, we need not fret over remembering those long mobile phone numbers. Enter the digits on your phonebook once and you’re set for life, at least the life of the particular handset.

Or think of those to-do lists, painstakingly written and highlighted on papers and placed conspicuously to avoid being forgotten! However, with the bounty of reminders and organizing apps on all our phones, who would care about handwritten lists, when all you need is to checklist the items on your apps? Indeed technology has evolved and with it, our methods of storing data have, too. In that domain, one of the most disruptive and revolutionary technologies available is blockchain.

Simply put, blockchain is one of the innovative methods of storing data online. Blockchain entails an ingenious technique of recording user data within a network of computers without any single entity owning it all. What makes it all the more unique is that the data is stored within watertight security systems and the data remains immutable for generations.

This has tremendous potential to transform the e-commerce sectors all across the world and given that blockchain technology is so closely intertwined with cryptocurrencies, if and when it becomes mainstream, the blockchain-cryptocurrency pair is likely to overhaul our entire monetary system.

What Is Blockchain?

According to Blockchain for Dummies, “Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible (a house, a car, cash land) or intangible (intellectual property, patents, copyrights, branding). Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.”

It is a decentralized and distributed ledger that was designed way back in 1991 to store and record financial transactions. However, it is capable of storing anything that has value. Essentially, Blockchain is an interconnected web or network of computers linked together instead of being connected to one central server. All the machines (or nodes) within this network can define and agree upon a shared state of data while adhering to some unanimously agreed upon constraints – although the system consists of multiple nodes, no single node can alter the data without the consensus of the entire network.

As the name suggests, a Blockchain consists of blocks containing specific information that is shared by all the connected machines within the peer-to-peer (P2P) network. These blocks are data structures that bundle sets of transactions and distribute the same to all the nodes in the P2P network. Each block is secured through a highly specialized cryptographic key. Furthermore, each block contains a Block Header – the metadata – that verifies the validity of the block. The block metadata of a block is made of the following six components:

  • Version – The current version of the block structure.
  • Previous block header hash – The reference to this block’s Parent Block.
  • Merkle root hash – It is a cryptographic hash of all the transactions recorded in the block.
  • Timestamp – The time of the creation of the block.
  • nBits – The encoded form of the target threshold in the block header.
  • Nonce (number used once) – A random value that the block’s creator can manipulate as and how they desire.

While these six components form the Block Header, the remaining part of a block contains the transactions included by the miner while creating the block. The users in a network create such transactions and submit them to the network to be included in a block. As these transactions continue to grow, the size of the Blockchain also continues to expand.

Predictions for the future of blockchain

While looking to the far future of blockchain is extremely exciting, new innovations are constantly entering the market promising bigger and bolder uses of the technology. As active blockchain networks continue to bring real transformative change to a number of industries, the IBM Blockchain team predicted the following trends in the near future:

World Economy via blockchain

Currently, international trade is an inefficient and dysfunctional process that slows down commerce and discourages trade between nations. International trade is also fraught with fraud, counterfeiting, dirty politics and errors.

By entering cryptocurrency into the equation, many of these problems will be alleviated. By unifying methods of payment, paperwork and regulation through a single digital international system, much of the fraud and inefficiency can be eliminated. This will give way to a new era, increasing international commerce and fostering greater trust between nations.

As blockchain technology continues to mature and advance, we are seeing more improvements in not only cryptocurrency, but also in a variety of business applications such as smart contracts and automated tracking and policy enforcement. The impact of blockchain is likely to have a greater impact on business and society than most people realize.

Blockchain and identity

Identity systems are currently flawed in a number of ways. They are porous, operate in isolation and prone to error. Blockchain systems can solve these problems and provide a single source to verify identity and assets. Blockchain identity can also offer a type of “self-sovereignty” that hasn’t existed before.

According to statistics, nearly 1.5 billion people throughout developing nations have inadequate means of proving their identity. With identifying information stored in an open-source encrypted ledger, the information will be more secure than they would be in the hands of some questionable third-world agencies.

Pragmatic governance models will emerge

In 2020, we’ll start to see new governance models that enable large and diverse consortia to approach decision-making, permissioning schemes, and even payments more efficiently. These models will help to standardize information from different sources and capture new and more robust data sets. 68 percent of CTOs and CIOs even expect to see a scalable governance model for interactions across multiple blockchain networks to be an important feature of their organization’s blockchain environment in the next one to three years.

Interconnectivity comes one step closer to reality

hough reaching interconnectivity at the maximized level might be years away — and the definition of interoperability can take many forms — 83 percent of organizations today believe assurance of governance and standards that allow interconnectivity and interoperability among permissioned and permissionless blockchain networks to be an important factor to join an industry-wide blockchain network, with more than one-fifth believing it to be essential. Although there’s still work to be done on this front, this year as more emerging networks attain critical mass, we’ll find that more members of a single network will expect (if not demand) guidance on integration between different protocols.

Adjacent technologies will combine with blockchain to create a next level advantage

Combining adjacent technologies with blockchain will help us to do things that haven’t been done before. More trustworthy data from the blockchain will better inform and strengthen underlying algorithms.

Blockchain will help keep that data secure and audit each and every step in the decision-making process, enabling sharper insights driven by data that network participants trust.

Validation tools will begin to combat fraudulent data sources

With a need for heightened data protection mechanisms, this year, blockchain solutions will use validation tools along with crypto-anchors, IoT beacons and oracles, mechanisms that link digital assets to the physical world by injecting outside data into networks. This will improve trust and remove the dependency on human data entry, which is often prone to error and fraud.

What are the future prospects of blockchain technology?

Market analysts state that the future belongs to the blockchain. Let’s look at some statistics and market predictions:

By 2023, up to 30% of world news and video content will be authenticated as real by blockchain technologies.

By 2025, 50% of people that own a smartphone, but do not have access to a traditional bank account, will use a mobile-accessible cryptocurrency account.

By 2023, multiple blockchain technical standards will enable mainstream decentralized application and smart contract development and deployment.

By 2023, costs will exceed returns for 30% of smart contracts.

Through 2022, major cryptocurrency exchanges using multiparty computation (MPC) for signoff and private key protection will rise from 1% to 50%.

From the supply chain to the Internet of Things, from governance to stock trading, blockchain is likely to make sustained interventions in almost all facets of lives and transform them for the better in the near future.

Wrap Up

The impact of blockchain is likely to have a greater impact on business and society than most people realize. Blockchain systems can solve identity system problems and provide a single source to verify identity and assets. Pragmatic governance models will emerge, Interconnectivity comes one step closer to reality, adjacent technologies will combine with blockchain to create a next level advantage, and validation tools will begin to combat fraudulent data sources

There is a rise in careers in blockchain technology and blockchain has tremendously changed the very face of the technology industry forever. If you’re interested in blockchain development or blockchain consulting, checkout System Plus.

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