As we discussed previously, blockchain technology is mostly a completely open peer-to-peer collection of blocks of information, which is publicly viewable and nearly impossible to change. To put it simply, blockchain technology offers a way for people who have not worked with each other before to reach an agreement and record this agreement on a historical log, or ledger, that cannot be retroactively changed. This means that the transfer of information, currency or asset cannot be faked, copied/duped or reneged on. Blockchain technology solves this without the need to involve a third party authority.
A public agreement without the need for a 3rd Party Authority
Blockchain technology is effectively important in any industry where the use of a 3rd Party authority is all but required to record the transaction and keep it on record. But even though this might seem primarily useful in a Business Environment, it is also very important in our personal lives. Simply take a look at your Identity Card, your government issued a slip of paper which you use very regularly to prove your identity. This card, unfortunately, is not fool-proof, and identity theft is a real threat to any individual nowadays, but this can all soon change. With a national Distributed Identity Ledger, proof of identity can become a painless and quick process, whilst also making it virtually impossible for anyone to change, remove or steal an identity off of someone else, whilst also making fake IDs and Passports a thing of the past.
It’s all about trustless trust
Most technologies running a form of the blockchain are build to create a layer of trust where in most cases there is none. This happens in all facets of life and business, whether you’re buying a car from a person you’ve met online to making a bank transfer, buying a property from a large Property developer to crowdfunding a dog skateboard with inbuilt video technology, all of these transactions happen with a very low level of trust.
Using a blockchain technology, each transaction can be recorded, retraced and will store proof of transfer until the end of the technology. You do not need to know who you are transferring to, but the transfer will happen with absolute trust, in a completely trustless environment.
Apart from record keeping, is there any other use for Blockchain?
This is where Cryptocurrencies and Tokens come in. It is very simple to say that we are going to have a ledger of activities and transactions, and these will be kept safe from modification, removal or loss, but most use cases will require a transaction to happen.
In the case of a CryptoCurrency (capitalisation emphasis on currency) the transaction will be handled as a monetary one. These transactions happen in what are referred to as coins. Most currencies have their own coins, sometimes called altcoins, and the fundamentals of that coin are inscribed into the blockchain technology that they run off of. These might be completely unique
In the case of a Token based transaction, the Token has a nominal monetary value, based off of the value of the underlying blockchain and altcoin that goes with it, but the transfer will be based on a Smart Contract which would have very clear and concise conditions for the contract to be fulfilled and transacted onto the blockchain. The Token represents an asset, an action or any other case use that might require a transfer from one person or entity to another, and its value will be initially created through the underlying coin.
An example of this is TRON, one of the leading Token based technologies, which initially started on the Ethereum blockchain and continues to use it till today. Through an initial coin offering (ICO) the TRON token was created based off the value of Ethereum at the time of launch, but is now a fully fledged token who’s value increases and decreases based on user activity, speculation and real world use.
Continue Reading about blockchain:
- What is Blockchain?
- Why is Blockchain Important?
- What is a Crypto Currency?
- What is an ICO?
- Are Cryptocurrencies and Tokens the same?
- Can Blockchain be used without a Coin or Token?
- Blockchain in Use (Real Estate)
- Will Blockchain replace banks? (Part 1 – Banking and Finance)
- Will Blockchain replace banks? (Part 2 – Blockchain Adoption)
- What is Distributed Ledger Technology? (Coming Soon)
- What is the future of Blockchain? (Coming Soon)
If you want to learn more about Blockchain Technology, Cryptocurrencies, ICOs, Distributed Ledgers, Smart Contracts or other fields related to the technologies, contact me using the contact page, or leave a comment below.
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