Bitcoin(BTC) is the first cryptocurrency to reach a truly high level of success, and those who are interested in the subject are wondering and speculating on what BTC will be worth in the next years. Few people realize how important bitcoins really are and even less people realize that this is just one of many uses of a technology called ‘Blockchain’. This is important because, despite many attempts by people and organizations what would like to see the end of this technology, we now have a government-independent cryptocurrency, which cannot be reprinted or controlled. It is not a fiduciary currency based on trust. Bitcoin is based on the laws of mathematics, which guarantee that no one will be able to manipulate it.
The Queen of Sciences has once again showed her strength. This shift is going to change a lot more than just the creating of Bitcoin; many people believe that the changes will be so profound that they will undermine the foundations of today's virtual finances and that financial hegemony will be dispersed among the community, meaning that no one will be able to control us.
What is Blockchain?
There are a lot of publications on this subject, so I will just mention that Blockchain allows you to execute arbitrary transactions in a distributed register - every network participant has access to copies of all transactions, so no one can manipulate and reverse those that happened in the past.
The key is to execute any transaction within the distributed registry. The specific implementation is the bitcoin in this case. Bitcoin is nothing more than simple transactions which state: person A sends an amount of cryptocurrency to person B. If we expand this concept, it is clear that within Blockchain we can perform any operation - much more advanced than the simple transmission of the chosen amount of cryptocurrency.
For example, person A transfers a unit of currency in a transaction called ‘smart contract’. 20% of those funds are transferred randomly to five selected network participants, 80% to recipient B.
Or - imagine that we want to vote. Each person in the network can perform a transaction that receives an ID, a question, and a selected answer at the entrance. All answers are kept in a public register, everyone has access to the voting results. This allows the vote to be fully transparent and no one can manipulate it.
What Ethereum has to do with Blockchain?
One of the most popular Blockchain implementations is Ethereum. In the minds of investors seeking new opportunities in the currency market, this term exists as a twin to Bitcoin. Introduced 2 years ago, the cryptocurrency ‘Ether’ has recently reached the price of 326 USD, with a 3000% increase in value in 2017.
But Ethereum is not just an electronic payment. The effects of the 22-year-old Russian programmer, Vitalika Buterin, is a free open-source platform that not only allows people to invest, but also bet on or support crowdfunding, allowing developers to benefit from all the pluses of a distributed registry by creating their own applications in a new language called ‘Solidity’.
Ethereum provides ready-made solutions such as an electronic wallet to store cryptocurrencies, the ability to create your own currency tokens (crypto currency), or the key element of Blockchain: smart contracts. With ready-made tools, developers can focus on the creative use of the distributed registry beyond the exchange of digital currency.
What is the main problem with Blockchain?
The biggest problem users are having, is finding the most correct and optimal way to use this technology. Its use is only meaningful when it is integrated very well with current solutions, and above all users understand where its application gives the greatest benefit.
Opportunities are plentiful. Let's remember that Blockchain is not just a public Ethereum. Nothing obstructs you from running your own network, your own nodes, which will only be available to your community. Your transactions do not have to be visible to the whole world.
Not everything must be stored in a distributed registry necessarily. You can always hold some information in a standard database. Moreover, in many cases, this is a more reasonable solution, due to the specificity of Blockchain, where everyone has access to the transactions and information about how they were carried out. In a situation where you use a distributed registry, but at the same time you need to store and manage personal data, there is nothing to prevent the data from being distributed in the right way - the distributed registry gives you a guarantee of transparency and security for all network data. The key to linking both elements are the smart contracts and identifiers of individual Blockchain participants.
A practical application of Blockchain
Trueflip.io is an online lottery based on a distributed register in which players from all over the world are counting on getting rich in Bitcoin. The game is high stakes: at the date of writing this article, the culmination is over $ 288,000. Anyone who purchases a lottery ticket for 0.001 BTC ($ 4.27) is eligible to take part in a draw that takes place every day at 8:00 pm UTC and is broadcasted on an official YouTube channel. From April 2017, nearly 117,000 internet users participated in the lottery and the total prize pool has exceeded 31 BTCs (~ 135,000 USD). What distinguishes trueflip.io from traditional lotteries? Contrary to native Lotto, the randomization machine is an algorithm, and all transactions are made in a distributed register base. Since the entire random lottery system code is available for online viewing and the fact that all lottery transactions sign up in Blockchain, TrueFlip is one of the safest and most transparent online lotteries around.
Slock.in is a German startup founded in 2015, which focuses on implementing Ethereum solutions, and in particular, smart contracts for practical applications used in so-called cooperative economics. Share economy is a social and economic trend of sharing resources across distributed groups of individuals and communities.
A good commercial example of this phenomenon is Airbnb, which mediates short-term rent of private flats of registered users. Slock.in, in anticipating the development of these social trend, has created an innovative door lock that only opens on the basis of a Blockchain suitable smart contract. In practice, a tourist who rents an apartment can pay both deposit and rent in the Slock.in application, and after a positive verification of the smart contract on the Ethereum platform, the door lock in the rented apartment is opened. The solution is revolutionary, because of the full transparency of the deal and the high security offered by Blockchain, the presence of an Airbnb type broker becomes redundant.
The philosophy of using an intelligent contract to increase efficiency and safety, while reducing costs, has been noticed by large corporations. In 2017, the German energy giant RWE introduced a network of charging stations for electric cars, for which the fee is paid from an electronic wallet on the Ethereum platform using a Share & Charge mobile application.
In another article, we will return to the topic of examples and ideas for using Blockchain in large IT solutions. We will discuss the examples I use on a daily basis and in which the use of Blockchain gives invaluable benefits.