Example Use Cases of Blockchains

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Intermediate
Duration
40m
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Description

This course explores the theoretical side of blockchain technology as well as the practical elements. You'll learn what the blockchain is and the difference between private and public blockchains. We'll also cover smart contracts, and Web 3.0.

Transcript

This lecture is going to be one detailed insight into use cases of Blockchain technology for you. So, without any further ado let's dive in to learn about its many uses. Now, Blockchain has been hailed as the fundamental technology under the hood of cryptocurrencies like Bitcoin. And though it's not the only one, it is certainly getting a lot of attention from pretty much every industry as they're all looking to integrate it into their systems. Blockchain has been such a strong buzzword lately, that it feels like any startup can easily get heaps of funding from VCs or Crowdfunding, just by stating that they're doing a Blockchain for something. The vast majority of major companies, banks, and even governments are researching Blockchain and figuring out how to implement it to help secure their infrastructures. In this lecture, we'll try and cover why that is, and what Blockchain is good for, what is not good for, and where Bitcoin itself fits into this picture. To really figure out what it can and cannot do, let's start by restating what we've already covered. Blockchains are databases that trade-off efficiency for security, and are inherently tamper evident. This means a pair in the network that's observing a Blockchain database can notice when any change has been made to it. When implemented with what's called proof of work baked in, it can also be hardened and therefore become practically tamper-proof. Arguably, since blockchains are inherently inefficient, keeping copies of the database with every participant of the network, it's only reasonable use cases are datasets that really require a high level of security. Naturally, the first companies to really get excited over Blockchain were banks and financial institutions. They are the most sensitive to intruders tampering with their databases. When just a few numbers being changed around could cost them millions of dollars, the need for a more secure way to hold your database becomes pretty obvious. For example, R3 is a distributed database technology company. It needs a consortium of more than 70 of the world's biggest financial institutions or developing Blockchain-based products that are going to be used in banks all across the world. Beyond that, people are working on a Blockchain version of pretty much every other major technology surface imaginable. We're talking Blockchain competitors to Facebook, eBay, Internet Of Things, stock markets, shipment tracking, cloud services, gambling sites, domain registrars and networks and even Tinder. Anywhere where people have sensitive data or transactions that they want to back up and secure, Blockchain is being researched. And that's without even getting to many different Blockchain based networks that compete and complement Bitcoin as a monetary system. Pretty much every tech-based company you can think of has some kind of Blockchain-based competitor in the works. Will they all work? Not a chance. Some of these industries arguably have more to gain from using the Blockchain than others, as the inherent tradeoffs involved with using a Blockchain will complement some use cases and will be a burden to others. We'll quickly go through a couple of examples to try and analyze what Blockchain can do for them and what it can't. One of the first industries to come on board the Bitcoin revolution, is the gambling industry, because it suffers from a lot of restrictions in many jurisdictions around the world. On top of that, there is also a major issue with the integrity of the software that runs a gambling site. How can you know they're getting the odds you should be getting and the house isn't cheating to get more money out of you? And then there's a bunch of security related issues that every business dealing with the transmission of monetary value needs to handle. Blockchain tech addresses each one of these issues. It's highly compatible with pay to pay technology that has broken down borders for years, like Torrent software does, and just like Bitcoin does. An open-source code and client-side software or Blockchain, it allows independent people to go through it and make sure the odds they are promised are actually the odds they're getting. Furthermore, having a system that's highly secure for value transmission allows for a reduction in costs operating a gambling operation. As the most common games in casinos are not time-sensitive, the relative inefficiency of Blockchain networks shouldn't be much of an issue. Sure, you wouldn't want to run an online football game on a Blockchain, because any delays are a big deal, but a few seconds on a roulette wheel might be worth all of the benefits. All of these can contribute to lowering rates and being a highly competitive actor within the gambling industry. However, having the software of such a casino as an open-source does bring up a lot of difficulty monetizing it, just like any other open-source software. Imagine you trying to hard code even a minuscule portion. For example, 0.1% rate to go to developers of the site. With open-source software, an identical version that does not pay out these dividends is likely to pop up within days of launching. Let's also have a look at the very first fork of Bitcoin which is almost an identical duplication of it with some slight modification, it's called Namecoin. Namecoin's main use is as the database that manages the top-level domains that ends with Dot-Bit. Unlike traditional DNS registrars which require you to rely on companies and corporations to get from the domain to the IP address you're trying to reach, Namecoin stores that information in a Blockchain database which allows you to trust no one and be certain that everyone has the correct database. This is a classic use case for Blockchains. It doesn't have to be efficient. The amount of data it's keeping is not that big so it can easily be duplicated over many computers all around the world. One Namecoin serves its purpose and serves its DNS as well. For a long part of its existence, it's felt to gain real monetary value, which in turn caused the low hashrate because it didn't draw a lot of miners and some services that originally used the Namecoin Blockchain have moved to the Bitcoin Blockchain because they're worried it wasn't secure enough. Which illustrates another problem with Blockchains. They require a lot of computing power dedicated to their proof of work to actually be secure and tamper-proof. But these real-world examples may only scratch the surface of what Blockchain can do for our society. Think of all the various situations in which information needs to be either securely stored and mutable, or validated in its authenticity. For example, you may have read in the news about the WannaCry attack that affected 300,000 computers worldwide and crippled organizations everywhere from FedEx to the National Health Service in the United Kingdom. Ironically, the only way that Blockchain was used in this scenario was to demand a Bitcoin ransom for unlocking the affected computers. But what if that information had instead been distorted, not on individual computers or servers, but rather in the form of a Blockchain? Affected computers such as those at the hospital reception desks could simply be wiped clean and restore the latest Blockchain from unaffected machines without having to worry about old or outdated backups. Furthermore, they wouldn't have to worry about whether or not the attackers were able to access the data on the machines, because it would be encrypted using private keys. Well, how about all of the debate about voter fraud in the United States? What if every single vote was somehow recorded in a publicly available ledger and verified by encrypted private keys? If governments around the world were able to harness Blockchain technology successfully to identify voters, the resulting voting system would not only be more convenient, but also significantly more secure and transparent. Obviously, not all of these applications are going to be a success, and some of them are going to involve in ways that we can't predict. But one thing is for sure, Blockchain technology is going to play an increasing role in our security in our digital world. I look forward to seeing you in the next lecture where we'll be going over smart contracts.

 

About the Author
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Ravinder is an expert instructor in the field of cryptocurrencies and blockchain, having helped thousands of people learn about the subject. He's also the founder of B21 Block, an online cryptocurrency and blockchain school.

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