There’s a lot of new terminology associated with the birth and rapid growth of the cryptocurrency market. It’s a challenge to keep up, and it doesn’t help that there are a lot of confusing and even inaccurate definitions out there. Depending on who you ask, you can get lots of different answers to simple questions like, “What is Blockchain?”
Briefly, blockchain technology uses a distributed, decentralized (widespread, not owned by any one person or group) network of millions of computers to register and verify encrypted online transactions. A block is digital information and the chain is the public database where this info is stored. Each computer’s verification of the transaction gets added to the chain of blocks, and no changes can be made to the transaction. If someone were to try to change any info in a transaction, they would have to change every single block in the chain that came after it, on millions of computers. Impossible. This results in a “ledger” of transactions that is highly secure, encrypted, and reliably accurate.
Each block has a unique code identifier called a “hash” that distinguishes it from every other block, and it can store up to 1 MB of data, which can be thousands of transactions in one block. Once a transaction is verified, it is stored in a block. The transaction is publicly available, and anyone can look at it. However, personal identifying information of the people making these transactions is not available.
The fact that blockchain technology consists of digital information that is recorded and distributed, but cannot be edited or deleted, makes it an attractive type of technology for other online activity that needs to be encrypted and guaranteed accurate.
Denver to Pilot Blockchain Voting App
The city of Denver has just announced that they plan to utilize a blockchain system to store and track votes in upcoming municipal elections. They are planning to allow overseas voters, active-duty military personnel and their dependents to vote using a blockchain-based smartphone app from Tusk Philanthropies and Voatz. This won’t be the first time the Voatz app has been used for voting. Active-duty military personnel used the app to vote during the state of West Virginia’s elections in 2018.
There have been more than 30 successful pilots of this app, and blockchain technology has proven to be a secure, auditable, transparent and accurate method of counting ballots. With all of the concern about voter fraud in recent elections, it’s likely that more municipalities will begin implementing this innovative technology.
Digital Identity
According to a recent article on Techopedia, the most promising new application of blockchain technology is the creation of digital identity. The term “self-sovereign identity” has been coined to describe the ability of a blockchain-based system to give users ownership over their personal data and digital identities. It’s easy to see how valuable it would be to be able to prove your identity online so you’re no longer subject to third parties who can lock you out of your own accounts.
Payment Processing
Once you understand how blockchain technology works, you can begin to see many ways it can be applied. Since it is decentralized, the database can’t ever be offline. It can’t be removed through cyber-attack. The encrypted transactions are verifiable. Transactions can be more secure, faster, and cost less than traditional payment methods. Mastercard has launched its own blockchain network for the B2B space and cross-border payments. Visa uses blockchain technology to power its Visa B2B Connect payment platform. And American Express has also added blockchain technology to its payment system. Many banks and financial institutions are getting on board with the blockchain trend.
Other ideal uses for blockchain technology include retail loyalty rewards programs, monitoring supply chains, copyright and royalty protection, real estate, land, and auto title transfers, data sharing, medical recordkeeping, wills or inheritances, tracking prescription drugs and much more. Some of these uses are already being piloted, while others are in development. What is certain is that blockchain technology will continue to be applied to additional real-world uses in addition to buying and selling cryptocurrency.