You have likely heard the word “blockchain” plenty of times in the last several years. It relates to cryptocurrencies like Bitcoin. In fact, you might ask yourself what exactly are the basics of blockchain’?
There is no simple meaning that you can understand as an average person. Blockchain seems to be a cliché, but only in a theoretical sense. Answers to the above question are essential in understanding the basics of blockchain. So, how many people really understand the blockchain basics in 2023?
What is blockchain and how does it work?
A blockchain is a ledger or distributed database that is shared among the nodes of a computer network. They are most well-known for playing a significant part in cryptocurrency systems.
They support the upkeep of a decentralized, secure transaction log. They are not, however, restricted to just cryptocurrency applications. Any industry may utilize blockchains to make data immutable, or incapable of being changed.
You may be familiar with databases or spreadsheets. The fact that a blockchain is a database where data is input and stored makes them relatively comparable. How the data is organized and accessible is what distinguishes a blockchain from a conventional database or spreadsheet.
To determine how many people understand the blockchain basics, we have to look at the various fields where people apply it. In the modern world, blockchain applications have wide-ranging effects on several sectors. The people in the following sectors understand blockchain basics:
Nowadays, gaming is a sizable industry that competes with more established forms of entertainment like movies and TV. Due to network effects, extensively multiplayer online (MMO) games are far more commercially successful over the long term than single-player games.
An MMO has a larger player base right now, which is more valuable to a new user. This is due to the more readily available teammates and competitors.
However, the underlying issue of widespread fraud and cheating is present in MMO games. Owning these games puts you in the awkward and expensive position of arbitrating disputes between players. This method is frequently flawed.
Trading amongst players is a typical scam source. You can prevent common fraud by making promises, such as “pay you back later.” These processes are enforceable by using a blockchain-based smart contract.
For instance, using a secure peer-to-peer protocol, participants can trade goods on the blockchain-enabled site. Even the exchanging of things between other games is permitted by the protocol.
Basically, you just place your products in a trade proposal box and, once you’re satisfied with the transaction, cryptographically sign the swap. The platform’s digital ledger is then used to securely store the trade.
The finance industry primarily deals with the recording, transfer, and investment of valuable assets. This comprises businesses that cater to customers, such as banks, wire services, and money managers. Infrastructure firms including central banks, credit rating services, and stock exchanges also contribute.
The use of blockchain in finance is more efficient and relies less on established financial institutions and paper-based processes. Blockchain technologies also maintain security and cut expenses.
I’ll give you an example of Aave, a dApp that runs on the Ethereum blockchain. With the help of this service, you may lend Bitcoin to others and earn interest. You put your tokens into a liquidity pool and receive a specific interest rate in return. From the same pool, you may additionally borrow tokens and pay interest on them.
The modern healthcare sector is a part of the information sector. The medical history of patients must be available to the caretakers who need to know it and must be kept private in order to provide effective and safe treatment.
The trade-off regarding accessibility and secrecy is lessened by blockchain technology. For instance, Estonia uses a private blockchain to ensure that medical data haven’t been tampered with. Every time a physician or patient asks or inputs data, the Estonian health system registers it. These huge logs are often hashed and backed up.
The hashes are stored in a blockchain. As a result, changing just one record would require changing the entire blockchain, which is essentially impossible. The logs are basically impenetrable in a way that costs nothing to maintain.
The real estate industry deals with both public and private land as well as buildings. However, because of ownership restrictions and the infrequent nature of asset transfers, it is well recognized to be illiquid.
Through real estate investment trusts, real estate has traditionally been securitized. However, a new choice has emerged thanks to blockchain technology: the decentralized tokenization of real estate.
Unmatched levels of automation and portfolio diversification can be made possible by tokenizing real estate and transacting it on a digital market. In reality, tokenization has been applied effectively to an Aspen resort.
Interaction with regulatory authorities is important for tokenization to be useful. Blockchain technology by itself cannot ensure ownership of tangible assets.
The tokenization provider operates as a middleman, selling tokens on a blockchain after the regulator authorizes the tokenization of a property. Token holders are entitled to a portion of the operational margins when the asset generates a return, such as rent.
Supply chain systems for managing the flow of supplies between sectors and nations. Making the procurement and delivery of goods as flexible as feasible is encouraged by the ongoing market demand to lower the cost of logistics.
However, doing so frequently results in supply networks being untraceable. Because there are so many intermediaries, it is challenging to determine a product’s origin. There is a trade-off between information accessibility and record integrity, much like in healthcare.
By using blockchain or distributed ledger technology, this problem is becoming better. IBM Food Trust is a prime illustration. The Food Trust employs blockchain verification to create records that are impenetrable to tampering while yet being extremely quick to find.
The fundamental concept of blockchain is still somewhat new. People are still actively researching new uses and variants. However, from the above sectors where blockchain is actively utilized, we can say that a lot of people understand its basics now. As time goes by, we can only expect more people in various industries to fully embrace blockchain.