Over the past 30 years, financial institutions have funded the disturbance of numerous sectors; they have an idea of what a revolutionary technology can do to static incumbents.
So, to remain ahead of change, banks have been proactive in setting up R&D laboratories, construction test centers, and creating alliances with blockchain developers to completely comprehend the technology’s revolutionary potential.
Financial institutions were the first to dip their feet in, but the technology was also explored by academia, governments, and consulting companies.
Of course, all this work is in relation to what the entrepreneurs and developers are doing, either by discovering fresh methods to use the Bitcoin or Ethereum blockchains or by generating completely fresh blockchains.
This has been going on for over three years now, and the findings are beginning to come in.
While some of the waters are still turbid, this is what we understand a blockchain can do:
Establish digital identity
The identity component of blockchain technology is achieved by using cryptographic keys. Combining a government and private key generates a powerful, possession-based, digital identification reference.
A public key is how to identify yourself in the crowd (like an email address), and how to express consent to digital interactions is a private key. Cryptography is a major force behind the revolution in the blockchain.
Serve as a system of record
Blockchains are an innovation in the registration and distribution of information. They are useful for recording both static information (a database) and dynamic information (transactions), making it an evolution in recording technologies.
In the case of a registry, data may be stored on blockchains in any combination of three ways:
- Unencrypted data – Every blockchain participant in the blockchain can read and is fully transparent.
- Encrypted data – Participants with the decryption key can be read. The key offers access to the blockchain information and can demonstrate who added the information and when it was added.
- Hashed data – Can be displayed alongside the feature that produced it to demonstrate that the information was not tampered with.
Blockchain hashes are usually performed in conjunction with the initial information stored off-chain. For instance, electronic ‘ fingerprints ‘ are often hashed into the blockchain, while the main body of information can be stored offline.
Such a shared recording scheme can alter the manner in which disparate organizations operate together.
Currently, with information siloed in private servers, there is an enormous expense for inter-company operations involving processes, procedures, and record cross-checking.
Prove immutability
A characteristic of a blockchain database is that it has a history of its own. Because of that, they are often called immutable. In other words, modifying an entry in the database would be an enormous undertaking, because it would involve altering all the information that goes afterward on every single node. In this manner, it is more a recording device than a database.
Serve as a platform
Cryptocurrencies were the first platform to be created using blockchain technology. Now, individuals have shifted from the concept of a platform to exchange cryptocurrencies to a smart contract platform.
The word ‘ intelligent agreements ‘ has become a catch-all sentence, but the concept can effectively be split into several classifications:
There are the ‘ vending machine ‘ smart contracts created by Nick Szabo in the 1990s. This is where computers participate after getting an external input (a cryptocurrency) or otherwise send a signal that causes a blockchain activity.
There are also intelligent legal agreements or Ricardian contracts. Much of this request is based on the concept that a contract is a meeting of the minds and that it is the outcome of whatever the contracting parties agree to. A contract can therefore be a combination of a verbal agreement, a written agreement, and now also some of the helpful elements of blockchains such as timestamps, tokens, auditing, document coordination, or business logic.
Finally, there are the intelligent Ethereum agreements. These are programs that regulate blockchain resources, executed over interactions on the Ethereum blockchain. Ethereum itself is an intelligent contract code platform.
Blockchains aren’t constructed from fresh technology. They are constructed on a distinctive orchestration of three current techniques.
