BLOCKCHAIN AND DECENTRALIZATION IN THE MODERN WORLD
Blockchain technology has generated a lot of interest across various sectors, revolutionizing traditional methods and creating opportunities for more secure and transparent processes. That’s why we felt it was a particularly important topic to discuss on our blog.
While blockchain is often associated with cryptocurrencies, its potential applications go far beyond financial transactions. One area where this cutting-edge technology is making a significant impact is software development.
Software development companies are realizing the huge benefits that blockchain technology can bring to their coding practices. By implementing blockchain into the development process, companies not only improve security and transparency, but efficiency. Let’s take a closer look at how blockchain is changing coding practices in the software development industry.
One of the main benefits of blockchain in coding is increased security. Traditional methods are vulnerable to cyberattacks and data leaks, whereas blockchain stores data in a decentralized and encrypted manner, making it difficult to tamper with or steal. This allows developers to work with confidence, knowing that their code and data are protected. With blockchain, software development companies can streamline operations and improve efficiency. The decentralized nature of blockchain eliminates intermediaries, reducing costs and increasing productivity. Smart contracts automate tasks, allowing developers to focus on more complex projects, which speeds up development and increases customer satisfaction.
A LITTLE HISTORY OF BLOCKCHAIN CREATION
This technology promises to revolutionize the way we do business. It has an impact on various sectors, from finance to manufacturing and even education. Satoshi Nakamoto released a famous whitepaper on the technology in 2009. In the paper, he provided details on how the technology was well-equipped to enhance digital trust, given the decentralized aspect, which meant that no one person would ever control anything. Since Satoshi Nakamoto left the scene and handed over the development of Bitcoin to other core application developers, the digital ledger technology has evolved, leading to new applications that make up the history of blockchain.
The evolution of Bitcoin and other cryptocurrencies has attracted considerable attention, as well as threatened the very foundations of the financial system. After all, this was Satoshi Nakamoto’s intention when the global financial crisis hit not only the United States but the global economy harder than any other crisis in history. However, after the global financial crisis, 2009 is not the exact date of the emergence of the blockchain concept.
Blockchain was invented in 1991. The history of blockchain dates back to the early 1990s with two researchers: Stuart Haber and W. Scott Stornetta. They were both touted as co-inventors of blockchain technology. Several aspects of the Bitcoin blockchain architecture are based on Stornetta’s work. They described the concept of a cryptographically secure network of blocks. The first mention of blockchain architecture was in a publication in which Stornetta co-authored a digital hierarchical system known as a “blockchain” that used digital timestamps to order transactions. They worked on a cryptographically secure chain of blocks through which no one could tamper with the timestamps of documents. They subsequently upgraded the blockchain system to include Merkle trees, which increased efficiency, thereby allowing more documents to be collected in a single block in 1992. Moreover, blockchain technology has several significant features that have developed over time. One of them is that it allows for a profound shift from the centralized transaction model that has prevailed to a decentralized one.
BLOCKCHAIN DEVELOPMENT—BITCOIN AND ETHEREUM
The main advantages of blockchain are that it provides transparency, authentication, and auditability, and generally, the evolution of blockchain technology can be seen in two stages. The first stage consists of the years between 1991 and 2013. Just at the beginning of the 2008 crisis, Bitcoin emerged as the first application of blockchain technology.
One of the factors behind the crisis was the centralized payment and monetary system based on clearing houses that act as intermediaries between buyers and sellers and take on the risk of defaults. Bitcoin is an innovative technology that can allow banks to settle accounts with each other without relying on centralized organizations. Based on blockchain technology, Bitcoin is considered the first decentralized monetary system that operates on a global scale. It relies on cryptographic proofs of work, digital signatures, and peer-to-peer networks to provide a distributed ledger containing transactions. Since Bitcoin emerged, the number of applications has dwindled, all of which seek to leverage the principles and capabilities of digital ledger technology. Therefore, the history of blockchain contains a long list of applications that have emerged with the development of the technology.
The second phase of blockchain is called Contracts and covers the time between 2013 and 2015. Developed by Vitalik Buterin, Ethereum was born as a new public blockchain in 2013 with advanced functionality compared to Bitcoin, a development that proved to be a turning point in the history of Blockchain evolution. It separated Ethereum from the Bitcoin Blockchain by including a feature that allows people to record other assets, such as contracts. With its development, new features expanded the functionality of Ethereum from a cryptocurrency to a platform for developing decentralized applications. In 2015, the Ethereum blockchain was launched and became one of the largest applications of blockchain technology given its ability to support smart contracts used to perform various functions. In 2017, Eos published a paper detailing a new blockchain protocol running on EOS as a native cryptocurrency, its main goal being to encourage the deployment of decentralized applications through an autonomous decentralized corporation. Phase 3 of the Blockchain began in 2018 and was called Applications.
TECHNICAL AND ECONOMIC IMPACTS
Blockchain can be defined as a chain of blocks of information called digital ledgers. These ledgers are chronologically linked and replicated not in a centralized database but in a distributed database. Information can be added in blocks and never deleted, and any changes are tracked and verified by the chain. Each block is secured with cryptographic algorithms, and only authorized individuals can access the information. Although private blockchains exist, a typical blockchain is public and is defined as “decentralized.” The four key uses of blockchain are transfers and payments, property registries, contractual agreements, and identification. Blockchain replaces the need for trust with cryptography, allowing verification of identity, provenance, and authority using mathematical methods. This distributed ledger technology enables the secure transfer of money, assets, and data over the Internet without intermediaries. Blockchain can be used as a digital ledger to record and verify ownership of assets (e.g., real estate, shares) and to protect sensitive documents (e.g., passports, contracts). In a blockchain-based networked economy, financial and government services will become more personalized and efficient, reducing the need for physical infrastructure.
The technology’s computing architecture creates a wide range of potential applications. For example, by providing an immutable distributed ledger, it can help not only facilitate peer-to-peer payments but also manage records, track physical assets, and transfer value through smart contracts, all without a third party or manual reconciliation.
The advancement of computing power in computers and networked computer systems has facilitated advances in blockchain applications, while the dominance of smartphones has made digital wallets possible and increasingly relevant. In addition, there has been a proliferation of IoT (Internet of Things) and AI applications that can automate the collection and processing of big data for use on platforms. Blockchain applications are commonly used with cryptocurrencies, i.e., currencies that use public-key cryptography as a security measure and to prevent counterfeit transactions.
Blockchain technology can be considered both a technical and economic innovation. Blockchain technology can be used as a transaction mechanism for sharing economy services because it naturally solves the problem of trusted recording of large-scale peer-to-peer actions. Blockchain as an economic innovation offers solutions where there is a need for a reliable record of transactions in a decentralized environment where not all parties can be fully trusted. Blockchain technology has created a global economy of immediate trust and value built on agreement and complex computer algorithms. Also, digitized streaming money and payment channels can be methods to speed up the 30-60-90-day terms and bad debt problem in supply chain finance and promote a just-in-time economy for money. When talking about blockchain economy, can be defined as a term for the transition to cryptocurrencies and digital accounting systems and away from traditional national hard currencies and outdated, old-fashioned accounting systems. In the blockchain economy, technologies such as Bitcoin and blockchain are typical tools for financial management rather than traditional application programs that manage existing national currencies. Furthermore, the blockchain economy is a scenario and potential future environment where cryptocurrencies replace current monetary systems worldwide. Furthermore, with blockchain-based asset transfer, personalized financial and government services can be better tailored to individual needs. Blockchain technology is currently revolutionizing the storage, management, and transfer of value between digital identities in many economic sectors.
The Future of the Blockchain Market. The report reveals that the distributed ledger technology (DLT) called blockchain is optimistic that it will have a positive economic impact. It will contribute up to $120 billion worldwide between 2018 and 2024. Also, the study found that the benefits offered by blockchain mean that mass adoption is highly likely. They predicted that blockchain could contribute anywhere from $87 billion to $120 billion by 2024, depending on which industries add it and the speed of adoption.
While blockchain technology is having a major impact on the financial sector, new industry leaders are emerging with blockchain technology. Financial services seem to be the leader of blockchain shortly. Other sectors such as energy, industrial products, healthcare, and utilities.
CONCLUSION
Distributed ledgers, called blockchain, have the potential to securely digitize many of the ongoing transactions in economics and finance, as well as in legal and government services. Blockchain can be defined as a decentralized public ledger that records transactions between users in a permanent, secure, and verifiable manner. Importantly, blockchain can be programmed to record not only financial transactions but anything of value. There is a growing awareness that blockchain technology will bring a radical shift, especially concerning financial assets. Undoubtedly, the financial sector is at the forefront of the adoption of blockchain technology. Blockchain is rapidly changing the global economy. The potential impact of blockchain technology - distributed ledgers—on society and the global economy—is extremely important, as they promise to always have an optimistic impact.
The potential benefits of blockchain go beyond just the economy, and the technological capabilities of blockchain are already being used to solve real-world problems by certain groups. Just nine years after the first Bitcoin white paper, blockchain technology is now being explored by companies and governments to find potential use cases to improve efficiency and potentially spark a third industrial revolution. On the other hand, there is an ongoing debate about the promise of blockchain as well as its limitations. Blockchain technology in all its forms continues to evolve rapidly. It is widely recognized that the future of blockchain technology looks bright and attractive, in part because governments, developers, firms, and investors are pouring in large amounts of money to spur innovation and applications. The opportunities that blockchain offers need to be developed and managed wisely, with unintended consequences and downside risks being managed upfront and ongoing. Blockchain is the kind of technological disruption that could make a global difference. Its predicted impact on the global economy is large enough that some countries and major companies are already preparing for it.
