Financial institutions have financed countless industrial disruptions over the past 30 years; they had an idea of what revolutionary technology could do to static old players.
So, to keep ahead in change, the bank has been proactive in establishing R&D laboratories, building testing centers and building partnerships with blockchain developers to fully understand the revolutionary potential of technology.
Financial institutions were the first to try, but academics, government and consulting firms also studied the technology.
All of this working, of course, is in addition to what entrepreneurs and developers are doing, either by discovering new ways to use bitcoin or ethereum blockchains, or creating entirely new blockchains.
This has been going on for more than three years now, and the results are starting to come in.
While some waters are still bleak, here’s what we know blockchain can do:
Establish digital identity
As explain in our guide “How Does Blockchain Technology Work?“, The identity stuff of blockchain technology is fulfilled through the use of cryptographic keys. Combining public and private keys creates a strong reference of digital identity based on ownership.
A public key is how you are identified in a crowd (such as an e-mail address), a private key is how you express approval for digital interactions. Cryptography is an important force in the blockchain revolution.
Serve as a system of record
As stated in our guide “What are Distributed Ledgers?“, Blockchains is an innovation in the registration and distribution of information. They are good for recording static data (registry) or dynamic data (transactions), making it an evolution in the recording system.
In the case of the registry, data can be stored on a blockchain in a combination of three ways:
- Unencrypted data – can be read by any blockchain participants on the blockchain and is fully transparent.
- Encrypted data – participants can read it with a decryption key. The key provides access to data on the blockchain and can prove who added the data and when it was added.
- Data hash – can be presented alongside functions that make it to display data that is not corrupted.
Blockchain hashes are generally done in combination with original data stored outside the chain. Digital ‘fingerprints’, for example, are often hashed to the blockchain, while the main body of information can be stored offline.
Such shared records systems can change the way different organizations work together.
At present, with data on private servers, there are very large costs for inter-company transactions that involve processes, procedures and cross-checking records.
Read more about this in our guide “What are the Applications and Use Cases of Blockchains?“.
A feature of the blockchain database is that it has its own history. Because of this, they are often called immortal. In other words, it will be a huge effort to change the entries in the database, because that will require changing all data that comes afterwards, on every single node. In this way, this is more a system of records than a database.
Read more about this in our guide “What’s the Difference Between a Blockchain and a Database?“.
Serve as a platform
Cryptocurrency is the first platform developed using blockchain technology. Now, people have switched from the idea of platforms to exchange cryptocurrency to platforms for smart contracts.
The term ‘smart contract’ has become a kind of general term, but the idea can actually be divided into several categories:
There was a smart contract ‘vending machine’ made in the 1990s by Nick Szabo. This is where the engine engages after receiving external input (cryptocurrency), or sending a signal that triggers blockchain activity.
There are more smart legal contracts, or Ricardian contracts. Most of these applications are based on the idea that a contract is a meeting of minds, and that it is the result of anything agreed by the party who agreed to the contract. So, a contract can be a mixture of verbal agreements, written agreements, and now also some useful aspects of the blockchain such as time stamps, tokens, audits, document coordination or business logic.
Finally, there is the ethereum smart contract. This is a program that controls blockchain assets, executed through interactions on the ethereum blockchain. Ethereum is a platform for smart contract code.
Block is not built from new technology. They are built from a single orchestration of three existing technologies.
Read more about this in our guide “What are the Applications and Use Cases of Blockchain Technology?“.
Images by Maria Kuznetsov
Article Source: http://www.coindesk.com