We live in an age of extensive digitalization. Almost the entirety of the collective knowledge of humankind has been transferred into a digital form. However, while digitalization has many advantages, it can also leave much to be desired. Security, privacy, reliability and trust are all ongoing issues for which the traditional digital world has had no real answers. Until blockchain entered the picture.
For a more secure and reliable digital environment, a new step had to be taken in how these problems are dealt with. Blockchain is a cryptographically-secure technology ideal for many fields of the digital world. It has the potential to bring about a new age of the internet.
Crypto value essentials
- Transparent and immutable monetary transactions.
- Digital notarization of critical information.
- Signing binding smart contracts in the blockchain environment.
- Unrestricted freedom of content creation.
- Enhanced governance and decision-making.
Revolution of monetary transactions
Bitcoin, the first cryptocurrency, has already proven its worth as a powerful financial option. The most fundamental properties of distributed blockchain networks ensure immutability and endorse a culture in which we do not need to trust others (this is known as trustlessness). At the same time, public blockchains endorse complete transparency, while private blockchains can also ensure absolute privacy.
How blockchains maintain data integrity
Blockchains can store many kinds of data, not just monetary transactions. Their decentralized nature and immutability makes them ideal for storing critical information (information that cannot be lost or altered). This makes blockchain an excellent medium for storing legal documents, contracts, agreements and the like.
Uploading entire documents into the blockchain is not only expensive, but also irresponsible, since they may contain sensitive information. To work around this, the contents of these documents are driven through a hash function and only the resulting string of characters is written into the blockchain. The hash value represents a proof of notarization. It is stored safely and permanently on the blockchain without the risk of modification or corruption.
Whenever the integrity of a document needs to be verified, it is simply hashed again and the hash is then compared to the one stored in the blockchain. If the contents match, the result will be the same, but if there was any alteration made to the document, the hash will be completely different.
It has to be noted that blockchain simply presents a more secure and reliable way to perform the act of notarization. For any contract to be legally enforceable, it has to be approved by an appropriate government or legislative body.
How the term binding works with blockchains
Too often traditional contracts prove insufficient. We say that they are “legally binding,” but this does not mean much in an age when people constantly find loopholes in the law, legal or quasi-legal ways around impediments. But in the world of blockchain, code is law.
If a smart contract is signed on a blockchain, that makes it well and truly binding. There is no way to change, terminate or forcibly execute it. Within the domain of the blockchain, the contract is as set in stone as the laws of physics are in our universe.
It is important to note, though, that this only holds true for the actions executed in the blockchain. A smart contract is no more binding than a regular contract and has to abide by international laws and regulations if it were to be enforced off-chain.
Blockchain promotes creative freedom
Blockchain has the potential to accommodate a fair environment for all kinds of content creators, from writers to musicians to video artists and more. Existing content storing and broadcasting platforms set arbitrary rules for what can be uploaded onto their servers and whether it is monetizable. Advertisers that pay the platform and, in turn, the content creators, do not want their ads to appear on certain content. That is their right and prerogative, but it forces some creators off the platform.
Imagine a blockchain-based video streaming platform where a smart contract charges you a hundred satoshis (Bitcoin's smallest subunit) for each minute of a video you watch. There are no companies involved who would take a part of the profit or censor a particular topic. The coins would go directly to the creator, who would be free to make a video about anything they wish. Innovations such as the Lightning Network make systems like this a real possibility.
Enhanced democracy through blockchain
Lately, there has been much talk of rigged elections. Blockchain offers a way to solve this issue. A private blockchain can facilitate an account for each citizen with the right to vote. When it is election time, eligible individuals could use their private key to access their node and cast a vote. This would result in no more “hanging chads” on ballots and would be as secure an alternative as possible to the current election methods, which in many countries still involve traveling to a voting center, entering a physical voting booth, and dropping a slip of paper into a box.
The benefits are not restricted to elections or referendums – any kind of a decision could be broadcast directly to the public, making a centralized government virtually obsolete. Who needs parliamentary representatives when you can make the decisions yourself?
Become a part of digital future
These are just some of the many possible applications of blockchain. The blockchain technology on which cryptocurrencies are based makes them a stepping stone towards a new and improved digital age. Therefore, their underlying value is actually much greater than what is reflected by their price.
Blockchain technology has been around for over a decade, but we’re still discovering its true potential, with new and exciting blockchain innovations constantly being developed.