Blockchain Technology - A Magic Behind Potential Web 3.0

Blockchain. I'm sure that by now, you must've heard about this or already knew when Bitcoin whitepaper got released way back in 2008 or when bitcoin came to realization stage in 2009. (Feeling old yet?).
Satoshi Nakamoto, the guy (or probably a group of highly intelligent people) who invented bitcoin and devised first blockchain database as a part of bitcoin designing and reference implementation. Although there were many theoretical works done by other cryptography experts ( Source - Blockchain Wiki ) in the past, this was the first conceptualization of blockchain. Blockchain is bitcoin's (or for that matter, any other cryptocurrency's) core component.

What is Blockchain?

Image Source

Blockchain is a distributed database which stores and maintains list of records in a chronological order where anyone can verify it and due to distributed nature of the database, it secures the records from getting tempered with. These records are digital transactions without any need of a middle man performing any verification. They contain the timestamp and link to the next record, like a linked list. This database gets replicated over the network and anyone can view/verify it within the network. These distributed databases gets synced over the internet.

For example, I'm lending you a book. I physically placed it on your hand. So we both are aware about the transaction that happened. We didn't need any third party to verify this transaction. And now, you have complete control over that book and I have none.

Now think about the book being an eBook. I'm sending you the eBook via email, a digital transaction. When the word digital gets added, it brings in many more other questions. like, how do you know that eBook which belonged to me now belongs to you, and only you? How do you verify that I didn't make certain copy of this eBook and shared with others? This transaction was supposed to happen between you and me, right? But what if I uploaded it to some file sharing website for the whole internet to download it? When it comes to digital transactions, there are many complications compared to physical transactions.

Double Spending Example With Digital Currency - Image Source

This particular problem is known as double-spending problem. To solve this double-spending problem, we need a database which can track the transaction of this eBook. This is called a ledger. This ledger is distributed over the internet for everyone to see and verify. So now when I send the eBook to you, through this ledger you can verify that the eBook now belongs to you. I can not double spend it as ledger already had registered the number of eBooks I had. And once I sent it to you, it reduced the number from my possession and added it under yours.

Note: I read about this on coindesk and thought it to be the best example someone can give to explain the basics of blockchain. Full article available @ Coindesk

Blockchain is like this but on a much broader level. There are millions of people watching and verifying this transaction and adding it to the blockchain so that it remains in the blockchain forever. Once the transaction has been added on the blockchain, it lives forever and can not be altered, which adds security property to this. Now, whenever someone wants to know who gave you that eBook, all they have to do is look up into blockchain and get the details. This adds transparency property to this. When a digital transaction is carried out, it is placed in a block with other transactions which happened during that timeframe. This block is encrypted with an algorithm and broadcasted over the blockchain network for everyone to see and verify it. Nodes, which are participating in this network, verify this block by solving complex coding puzzles. The first node which solves the problem gets rewarded. This block is then marked with the timestamp and added to the chronologically accurate chain of blocks. This chain is continuously updated and verified by the network, giving each node an ability to prove possession of everyone at any given time.

How blockchain can be useful?

Blockchain's distributed, decentralized, transparent, and cryptographic nature allows users to trust each-other and perform the transactions without worrying about the problems which comes with digital transactions. This erases the need of intermediary element in the transaction. It's also adds a sense of strong security. Centralized systems always face the risk of data being compromised and altered by someone smart enough to identify the loopholes. But this problem becomes obsolete because of the decentralized and distributed properties of the blockchain. If that smart person wants to compromise and alter the data on the blockchain, they have to go through every block in the blockchain to reflect the alterations, and furthermore, this needs to be done with every node of the whole network simultaneously.

The list of useful applications of blockchain is growing as each day passes by.

Current System Vs. Blockchain

Let's take an example of banks which maintain your money. They operate on a central database with all the necessary details available on the sheet. Whenever you perform a transaction, bank will lock down this sheet, deduct the amount from your account and add it to the beneficiary, and then release the lock. The problem with central database is the amount of risk it endures. If anyone to alter that data, it will be huge pain for verifier. Now, if this database was decentralized and distributed over the network, it would be impossible to alter the data at one place and replicate it over the network. Other nodes will see that the other node is not providing correct data and ignore it as they already have correct data synced over the network.

Now think about your identity. Now a days we rely on internet to stay connected with our friends, family members, fans (if you're a celebrity, or a dynasty in search of his empire), professional network, and even perform banking operations. The list is ever growing. Our usernames, passwords, and other personal details are being stored on centralized database of the organization we interact with. Now what if someone to steal your identity. It becomes really difficult when you're the protagonist of 2011's movie "Unknown". How do you prove it to a credit card company that it wasn't you who purchased that fluffy unicorn on the amazon or prove it to the bartender that it wasn't you who drank all those beers. Here comes the blockchain concept to save all our troubles. If your identity is present on the blockchain, every node can verify that it's you, the protagonist, and no one else can alter it.

There are many other applications of blockchain, including but not limited to, distributed cloud storage, digital voting, smart contracts, assets management, payments, insurance, healthcare, and music. Currently bitcoin is the biggest example of blockchain in action. Blockgeek has explained the usefulness of the blockchain in such a manner that it's hard not to understand after reading it.

Blockchain can be the web 3.0, a promising technology to revolutionize the future. Here are some of the intriguing organizations/products being launched with blockchain as a backbone.

1. Decentralized Apps Platform - Ethereum

Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference. These apps run on a custom built blockchain, an enormously powerful shared global infrastructure that can move value around and represent the ownership of property. This enables developers to create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past (like a will or a futures contract) and many other things that have not been invented yet, all without a middle man or counterparty risk.

2. Digital Assets Management - Iconomi

Digital assets are the foundation of new, improved economy. It can include music, photos, logos, animation, presentations, personal documents, games, remittance, and others. With too many digital assets and exponential growth in number of devices which acts as a pipeline of your digital youth water to flow over the network of such pipelines, digital assets management is becoming increasingly important. With blockchain, digital assets management can become more secure allowing individual to control their own assets and gain value of it. Digital assets management with blockchain enables related institutes to reduce vulnerability and data ambiguity, by introducing cryptography-secured, distributed, and master prime record ledger. Iconomi is one of the digital assets management platform which utilizes the blockchain technology to achieve better fund management.

3. Distributed Computing with Digital Assets Management - Zennet

For several years now, with grid computing in action, volunteers arounnd the world contrinute their otherwise idle computing power to reach a common goal like scanning cosmic signal data to produce clear picture of universe or calculating and analysing the climate change scenarios data. Zennet is a distributed supercomputing project that will use blockchain technology to remove the central administrators from the problem. Instead, it will be a completely decentralised system, according to its founder, software engineer Ohad Asor. Publishers provide jobs ripe for large-scale distribution, which would typically be the kinds of workloads used in Hadoop, the open source project used for the distributed processing of large data sets (you'll often see Hadoop and 'big data' used in the same context). Publishers distribute information about those jobs on the network. Software operated by providers – owners of computers with spare computing power – will contact the publishers, and automatically negotiate a price for their part in the job.

4. Smart Contract Platforms - Embermine

How can we empower writers and artists so that they can manage their creative work and achieve their goals, sustainability, and professional growth? Moreover, how can we streamline the compensation of these individuals efficiently and fairly, assuring the fulfillment of those terms and responsibilities? Finally, how can we do all of this with accountability and confirmation that is irrefutable? Embermine is working to provide solutions for these kind of questions. Originally, the ability to create and understand the programming used to create smart contracts was available to only specialized programmers and enthusiasts. Embermine will bring the smart contract into a language and format that is nonexclusive and accessible to anyone using the Embermine platform. Usecases includes, but not limited to, Music (Management, platform, royalty splits, promotions), E-publishing, Film Making, Web and mobile development.

5. Messaging Platforms - KiK

Chat platform Kik has revealed that it is launching its Kin token that will deliver the basis for a decentralized ecosystem of digital services. Kik believes that through its token it can bring together the areas of communications, information and commerce in a new way that will fuel how today's generation and future ones will connect. Through the advanced developments in digital currencies and the blockchain, Kik is planning on creating a decentralized ecosystem of digital services through four steps: creating the Kin token on Ethereum, integrating Kin into Kik, developing the Kin Rewards Engine and launching the Kin Foundation. Implemented on the Ethereum blockchain as an ERC20 token, Kin will serve as the basis of interoperability for all transactions within the Kin ecosystem.

6. Distributed Super Computer - SONM

SONM is a universal fog supercomputer – ethereum-based network for globally distributed computing power. The purpose of the SONM project is to provide safe and cost efficient way to run general purpose computing workloads from game servers to scientific calculations using a free market place. Usecases - Scientific projects, Site Hosting, Gaming Servers, Neural networks projects, Rendering video and CGI. Imagine your video being rendered on a grid of multiple computers allowing you to save time, cost, energy.

And the list also includes Crowdfunding Platforms, Supply chain management and auditing platforms, distributed cloud sharing, Protection of intellectual property, Prediction market, Internet of Things (IoT), Land title registration, Stock trading, and the list continues. There are many other projects which are utilizing the blockchain technology to revolutionize the future. Web 3.0 will be a reality soon.

An image I found online was pretty much self-explanatory. Have a look.

What is Blockchain? "A Simple Guide to Understand Blockchain Technology & Web 3.0"