The blockchain is an evolving technology that is the work of high minds from the fields of cryptography, information technology, mathematics, business, and finance. Many technologies today that we take for granted now were considered unthinkable in the past: steam engines, steamboats, and airplanes revolutionized global transportation, while the replacement of gold with paper currency revolutionized the financial world. Smartphones changed our communication and the way we entertain ourselves, while digital marketing services in the USA and elsewhere have altered how consumers make purchasing decisions. As we move towards the realization of the “Internet of things (IoT),” Blockchain could have an even more significant impact on businesses, society, government and everything in between.
Are you considering the various options available as the basis for your database? Then you may be having trouble deciding between a traditional database or a Blockchain database. This article will provide an overview of Blockchain and its potential uses for you. However, before we look at the pros and cons of each approach, let’s take a quick look at the history of Blockchain.
History of Blockchain
Blockchain Version 0: Bitcoin
The idea of utilizing timestamps and blocks, preventing data and documents from being tampered with, dates back to 1991 with the work of S. Haber and W. Stornetta. However, the real hype around the idea of Blockchain started with the seminal whitepaper by an unknown person calling themselves Satoshi Nakamoto in 2008.
In this paper, Nakamoto described the functioning of a possible peer-to-peer, decentralized public ledger that now forms the basis for the trustless electronic cash, Bitcoin. Nakamoto launched Bitcoin on January 3, 2009, when they mined the first block for themselves. Since then the currency’s value has skyrocketed with the current market capitalization valued over $115 billion.
Put simply; Bitcoin is a digital currency which relies upon Blockchain as the public ledger to record transactions on a network of computers. The main idea is to solve the problem of double-spending in the traditional financial system that requires a trusted authority as an intermediary. This system operates with a need of trust between transacting parties and is controlled by unbiased supercomputers that verify the transactions at minimal transaction costs.
Initially, it was believed that Blockchain and Bitcoin were the same thing. However, people soon started to realize that Blockchain was not just a financial ledger: it could be used for all sorts of cooperative activities that involve some sort of exchange of value. This has led to many individuals and companies developing applications of Blockchain and making their own cryptocurrencies, smart contracts, and databases. There are currently over 40 active cryptocurrencies; with Bitcoin, Ethereum and Ripple as the most prominent. People have even used Blockchain to create joke currencies, such as the meme-inspired Dogecoin.
Blockchain 2.0: Ethereum
Vitalik Buterin, a 26-year-old Russian-Canadian computer scientist, and Bitcoin codebase contributor, realized the limitations of Bitcoin around 2013. Buterin pushed for a change in the code to make the currency more flexible. However, he faced severe resistance from the Bitcoin community. Disappointed, Buterin set out to develop a separate public blockchain that allowed for the exchange of other assets such as loans, bonds, and contracts.
Buterin launched a new digital currency based on his new set of protocols in 2015. In three years his new currency, Ethereum, has reached a market capitalization of $52 billion.
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Flippening.watch is a website dedicated to watching out for a possible future event when Ethereum takes over Bitcoin regarding market capitalization. According to the website, Ethereum has already overtaken Bitcoin in terms of daily transactions, daily mining reward and the number of nodes.
Blockchain 3.0: Blockchain Applications
Today, Bitcoin is just one among the hundreds of applications of blockchain technology. WiseKey, a Swiss cyber-security firm, uses blockchain to provide Public Key Infrastructure (PKI) technology for secure transactions in a range of activities like e-commerce, Internet banking, and email. Multinational corporations like IBM, Microsoft, Walmart, and BHP Billiton are leveraging blockchain technology to streamline their supply chain management. The Massachusetts Institute of Technology (MIT) university became one of the first institutions to offer blockchain based virtual credentials to its graduates via a mobile app called “Blockcerts Wallet.” Medicalchain, a UK-based company, launched its technology infrastructure, based on Blockchain, smart contracts, and its own cryptocurrency, in February 2018; to be used in digital health applications, and EHRs.
And business keeps growing. The state of Dubai has announced that it will be issuing all its documents via blockchain by 2020. Early this year, the Russian state-owned bank, Vnesheconombank (VEB), signed a deal with the Kaliningrad government to develop a payment system based on Blockchain. The Australian government announced in 2016 that it had plans to allow its citizens to vote online thanks to its use of blockchain technology.
From the examples mentioned above, it is clear that Blockchain is a viable option for database development. But how does one decide if Blockchain is suitable for their business? Which type of Blockchain technology should be used for this purpose? Or is it too early for businesses to get on the bandwagon? To find the answers to these questions, continue to Part 2 of this article.