Blockchain

Blockchain is a distributed ledger that keeps track of all money and data transfers from one party to another across time. The initial application of blockchain technology was to establish and transmit a non-fiat currency known as Bitcoin, which spawned an entire ecosystem of hundreds of competing cryptocurrencies with varying values.


What makes blockchain appealing for currencies is that it establishes a reliable system without the need for a bank or a central authority, preventing double-spending. Over time, this technology expanded beyond currency exchange, and we coined the term Distributed Ledger Technology (DLT). 
DLT technology can be thought of as a giant write-only data-base where data is spread across every computer in the network rather than stored in a central location like a traditional database. The root of this design's intricacy and strength is a particular tradeoff.


Unlike a traditional database, which allows you to modify and update data, DLTs impose the fundamental property of irreversibility, which means that all new records added are immutable. This means that once data is written to the blockchain, it is irreversible. The only way to correct a mistake is for the person who was wronged to do it on purpose.


Because DLT nodes, unlike cloud datacenters, may be located anywhere, this is a simple criterion to meet, and each country would be assured that its transaction records are secure, unalterable, and auditable. Finally, without a single point of failure, the network would need to be secure against nation-state hacking attempts. Fortunately, we now have such a technology in the form of blockchain. 


DLTs are, in a genuine sense, one of the best technologies available to assist governments in building confidence in international data interchange, which is a significant step forward in digitizing governments' paper addiction.
Blockchain is a distributed ledger that keeps track of all money and data transfers from one party to another across time. 


The initial application of blockchain technology was to establish and transmit a non-fiat currency known as Bitcoin, which spawned an entire ecosystem of hundreds of competing cryptocurrencies with varying values.


Blockchain could serve as a trusted intermediary between you and the person (or thing) with whom you're dealing. You can put your trust in a shared distributed technology network rather than a person, agency, or institution. With this knowledge, we can look into some of the applications where distributed ledger technologies like blockchain could be useful, ranging from enterprise to consumer products.


Let’s dig into what makes the landscape of Blockchain and what we can do with it.
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Healthcare

With the expansion of healthcare options, it's becoming more vital for individual patients to begin retaining their own records, which, once again, necessitates the trust of a third party. Alternatively, it necessitates the use of a distributed ledger technology (DLT) to keep trusted health records, allowing patients to choose which records to share and with whom, independent of any one health provider or even the government. A medical chain is an example of an organization that is aiming to achieve this goal. It also allows users to monetize their confidential health records for research purposes, which is an interesting twist. Now that’s owning your own data.


Administrative costs account for 34% of healthcare costs in the United States. Anyone who has ever filled a prescription or arranged a medical procedure is aware that there is a period of time between making the choice to proceed and doing the medical act. Much of the time spent waiting is related to insurance administration, which includes everything from ensuring that the correct data is available for a prior permission to properly categorizing the procedure to be covered. A shared and common trusted system for instantly transmitting this data could reasonably decrease healthcare costs by double digits. Furthermore, patients may be able to push price competition and cost alignment into an opaque system by comparing dramatically different costs for identical treatments performed in different institutions.
Digital rights management

Blockchain-based digital rights management is a rapidly growing field of study. Digital Ledger Technologies can keep track of when a digital file is accessed and charge for it. The contract is solely based on consumption. It is impossible to decode or read the file unless you pay. Furthermore, customers can pay for partial use in real time. Let's say you only listen to the first minute of a three-minute song. You'd only pay one-third of the total price if you used a smart contract to extract micropayments from the file stream.


Sharing economy

One of the most fascinating blockchain applications is the potential to rent out equipment you own to others without paying a commission to a middleman. Despite the fact that it does not own a single hotel, Airbnb is one of the world's most valuable hotel networks. Other brokers, like Uber and Lyft, can be compared in a similar way. There are a plethora of potential applications for DLTs. Consider a distributed ledger of votes that is irreversible, trackable, and anonymous (each election is assigned a unique secret ID) but publicly accessible (you can count the votes yourself, if you like). Alternatively, a DLT-based system for secondary marketplaces for gently used things like cars.


Breakdown of “Proof of Work”


Proof of Work (PoW) essentially makes rewriting history prohibitively expensive in terms of computing power and electricity. Proof of Work is based on a mix of cryptography, statistics, and human computation's physical restrictions. When a particular amount of transactions occur on the network, computer nodes known as miners attempt to solve complicated arithmetic puzzles in order to group the most recent transactions into a new block. A block is effectively a specific number of rows in a single file, if you think of transactions as rows on a spreadsheet. 


The miners are racing against the clock to collect transactions and "sign" the next spreadsheet. The winning computer in this competition will be able to prevent all other nodes from making changes indefinitely. As a result, when a miner wins the competition, the remaining nodes go on to the next spreadsheet in the chain to construct. The blockchain is an orderly set of transactions that spans the globe created by the sequence of all blocks. It's a digital block chain, to put it that way.


The blockchain's integrity is demonstrated by the enormous amount of effort required to construct a new valid block that hashes correctly. To find the proper block hash, it needs a lot of computer power, and consequently a lot of electricity. That's the system's genius: accurately generating the winning number is significantly more difficult, making falsifying history nearly impossible. But verifying history is trivial.


Every block refers to the one before it, forming a chain that leads all the way back to the very first block ever made, known as the "genesis block." Miners group transactions into blocks and iteratively increment a nonce in the hopes of generating a winning cryptographic hash while ensuring that the newest block header contains the prior block's hash. This linked list of blocks produces a write-only, ordered ledger of all transaction data, indicating cryptocurrency transfers from one address to another. The blockchain, which is a type of distributed ledger technology, or DLT, is the whole list of ordered blocks starting with the genesis block.
Rewards for Miners

Payment in bitcoin is the reward for mining a block. Not only does mining ensure the integrity of the transaction ledger, but it also allows for the introduction of additional currency into the network. When a miner wins the block generation lottery, new bitcoins are created and "deposited" to the miner's own address. With a new lottery every ten minutes, the reward for generating a single successful block can be worth tens of thousands of dollars. This is a multibillion-dollar industry.


It's effectively impossible for anyone to change records encoded in the network due to the difficulty of mining a new block. Given the world's processing power by cost, the only way to change history is to rebuild every block for all time, which isn't physically conceivable on the bitcoin blockchain. Furthermore, because there is a financial incentive for participating in transaction verification, a global network of computers is competing for the opportunity to protect all transactions. Because the miners are compensated in Bitcoin, they have a financial incentive to maintain the system's integrity.

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Distributed Autonomous Organization (DAO)

Some of the Ethereum (cryptocurrency network) founders had a foresightful idea: could you construct an organization that is mainly run autonomously if you could codify a sophisticated enough smart contract? Any interaction between the organization and individuals would be governed by this contract, effectively reducing the organization to a set of rules, a pool of currency, and a governing body whose governors were elected by shareholders, with actions limited to those stated explicitly in the contract. By investing money into the system and executing a public smart contract, anyone can become a stakeholder. Any disbursement of funds for work would require governors' permission, and such executives might be dismissed or changed at any moment by a shareholder vote.

This enormous public offering resembled the type of initial public offering (IPO) of stock that you could find on a stock exchange like NASDAQ. This type of public crowdfunding of a blockchain-based business became known as an initial coin offering (ICO) since your ownership in the company takes the form of tokens or coins on the Ethereum network rather than stock certificates.
The DAO ICO was a thrilling event that signalled a new funding model as well as a new business paradigm. The DAO received 11.5 million ETH from over 11,000 unique investors, which was worth $150 million at the time.

In the end, the DAO was nothing more than an exercise in flawless bureaucracy. Nobody was above the law, yet there was no actual authority to turn to if things went wrong. Honest disputes can be handled by the courts in a traditional contract, but what recourse do you have against a conceptual error in a contract that is publicly executable and irreversible? The DAO's underlying flaw was a logical flaw, not a technological or software one. Before the community was able to stop the bleeding, a user discovered a weakness in the DAO contract and drained the account of roughly $50 million US. Many people are hesitant to label this a hack or a theft because the perpetrator's activities were not so obvious. He or she did not violate any of the system's intended rules; instead, he or she outsmarted the thousands of others who had invested in the DAO account. What the user performed was totally within the contract's intended parameters.

The core Ethereum developers chose to fork the blockchain and return funds to investors after a quick community debate and vote on what to do next. This fork resulted in the creation of two currencies: Ethereum (ETH) for the majority, and Ethereum Classic (ETC) for those who believed that the blockchain's integrity was more essential than $50 million. Ironically, a blockchain that was built to avoid forks ended up forking.


Environmental Impact

While the advantages of a blockchain architecture are numerous for some of the use cases we've discussed as well as many others, it's difficult to argue that DLTs based on proof of work are environmentally friendly. In 2018, completing a single transaction used the same amount of energy and power as approximately twenty-five families in the United States for a day. Based on the current rate of Bitcoin transactions, this is equal to the entire country of Austria's energy consumption. In essence, the lottery approach makes it tough for someone to manufacture a block, theoretically giving everyone a fair shot at generating the next one, based on how much electricity they're prepared to burn statistically. However, there are additional methods for generating new blocks known as consensus protocols.

Proof of Stake (PoS) is the most popular alternative, and it rewards individuals who are prepared to put the most stake (aka money) into the election system. According to the argument, those who stand to lose the most are more likely to safeguard the system's integrity. You will be penalized financially if you behave improperly. What is regarded "bad" varies on the institution, although voting against the majority is generally considered undesirable. The set of circumstances that punish bad actors in Casper, Ethereum's PoS system, is known as slasher. Then there's Proof of Authority (PoA), which adds a political twist to PoS by granting you blessed authority and the ability to vote in exchange for stake and good behavior.

Acting badly, like in PoS, results in the loss of stake as well as demotion from blessed authority. Proof of Elapsed Time (PoET) is a form of leader election championed by Intel, in which candidates attempt to solve secure puzzles in a set amount of time to establish their merit. Solving those puzzles necessitates the use of customized execution environments that can be trusted. These are made by Intel in a chip format known as SGX. Other proofs include Proof of Activity, Proof of Burn, and Proof of Replication, among others. While it is still too early to predict which, if any, will win, there is a lot of effort being done in the sector to free blockchain from its dependence on electricity

There's still much to do in the realm Blockchain. If you are a researcher in the field of Blockchain you are at the right place.

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