Blockchain is useful for a loterijlot more than just Bitcoin

By Mark Staples

11 November 2016

The distributed nature of blockchain networks make them useful for many applications. Photo – Shutterstock

Blockchain technology is not just useful for creating digital currencies such spil Bitcoin or developing fresh financial technologies.

Blockchains can be used for a broad multitude of applications, such spil tracking ownership or the provenance of documents, digital assets, physical assets or voting rights.

Blockchain technology wasgoed popularised by the Bitcoin digital currency system. But, essentially, a blockchain is just a special zuigeling of database. The Bitcoin blockchain stores cryptographically signed records of financial transfers, but blockchain systems can store any kleintje of gegevens. Blockchains can also store and run pc code called “smart contracts”.

What makes a blockchain system special is that it doesn’t run on just one pc like a regular database. Rather, many distributed processing knots collaborate to run it. There can be a utter copy of the database on every knot, and the system encourages all those knots to establish a overeenstemming about its contents.

This boosts our confidence ter the database and its contents. It’s difficult, if not unlikely, to meddle with the database without others finding out and correcting it. The global overeenstemming among the knots about the integrity and contents of the distributed database is why it’s often called a “distributed ledger”.

Why all the hype?

Ter our society, wij normally rely on trusted third parties, such spil lawyers, courts, banks and governments to process and keep authoritative records about commercial transactions.

Thesis transactions aren’t just about financial transfers, but also include the creation or transfer of physical assets, shareholdings, certifications, digital rights, intellectual property or even votes.

Thesis third parties are trusted because wij rely on them. If they fail or lie, wij suffer. Wij tend to trust the third parties for reasons that are outer to the database, lawyers are accredited, votes are counted by independent monitors, and courts run to established laws for matters such spil oversight and the possibility of appeal.

Blockchains are interesting because the integrity of the contents of the distributed ledger does not rely on any specific individual or organisation. So, rather than relying on trusted third-party organisations to facilitate thesis commercial transactions, wij might instead rely on a trusted blockchain system.

This means blockchains give us fresh opportunities to rethink how parts of our society work. Innovation here might reduce friction te the economy, or create fresh kinds of services and ways of doing business with each other.

Whether or not blockchain systems are trustworthy is an interesting question. The reasons for believing that blockchain systems won’t fail or lie would be based on our understanding of the underlying software technologies. It also depends on our understanding of market incentives that influence behaviour of the many distributed processing knots that run blockchains.

However, blockchain technologies are still fresh te the scheme of things, and the community is still discovering their risks, limitations and potential economic and social influence.

How will blockchains be used?

Because blockchain technology is so fresh, it’s difficult to predict exactly how they will end up being used. This is why wij at Data61 te CSIRO are exploring fresh ways blockchains can be used across industries.

To understand the economic and societal opportunities introduced by blockchain technology, wij also need to understand its technological risks and limitations. At Data61, wij project to identify, develop and evaluate some “proof of concept” systems using blockchains to investigate them.

A latest UK government report on blockchain technologies provides a good overview and examples of the use of blockchain.

One of thesis is Everledger, a company founded by Australian Leanne Kemp.

Everledger uses a blockchain to record information about the provenance and ownership of individual diamonds and other valuables. Here, rather than the blockchain recording transfers of digital currency, it records transfers of ownership of identified physical assets.

This globally accessible provenance trail could reduce fraud and theft, and enable fresh or improved kinds of insurance and finance services.

The same general idea could be used for any supply chain, such spil ter retail, agriculture or pharmaceuticals.

The drivers for improving assurance of supply chain quality vary te different industries. It could be brand reputation te retail, or safety te pharmaceuticals, or a combination te agriculture.

It is worth observing that blockchains don’t totally do away with the need for trusted third parties. A blockchain is only a digital record, but wij need others to determine if those records actually match the corresponding physical assets ter the real world.

Everledger relies on major diamond certification companies to measure identifying information about individual diamonds. Thesis measurements can be independently cross-checked. But te some sense, companies such spil thesis become trusted third parties for this blockchain-based system. One can imagine the adoption of blockchain technologies creating opportunities for fresh kinds of trusted third-party organisations.

Underlying all of thesis applications is the need for gegevens integrity, which is the key security property for commercial systems, and the primary property for blockchain technologies.

For financial transactions, gegevens integrity means you can’t spend money you don’t have, and you can’t spend money twice. For physical supply chains, this means you can’t fraudulently acquire record of ownership for an asset.

However, other security properties, such spil privacy and confidentiality, are also significant ter many application areas. To achieve confidentiality, other mechanisms such spil cryptography vereiste be used ter conjunction with the blockchain.

Part of our software architecture research at Data61 is to seek to understand how vormgeving choices for software-based systems affect tradeoffs for qualities including security (integrity, confidentiality, privacy), vertoning (latency, throughput and scalability), and others.

Good vormgeving choices can control risks to achieving thesis qualities, and this is part of what is evaluated te our research using proof-of-concept systems.

Brainy contracts

Laptop programs are a special kleintje of gegevens and so can be stored te a database. That means wij can store programs ter the distributed ledger of a blockchain system, and execute those programs while zometeen transactions are being processed.

Ter the Ethereum blockchain, thesis programs can be very ingewikkeld. Thesis programs are normally called “smart contracts”.

Clever contracts can carry value, and can conditionally transfer that value according to ingewikkeld business conditions based on the latest state of the distributed ledger.

This means blockchain systems can do more than store information about commercial transactions, they can also process commercial transactions too. This greatly expands the opportunities for using blockchain systems.

Albeit brainy contracts are often thought of spil standing for self-executing legal contracts, they are written ter a general purpose programming language and can be used to implement a broad range of business logic.

Can wise contracts actually stand spil legal contracts? This is an interesting question. For legal contracts to be enforceable, they need to be understandable by reasonable persons.

Can the bytecode of a program stored on a blockchain indeed be understood by any human? Perhaps only obsessive hobbyists might be able to develop that skill! Another thread of research te Data61 is investigating fresh ways of indicating and analysing wise contracts, using latest results from legal informatics.

Blockchain technology is still te its infancy. There are a broad range of plausible future screenplays for their future influence, ranging from efficiency improvements for commercial transactions through to a accomplish reinvention of the economy.

Spil with any disruptive technology, understanding the plausible, possible and probable impacts – the opportunities and risks – will be vital for wise policy, strategy, and vormgeving choices by Australian governments and companies.

This article wasgoed originally published on The Conversation. Read the original article.

Related movie: Best Websites for Cryptocurrency Beginners, Buying Cryptos Safe and Effortless


Leave a Reply

Your email address will not be published. Required fields are marked *

*