Recently, the world has seen a growing interest in blockchain, an innovative technology used to store and transmit digital data. With this in mind, we decided to look into what this concept is, how it has already gained a lot of popularity, and what impact it will have on our lives.
Blockchain (from the English "block" and "chain") is a kind of database, which is supported by many computers around the world. Data in this database is stored as a chain of blocks. Each new block contains information about the number of transactions and data encrypted by a certain algorithm of the previous block, and thus all of them are connected to each other.
Blockchain emergence history
The idea of blockchain technology was first described in 1991 by scientists Stuart Haber and W. Scott Stornett, who tried using cryptographic methods to protect digital documents from forgery. In 1992, the system was augmented with Merkle trees, which allowed multiple documents to be assembled into a single block. But this technology did not spread.
In 2004, computer scientist Hal Finney introduced the RPoW (Reusable Proof Of Work) system, which can be considered one of the cryptocurrencies prototypes.
At the end of 2008, Satoshi Nakamoto presented the concept of a decentralised electronic money system called Bitcoin (BTC). And on 12 January 2009, the world's first bitcoin transaction was made: the recipient was the aforementioned Hal Finney, who received 10 BTC from Satoshi Nakamoto.
In 2013, a programmer named Vitalik Buterin began developing a distributed computing platform based on the Ethereum blockchain using so-called smart contracts. These programmes or scripts, which are compiled into bytecode, can be used to execute a transaction if certain conditions are met.
In 2019, with the massive emergence of DeFi (financial services and tools built on blockchain), blockchain has become a competitor to the traditional financial system.
Today, the use of blockchain technology is not limited to cryptocurrencies, but due to its advantages, it finds application in many areas of our lives.
Advantages of blockchain technology
In general, blockchain has a number of advantages over traditional systems:
- Decentralisation. The system has no single point of control, making it more resistant to attacks and data leakage.
- Efficiency. Blockchain is able to provide faster and more efficient transactions because it does not require intermediaries.
- Transparency. Blockchain transactions are visible to all participants, which improves transparency and makes it easier to verify.
- Immutability. Blockchain transactions cannot be changed or deleted, ensuring their accuracy and reliability.
- Lower fees. By eliminating intermediaries, blockchain can reduce transaction costs.
- A "trust-free" system. Blockchain technology allows network participants to interact with each other without the need to trust each other.
Blockchain's potential to change the world
Blockchain is a relatively new technology that has the potential to change many areas of business. Some of the most common uses of blockchain include:
Cryptocurrencies are a convenient payment instrument in terms of currency conversion. Therefore, it is not surprising that paying with cryptocurrency for goods or services instead of paying with regular cards is gaining popularity. For example, such global brands as KFC, Burger King, Subway, Starbucks, Microsoft, PayPal offer crypto payment options. In Ukraine, it is possible to pay with cryptocurrency in such shop chains as VARUS, Foxtrot, WOG petrol stations, Stylus online shop and many online services (Tickets.ua, Polis.ua, CompX.com.ua, etc.).
When talking about cryptocurrencies, the first thing that comes to mind is bitcoin, which is an ideal investment instrument. It is a reliable and safe asset in which more than a third of the younger generation is already investing. It is worth mentioning the convenience of transactions with virtual financial assets: unlike traditional financial systems like SWIFT, through which money takes 2-3 days, crypto-transfers through Bitcoin Lightning come in a few seconds from anywhere in the world. This is already part of our reality, and in the future, more and more businesses from different spheres will offer to pay with crypto.
- Digital Identity
Blockchain can be used to create secure and tamper-proof digital identities. In turn, the latter can be used to verify personal information and other sensitive data. And going forward, blockchain's role in this area will increase as more of our personal data and assets move into the online space.
Blockchain technology can be used by national governments to create a secure and transparent electronic voting system. A decentralised register of all votes cast has the potential to eliminate the possibility of voter fraud and thus ensure the democratic beginnings of the electoral process.
- Supply chain management
Another use of blockchain technology is to create a registry of transactions in the supply chain. Each transaction can be recorded on the blockchain as a block, creating an immutable and transparent record of the entire process. In this way, the efficiency and transparency of the supply chain can be improved and the risk of fraud can be reduced.
- Smart contracts
A smart contract is a type of agreement that can be programmed to execute automatically under certain conditions. Blockchain technology allows such programs to be securely created and executed in a decentralised manner. Smart contracts can be used to automate many types of agreements: buying and selling goods and services, managing finances, and investing.
Because blockchain works with cryptography and helps protect data, its application will benefit the Internet of Things, data privacy, and data registries.
It is also worth noting that blockchain could be used in the transition to Web3, a new Internet philosophy where only the owner of information decides how it is managed.
Blockchain Technology Trends
The emergence of blockchain has brought certain changes in the life of society — at least in its digital life. And the development of technology will help further transform our daily lives.
New professions in the blockchain industry
Today, the blockchain industry already employs more than 30,000 developers. At the same time, the demand for qualified personnel is many times higher, and companies are ready to pay high salaries. All because of the rapid development of the blockchain sphere, which is complex in nature and needs competent specialists.
The revolutionary blockchain technology is already being used in such fields as finance, health care, logistics, energy and others. In the future, we can expect new professions to emerge in the blockchain industry. There is already a demand for such specialists as blockchain analyst, blockchain developer, blockchain marketer, and blockchain lawyer. Accordingly, those wishing to work in this field will need to acquire the necessary knowledge somewhere.
Teaching blockchain disciplines
In the US and EU, blockchain as a discipline has been taught for several years at world-renowned universities such as Harvard, Oxford and Stanford. In Ukraine, too, steps are gradually being taken to spread knowledge about the crypto market: various programmes dedicated to blockchain technologies and crypto-literacy courses are being launched. In particular, in 2022, the first master's certificate programme on Blockchain Technologies in Ukraine and Eastern Europe was launched at the Kyiv Mohyla Academy in cooperation with the largest European cryptocurrency exchange WhiteBIT. It is likely that in the future, crypto and blockchain disciplines will be included in school programmes.
Secure and convenient social networks
One of the key benefits of blockchain for social media is that it is decentralised. This means that social networks built on blockchain are not controlled by any central authority, so are more secure and transparent.
With blockchain, a user can create one account linked to a personal cryptocurrency wallet and log in to any social media platform (or website) that supports blockchain. In this case, personal data will be stored in one place and not controlled separately by Facebook, Google, etc. servers. The mobility of accounts will make using social media more convenient and secure for users.
It is clear that the use of blockchain opens up new opportunities for humanity that improve the quality of life. And instead of resisting change, we need to get acquainted with this modern and promising technology that can optimise many complex processes.