How are cryptocurrencies and blockchain changing the world today?
When it comes to cryptocurrencies, a lot of people first think about trading manipulations, bubbles, that digital currencies are quite difficult to deal with or that they are already in the past, having lost their relevance. Initially, cryptocurrencies attracted attention not only due to the stories of incredible growth in their value. Digital money has brought a new technology called blockchain. The technology was first implemented in Bitcoin and it is based on the process of building a sequential chain of blocks, where each contains certain information.
Despite the existing skepticism towards digital currencies, which the Simba.Storage team naturally does not share and considers its mission to educate people about cryptocurrencies, the blockchain technology has been successfully established in banking institutions, commercial organizations and even government agencies. Blockchain is used in different fields, social, banking, industrial, transportation, medical, etc.
Let’s consider key technical features, advantages of the blockchain and examples of projects that clearly demonstrate how the technology is applied in the real world to improve existing processes. Also, special attention should be paid to “decentralization” — a symbol of the blockchain idea.
Traditionally, data has been stored in relational databases (a collection of tables organized according to a relational model and each cell of these tables has a corresponding formal description), which can be represented as an Excel spreadsheet, where columns and rows are used as a data storage. These tables are stored on hard drives in centralized locations and then maintained according to user’s requirements. However, these ‘centralized’ databases begin to lose capacity, as the number of requests from the users increases.
More advanced hardware and improved methods are used to process queries quickly in order to cope with the growing workload and bypass the limitations of centralized databases. At the same time, the vulnerability of databases to hackers’ attacks is increasing. As a result, the amount of money which is required to create, maintain and manage an appropriate infrastructure is growing as well. Thus, companies can only look for more optimal and practical solutions for their projects.
It is blockchain, which is technically a decentralized database. The absence of centralization means that each node has a complete copy of the database registry, which is a general ledger. Users’ requests are processed by several servers connected to each other, the workload is distributed and the capacity is not reduced. It allows enterprises to take the process of data duplication to a completely new level.
Features of blockchain technology.
Having a general understanding of decentralization, let’s consider key properties of blockchain:
- Blockchain is a peer-to-peer network (P2P), where all the nodes are its parts, being both its clients and performing functions of a server.Devices can work together in a P2P network, providing pooled computing power for the entire network;
- Blockchain technology uses a new cryptographic hash function which takes input data and then outputs a value that connects to the next hash function. It is a one-way function that protects information from unauthorized access best;
- The Distributed Ledger Technology (DLT) function allows all nodes to have a complete copy of the ledger. In order not to download the entire database, the best methods are used to make the web work properly. It also allows a user to verify information quickly without relying on a centralized structure. It is also an additional guarantee that there is no fraud;
- Blockchain networks allow users to remain anonymous if desired;
- Due to the cryptographic hashing function, the distributed ledger and other functions ensure that the stored data cannot be changed by a third party.
In simple words, distracting from the terminology and summing up the received information, the experts of Simba.Storage present you Blockchain technology as a chain of blocks that follow each other and contain information.
The main advantage of blockchain technology is decentralization. It means that information is not stored on one server, but on a thousand or hundreds of thousands of servers, which does not make it possible to make changes or control the entered data in any way.
A bank server can be compared to a personal computer — it is subject only to its owner who can do whatever s/he wants, for example, change or clear the history, add something, etc. Such things can never be done in blockchain.
An important advantage is the transparency of transactions and actions. A “coin” can be tracked from the day when it appeared. The transaction history is public and available to everyone.
While working with the cryptocurrency, blockchain allows you to maintain anonymity, which is also an undoubted advantage.
Your assets cannot be blocked, because they are independent and uncontrolled by the state.
How are blockchain projects changing the world?
All of the above mentioned features are innovative from a technical specialist’s point of view, but there is still a question — how can blockchain and cryptocurrencies influence people’s lives?
People constantly make money transfers both for doing business and personal purposes. Despite the fact that you can make fairly fast payments and transfers using bank cards, users might sometimes have problems. For example, the services of buying and selling goods are carried out using payment systems on some platforms with their own rules. Paypal (payment system), for example, charges commissions and transfers money only within a few days. In some cases it can be suspended if the system considers the operation questionable, making the client spend some time to prove otherwise. Banks often let their customers down by blocking their cards and accounts, suspending payments and making slow transfers.
If you need to transfer your money in the case of emergency, you can only rely on blockchain and cryptocurrencies, because there are no agents who are eager to receive a commission for their extremely ineffective work.
You can conduct a cryptocurrency transaction immediately, anonymously and without agents. Moreover, a lot of cryptocurrency projects constantly work to simplify the process of money transfers, payments for goods and services using digital currencies.
For example, the Pundi X project (NPXS ticker) is working to create the largest decentralized point-of-sale (POS) network that will allow you to pay for goods and services using cryptocurrencies quickly and easily. Thus, the purchase will be carried out without agents immediately and absolutely safely, which is the most important. The ‘Crypto.com’ project (MCO ticker), which used to be called ‘Monaco’, is a mobile wallet and a linked bank card you can pay by using cryptocurrencies, which will be converted into the currency you need to pay in (available in the USA and Singapore).
Another example is the Simba stablecoin, which allows you to make fast transfers, including cross-border transfers, pay for goods and services and, at the same time, receive passive income, because the token is backed by the Bitcoin which constantly grows in price. At the same time, if you are an owner of this stablecoin, it will mean that your Bitcoins are under reliable protection in cold storage wallets of Simba.Storage.
Some of the largest central banks in the world have started or are already fully involved in the development of their own digital currencies and blockchains. Thus, China announced its plans to issue a national digital currency in 2014. The release date of the digital yuan of the People’s Bank of China is still unknown, but in 2020 representatives of the Central Bank announced that the digital currency might be used during the 24th Winter Olympics in Beijing, which will begin on 4 February, 2022. At present, China is likely to win the race to create state cryptocurrency. Besides, it has been officially announced that due to a new partnership with Huawei, the Chinese government plans to accelerate the implementation of its own blockchain. The People’s Bank of China has cooperated with Huawei to begin testing its own digital currency in 2020 in the partnership with major commercial banks. In the wake of the situation with Chinese state cryptocurrency, the United States is also actively talking about the creation of a “digital dollar”.
If you ever try to buy a house, there are a lot of steps to take. It is a tiring process that involves dealing with lots of documents, which can take several months if you are inexperienced. Of course, this process still depends on the country where you are located. In some countries the process goes faster, but it still takes a lot of time and effort.
Also, the real estate market is exposed to frauds, when forged documents may be involved. Contacting third-party organizations, government agencies, banks and so on, you will have to spend time and money to verify the authenticity of your documents.
When it comes to blockchain, you do not have to deal with so many agents. You can always check a landlord before making a deal. At the same time, all documents and agreements are transparent and protected from forgery.
During the first case of buying real estate using a smart contract, an American company was able to purchase an apartment in Kiev. The landlord was in New York, and the buyers were in Kiev. The transaction was verified by a notary’s digital signature of the transaction in the blockchain on a specialized platform ‘Propy’ and the payment was transferred in cryptocurrency. One can only guess how much time and money could be spent to arrange the parties’ meeting and finish the necessary paperwork without blockchain technology.
Assurance of the product authenticity
Blockchain is actively used for supply chains. Before receiving the product you want to purchase, you must first go through a certain number of destinations. The product can fall into the hands of frauds and be forged during transportation, and you will receive an absolutely different product from the one you paid for.
The use of blockchain in a supply chain, due to its ability to track a product at all stages of transportation, gives a buyer complete protection against counterfeit products. In the case of change or forgery of an item, the system will receive a warning and consequently reject it. In the end, you will get only genuine products.
One of the projects supporting the anti-counterfeit system is Walimai. The WABI cryptocurrency is used in the system’s circulation. Authenticity protection is provided to such everyday consumer goods as milk powder, pharmaceuticals, alcohol and cosmetics. Assurance of the product authenticity protection is achieved by the means of solutions that reliably connects a physical aspect with a digital one. The implication of this anti-counterfeit technology is to install special chips onto products and they can be scanned by any buyer with his/her smartphone to identify the authenticity of the product (the technology is actively used by the Chinese citizens).
Blockchain in medicine
In many countries, it is required to make an appointment before visiting a doctor. Then, if it is necessary, the patient is recommended to visit some other specialists whose offices are located in other buildings of the hospital or even in other districts of the city. During this process doctors and patients deal with different documents. Thus, maintaining a complete, detailed medical record is quite challenging, as medical records can be kept for many years and patients can consult several doctors having different treatment approaches. In general, patients need a lot of patience to solve their health problems.
Blockchain allows you to maintain a decentralized medical record, due to which any authorized staff of a medical organization can access the patient’s past medical history. It will enable practitioners to understand the situation better and ensure necessary treatment sooner. It will also make a diagnostic process faster and more efficient. It is equally important that the blockchain is able to reduce illegal circulation of medicines that can be classified as narcotic and psychotropic drugs. Today, a large number of medical companies are trying to implement blockchain technology in real life.
Digital currencies have been used in many areas and have great success not only in the financial sector. Fast, cheap and not limited by law, they are an excellent alternative to banking services and can significantly simplify and improve different processes in other areas.
In fact, it is the way to register digital money transactions as well as ownership. Everyone can check the information anytime without involving the third party. Blockchain can be called a workshop and a repository of reliable data. It can be used to store information in the defense and power industries, healthcare and so on.
The philosophy of blockchain technology and cryptocurrencies is based on decentralization and resource allocation. Data is the fuel of a new economy and blockchain is its revolutionary infrastructure.