What Else Could the Bitcoin Blockchain Concept Do? - dummies

What Else Could the Bitcoin Blockchain Concept Do?

The blockchain is the innovative technology behind bitcoin. It is essentially an open-source public ledger: If you consider an accounting ledger system, the first page contains the original entry; with bitcoin, the first block in the blockchain is called its genesis block.

Now, what the blockchain does differently from a normal ledger system is that it keeps a record of what was previously written on the previous block in the next block — as if in the ledger system, each page contained a summary of all the previous pages.

As long as the blockchain is in a healthy state (and not controlled by any one person or entity), this decentralized system records and maintains the integrity of the data within the system in an open and transparent fashion. Thus, every entry into this ledger system is verified and confirmed by sufficient members of that system to guarantee its authenticity and validity.

So, what can be done with this? Following are a few ideas about how such a system can be put into place with some real world applications:

  • As bitcoin is a digital currency, it makes sense that the blockchain serves as the infrastructure on which actual banking transactions would take place.

  • Banks could connect via the blockchain to send and receive flows of funds and individual transactions.

  • The blockchain could replace the infrastructure put in place behind the SEPA (Single Euro Payment Area).

  • It would take mere minutes to send money from Country A to Country B. There’s no reason why the blockchain concept couldn’t go global.

Another simple application of the blockchain would allow the unbanked to connect via a simple wallet or app on their phones. If these folks had bitcoins, the app would allow them to convert to fiat and send to any bank account in the world. It could also function as a pure peer-to-peer system, thus bypassing organizations such as Western Union and MoneyGram. Or such companies could adopt the blockchain as their backbone infrastructure upon which they run their own transactions.

Lawyers negotiating contracts could be essentially replaced by the blockchain. Making a will, selling a house or a car — these are more or less standardized contracts. Attorneys are the gatekeepers to such systems, and pretty expensive ones too. Imagine if all you needed was a blockchain-based app for both seller and buyer, through which you simply followed a procedure. By doing so, you entered into a legally binding contact that was confirmed by the blockchain. Sound enticing?

What about voting? A blockchain app could protect against electoral fraud as well. Each voter would be given a voting card (set of keys or entry mechanism to the app) and would vote online. The votes would be confirmed by the blockchain, with better security than current systems provide. A blockchain security system could also be put into place while keeping the current system of polling places.

Moving on to banking, usernames and passwords could be replaced by an application whereby the keys confirm verification of an individual’s identity. In addition to providing secure login to systems and accounts, a verified digital identity could be used for all manner of systems, replacing a username and password or two-factor authentication.