Blockchain: An introduction
With the blockchain and crypto Twitter community being set ablaze last week trying to explain the definition of bitcoin and blockchain to J.K Rowling - it clearly showed that putting across your point in the format others can understand is of utmost importance. So, let’s start with the rudimentary definition of the blockchain without being biased towards any specific blockchain or crypto price fluctuation - a story for another day. Blockchain is a distributed ledger technology with security, immutability, decentralization and transparency at its core. The main objective of the inception of blockchain was to reduce the risks and regulations to be adhered to by centralized systems. And no, blockchain is not synonymous with bitcoins or any specific digital currency; the currencies are just the tip of the iceberg.
Blockchain was introduced to reduce over reliance on central entities to provide finality for financial transactions post the 2008 recession. Fast, cheap and secure payment, both cross border and peer to peer, are still the most prominent and wide spread explored use cases in the blockchain space. The application of blockchain gradually has been expanded to include data based transactions to support use cases in healthcare, identity management, etc.
But every great thing has some limitations and faces some hurdles, and blockchain is no exception.
The different consensus protocols such as PoS, PoW, Byzantine Fault tolerance, etc. of different blockchains are limited in applications and upgrades are required to include more functionality to promote mass adoption.
Interoperability and scalability are the two most prominent hurdles for mass adoption of blockchain implementation but solutions for them are now being explored to pave the way for the greater credibility for blockchain adoption.
The response of the different governments and central banks has been varied on virtual currency trading, ranging from governments taking their ID management on blockchain in Estonia to countries which have been much more circumspect, this has led to smaller countries take advantage and create niche market as safe havens for such companies.
Lastly, blockchain applications require high storage and processing expenses to store huge amounts of data as required for decentralized record management in healthcare, education which will jack up the costs. The current solutions in the blockchain for ID management address only keeping the access permissions and view formats on the blockchain, but for the data storage they require a central database or have to incur high costs to maintain it on the blockchain.
Blockchain. the distributed ledger technology, as is the consensus in the market, is the technology of the future and along with big data, AI, VR, ML and IoT will frame the foundation of future internet and software usage. Higher security, faster transactions, no central reliability, interoperability and transparent supply chains are the clear advantages of applications of blockchain in cross-border financial transactions, healthcare record management, logistics, education, agritech, e-commerce, etc. I firmly believe, though some issues have been faced in the early iteration of blockchain applications — which is the case with all disrupting technologies, it will be imperative to adopt them as the advantages will outnumber the shortfalls along with the hurdles being cleared out.