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Exploring the Practical Applications of Blockchain Technology

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4 Practical Blockchain Applications

In a few short years, blockchain technology has been steadily gaining traction in traditional business applications around the world.

So much so, that blockchain-focused venture capital fundraising tripled to $3 billion between the years 2017 and 2018.

Four Practical Uses for Blockchain Tech

Today’s graphic from Noah Coin highlights four major sectors where blockchain technology is being used to innovate and enhance important business processes.

In an increasingly digital world, which industries are being transformed by blockchain?

Exploring Four Practical Blockchain Application

One of the primary benefits of blockchain technology is its immutability─the unchangeable nature of the “ledger” of data posted to the network.

This critical feature can provide widespread benefits across a variety of industries around the world. Let’s dive into some key examples.

Major Practical Applications of Blockchain

1. Financial Services

Recent numbers show that the asset management industry could cut costs by $2.7 billion every year by moving to blockchain tech. Practical applications of blockchain in the financial services industry include client screening and onboarding, recordkeeping, data privacy and security, and trade processing.

Similarly, the insurance industry is fraught with errors and costly mistakes. The FBI estimates that over $40 billion a year is lost through fraud across all non-health insurance industries.

Example solution:

  • RiskBlock, a proof-of-insurance product, helps insurers save time and money through automated processes, and it helps insured individuals validate their insurance claims securely and quickly.

2. Smart Contracts

Blockchain and smart contract technologies function well in instances where legal contracts are required to maintain ownership rights and data privacy laws. These customizable, self-executing smart contracts on the blockchain can be easily managed by all parties.

Issues with ownership rights and royalties are commonplace within the entertainment industry. To navigate these issues, blockchain technology offers an unchangeable, traceable, real-time distribution and reporting network for all involved.

Example solution:

  • Ujomusic is one such application that is helping artists track their royalties worldwide.

3. Digital IDs

According to the World Bank, over 1.1 billion people worldwide still have no way to prove their identity. At the same time, companies and financial institutions in both traditional and digital markets are being required to follow more stringent know-your-customer (KYC) initiatives.

Despite this, many providers are still not sufficiently meeting these standards; to further complicate things, regulations vary widely from jurisdiction to jurisdiction.

Example solution:

4. Blockchain Internet of Things (IoT)

Gartner predicts that 20.4 billion IoT-connected devices will be active by the end of 2020, with some estimates showing the IoT market will reach $3 trillion annually by 2026.

Blockchain-enabled IoT devices would operate faster and more securely for both users and businesses─enabling less centralized control over the financial industry, internet usage, and ownership rights.

Example solution:

  • Helium uses a decentralized machine network to simplify connecting anything to the internet through a blockchain, wireless network, and open-source software.

A Blockchain-enabled Future

Blockchain technology promises to be the next major tidal wave of innovation. While still in its infancy, practical blockchain applications are becoming more mainstream.

As blockchain adoption spreads, it can become a driving force for promoting equitable societies, solving complex economic issues, and transforming how we live and work every day.

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Bitcoin

Mapping the Major Bitcoin Forks

Bitcoin forks play a key role in Bitcoin’s evolution as a blockchain. While some have sparked controversy, most Bitcoin forks have been a sign of growth.

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Mapping the Major Bitcoin Forks

The emergence of Bitcoin took the world by storm through its simplicity and innovation. Yet, plenty of confusion remains around the term itself.

The Bitcoin blockchain—not to be confused with the bitcoin cryptocurrency—involves a vast global network of computers operating on the same distributed database to process massive volumes of data every second.

These transactions tell the network how to alter this distributed database in real-time, which makes it crucial for everyone to agree on how these changes should be applied. When the community can’t come to a mutual agreement on what changes, or when such rule changes should take effect, it results in a blockchain fork.

Today’s unique subway-style map by Bitcoin Magazine shows the dramatic and major forks that have occurred for Bitcoin. But what exactly is a Blockchain fork?

Types of Blockchain Forks

Forks are common practice in the software industry and happen for one of two reasons:

  • Split consensus within the community
    These forks are generally disregarded by the community because they are temporary, except in extreme cases. The longer of the two chains is used to continue building the blockchain.
  • Changes to the underlying rules of the blockchain
    A permanent fork which requires an upgrade to the current software in order to continue participating in the network.

There are four major types of forks that can occur:

1. Soft Forks

Soft forks are like gradual software upgrades—bug fixes, security checks, and new features—for those that upgrade right away.

These forks are “backwards compatible” with the older software; users who haven’t upgraded still have access to the network but may not be able to use all functionality in the current version.

2. Hard Forks

Hard forks are like a new OS release—upgrading is mandatory to continue using the software. Because of this, hard forks aren’t compatible with older versions of the network.

Hard forks are a permanent division of the blockchain. As long as enough people support both chains, however, they will both continue to exist.

The three types of hard forks are:

  • Planned
    Scheduled upgrades to the network, giving users a chance to prepare. These forks typically involve abandoning the old chain.
  • Contentious
    Caused by disagreements in the community, forming a new chain. This usually involves major changes to the code.
  • Spin-off Coins
    Changes to Bitcoin’s code that create new coins. Litecoin is an example of this—key changes included reducing mining time from 10 minutes to 2.5 minutes, and increasing the coin supply from 21 million to 84 million.

3. Codebase Forks

Codebase forks copy the Bitcoin code, allowing developers to make minor tweaks without having to develop the entire blockchain code from scratch. Codebase forks can create a new cryptocurrency or cause unintentional blockchain forks.

4. Blockchain Forks

Blockchain forks involve branching or splitting a blockchain’s whole transaction history. Outcomes range from “orphan” blocks to new cryptocurrencies.

Splitting off the Bitcoin network to form a new currency is much like a religious schism—while most of the characteristics and history are preserved, a fork causes the new network to develop a distinct identity.

Summarizing Major Bitcoin Forks

Descriptions of major forks that have occurred in the Bitcoin blockchain:

  • Bitcoin / Bitcoin Core
    The first iteration of Bitcoin was launched by Satoshi Nakamoto in 2009. Future generations of Bitcoin (aka Bitcoin 0.1.0) were renamed Bitcoin Core, or Bitcore, as other blockchains and codebases formed.
  • BTC1
    A codebase fork of Bitcoin. Developers released a hard fork protocol called Segwit2x, with the intention of having all Bitcoin users eventually migrate to the Segwit2x protocol. However, it failed to gain traction and is now considered defunct.
  • Bitcoin ABC
    Also a codebase fork of Bitcoin, Bitcoin ABC was intentionally designed to be incompatible with all Bitcoin iterations at some point. ABC branched off to form Bitcoin Cash in 2017.
  • Bitcoin Gold, Bitcoin Diamond, Other Fork Coins
    After the successful yet contentious launch of Bitcoin Cash, other fork coins began to emerge. Unlike the disagreement surrounding Bitcoin Cash, most were simply regarded as a way to create new coins.

Some of the above forks were largely driven by ideology (BTC1), some because of mixed consensus on which direction to take a hard fork (Bitcoin ABC), while others were mainly profit-driven (Bitcoin Clashic)—or a mix of all three.

Where’s the Next Fork in the Road?

Forks are considered an inevitability in the blockchain community. Many believe that forks help ensure that everyone involved—developers, miners, and investors—all have a say when disagreements occur.

Bitcoin has seen its fair share of ups and downs. Crypto investors should be aware that Bitcoin, as both a protocol and a currency, is complex and always evolving. Even among experts, there is disagreement on what constitutes a soft or hard fork, and how certain geopolitical events have played a role in Bitcoin’s evolution.

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Bitcoin

How Decentralized Finance Could Make Investing More Accessible

Under the current global financial system, billions of people do not have access to quality assets. Here’s how decentralized finance is changing that.

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Infographic: How Decentralized Finance Could Make Investing More Accessible

Did you know that a majority of the global population doesn’t have access to quality financial assets?

In advanced economies, we are lucky to have simple options to grow and protect our wealth. Banks are all over the place, markets are robust, and we can invest our money into assets like stocks or bonds at the drop of a hat.

In the United States, roughly 52% of people are invested in the stock market – but in a place like India, for example, this portion drops to a paltry 2%. How can we make it possible for people on the “outside” of the financial system to gain access?

Breaking Down Barriers

Today’s infographic comes to us from Abra, and it shows how decentralized finance could make investing a more universal phenomenon, especially for those that don’t have access to the modern financial system.

It lays out four key obstacles that prevent people in developing markets from investing in quality financial assets in the first place:

  1. The Geographic Lottery
    Where you live plays a massive role in determining your ability to build wealth. In advanced Western economies, the average person is much more likely to be invested in financial markets that can help compound wealth.
  2. Financial Literacy and Complexity
    Roughly 3.5 billion adults globally lack an understanding of basic financial concepts, which creates an impenetrable barrier to investing.
  3. Local Market Turmoil
    Even if a person is mentally prepared to invest, local market turmoil (hyperinflation, political crises, closed borders, etc.) can make it difficult to get access to stable assets.
  4. The Cost of Investing in Foreign Markets
    Foreign assets can be pricey. One share of Amazon is $1,800, which is realistically more money than many people around the world can afford.

In other words, there are billions of people globally that can’t take advantage of some of the most effective wealth-building tactics.

This is just one flaw in the current financial system, a paradigm that has created massive amounts of wealth but only for a specific and well-connected group of people.

Enter Decentralized Finance

Could decentralized finance be the alternative to open up access to financial markets?

By combining apps with blockchain technology – specifically through public blockchains such as Bitcoin or Ethereum – decentralized finance makes it possible to get around some of the barriers that are created by more traditional systems.

Here are some of the innovations that are making this possible:

Smart contracts could automate transactions and remove intermediaries, making investing cheaper, faster, and more accessible.

Fractional investing could allow partial or shared ownership of financial assets by using tokenization. This would make expensive stocks like Amazon ($1,800 per share) available to a much wider segment of the population.

Location independent investing is possible through smartphones. This would make it possible for people in remote parts of the developing world to invest, even without access to nearby financial institutions or local markets.

Like the internet with knowledge, decentralized finance could reshape the world by making financial access universal. Who’s ready?

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