Blockchain can enhance trust, security, and privacy in a range of digital transactions. Find out how…
Most early discussions of blockchain technology reverted around Bitcoin and other cryptocurrencies. Today, this is just a partial understanding of the force that blockchain is. In essence, blockchain provides decentralised and distributed ledger systems, allowing transparent, secure, and immutable records to be kept without some central authority — in short, it offers a pathway to register almost anything and have it validated outside incumbent institutions.
From supply chains and the creation of digital identities to healthcare and environmental sustainability, several industries have witnessed the disruptive changes brought about by blockchain.
Digital identity management with blockchain
Identity management and authentication are critical in a digital world. Traditional methods such as passwords, personal identification numbers (PINs) and centralised identity databases are vulnerable to breaches, theft and misuse. Blockchain, in contrast, enables open source digital identity systems that help people to own their personal information and free it from centralised authorities such as governments or corporations – it uses a distributed ledger to create an encrypted record of sensitive personal information
With blockchain, end users get a unique private key to affirm their identity instead of generating many passwords for different sites, which helps them enjoy both security and privacy. At the same time, every modification to the identity data is traceable because of the transparency of blockchain. This helps eliminate the use of multiple passwords, reduces identity theft risks, and simplifies tasks such as banking, healthcare, and even voting. It also empowers less privileged groups of people, who do not have conventional identification forms, to have a safe and verifiable digital identity.
The advent of digitisation made it easy to replicate and share the work of others without proper attribution or compensation to them. Traditional intellectual property protection involves complicated legal procedures, and enforcement is inconsistent and often lacks best practices. Blockchain, on the other hand, transforms the situation by establishing a secure, transparent and tamperproof system for managing and verifying the ownership of digital assets.
An excellent example of this is non-fungible tokens or NFTs. These are digital tokens on a blockchain that certify the ownership of tangible and intangible assets, like a piece of digital art, music, or even a video. Contrary to cryptocurrencies, such as Bitcoin, which are fungible and interchangeable with one another, each NFT is unique and has intrinsic worth. This helps to prove ownership rights over creative works.
Blockchain enables artists to tokenise their artwork. This means that, legally, they are owners of the work and have control over how it is distributed or sold. Each transaction that occurs in this case is recorded in a public ledger such that the full history of ownership is transparent to anyone, yet immutable. This simplifies the job of proving provenance and authenticity. This system reduces the threat posed by art fraud, piracy, and unauthorised reproduction to ensure that creators get paid for their creations.
Smart contracts are another excellent feature of blockchain technology. These self-executing contracts enforce contractual terms and conditions automatically. For instance, when an artist sells her work to someone, it could be set in the contract that she receives a certain percentage of the sale in case the artwork is sold again.
Blockchain’s potential for conducting secure elections
Blockchain makes voting more secure, transparent and accessible — all without compromising privacy. A voting system based on a blockchain allows ballots to be cast and tallied in a distributed and immutable ledger. As soon as a vote is cast, the encrypted entry is added to the blockchain, becoming part of a public record that can never be modified or tampered with. Once the vote has been cast, it cannot be changed, deleted or duplicated, thereby greatly reducing the chance of fraud at elections.
Blockchain also enhances electoral accessibility. Anyone can vote from anywhere around the world, which is especially useful for expatriates or those with disabilities who cannot vote in the traditional way. In addition, because of the transparency of blockchain, votes can be audited in real time, making the election process more transparent. Furthermore, voting would be open only to eligible voters, thus reducing the chances of impersonation or duplicate voting.
However, while several governments and organisations have begun pilot testing their versions of a blockchain-based voting system, the technology is still in its infancy.
Blockchain in healthcare: Streamlined medical records and drug traceability
The most remarkable impact of blockchain adoption will be felt in hospitals where medical records are kept and maintained. Medical records are often stored in different institutions in disparate forms and hence are not easy to access. Blockchain’s decentralised ledger can be used to access information by authorised doctors and the patients themselves. Blockchain technology ensures that such historic data cannot be modified or falsified.
This decentralised mode also enhances patient privacy. Using advanced encryption techniques, sensitive information can be safeguarded from private individuals gaining undue access to patients’ private data.
The drug supply chain can benefit enormously from blockchain technology. Counterfeit drugs have long been a challenge in the pharmaceutical industry and have endangered the lives of patients. Adding the flow of a drug through production, distribution, and sales on a ledger that cannot be manipulated offers immutable history about its storage, movement, and authenticity. So pharmaceutical companies and regulators can easily monitor the entire supply chain for safety standard compliance, and consumers can feel assured that they are buying genuine products.
Blockchain can also safeguard the data integrity of clinical trials. Researchers may use the blockchain to document trial information, making these records available to scrutiny designed to expose manipulation and guarantee trial results are credible.
Blockchain and the Metaverse: Facilitating true ownership in virtual worlds
Central to the Metaverse is the idea of digital ownership, whether these are virtual lands, avatars, NFTs, digital arts, or in-game items. As discussed earlier, NFTs on the blockchain are a way for users to create, buy, sell, and prove ownership of unique digital assets. In this ownership model, the asset, once created, is forever tracked by the blockchain.
On traditional online platforms or games, major stakeholders usually are large companies such as developers of the software. The Metaverse has a decentralised setup, where smart contracts guarantee equitable and transparent management of virtual spaces. This makes users feel in charge of the worlds they inhabit.
Blockchain permits digital identity management in the Metaverse. Just as it gives a user secure and verifiable identity in real life, it allows a distributed digital identity of the user through various virtual spaces. This identity can be augmented against reputation, and digital assets and activities, offering continuity and trust between different platforms and experiences.
Blockchain-backed systems allow micropayments inside virtual spaces to buy, sell, and trade digital goods and services without relying on centralised financial institutions. For the creators and businesspersons in the virtual economy, this sets the stage for frictionless and safe digital transactions.
Growth of the DeFi network
Decentralised finance or DeFi aims to replace old-style financial services like lending, borrowing, and trading with ways other than through central banks or financial institutions. Using smart contracts and blockchain platforms like Ethereum, financial transactions can be carried out directly between people at an extremely low fee. DeFi protocols are quickly growing with cutting-edge financial products such as yield farming, decentralised exchanges (DEXs), and tokenised assets.
DeFi democratises access to financial services, which means that the unbanked population will also have the ability to tap into opportunities in the global economy.
The challenges
At present, the most serious problem faced by blockchain is the non-interoperability between different blockchain networks. For instance, a Bitcoin user can in no way send information across an Ethereum blockchain. But with the growing adoption of blockchain, this need for cross-chain interoperability is becoming strong.
Many new projects and protocols are focusing on ensuring that diverse blockchain networks can exchange and access specific data. Polkadot and Cosmos, among others, are focusing on interoperability to create a multi-chain ecosystem within which different blockchains can reside and operate with each other.
The limited throughput and slow speed at which transactions can be processed in a blockchain are the other challenges. Proof of Stake (PoS), sharding, and Layer-2 solutions such as Lightning Network help transactions consume less energy and reduce the average processing time to make this technology efficient for high-scale applications.
