If you already know what blockchain is, you might already have the next question, which is: what can you do with blockchain?
There are already numerous tasks blockchain is being used for.
In this article, we look at themost prominent and, in my opinion, most exciting at:
The oldest and probably the most easily understood principle of use of the blockchain. The most famous representative: Bitcoin.
Bitcoin has seen an almost unbelievable increase in value since it was launched in 2009. Even though the path has been paved with massive price drops in some cases, the trend in and of itself is still incredibly positive.
Bitcoin is often referred to as electronic gold. Of course, real gold is much less volatile (fluctuating), but Bitcoin will also increasingly stabilize in the future as it becomes more established.
It is often pointed out that Bitcoin has no real value, but in fact many traditional assets, such as gold, have abstract utility rather than real and economically exploitable value. You can learn more about Bitcoin on the World Gold Council or on Statista where it is stated that just about 8% of gold is used for technology (medical devices, etc.). Gold is valuable primarily because investors perceive it as a safe investment. This is primarily because of the limited supply and also because of the safekeeping.
However, all of this is just as true for Bitcoin.
Smart contracts are basically simple if-then functions that are automatically executed by small programs on blockchains. In this way, conditions and actions can be defined that can no longer be changed, as they are disseminated on all nodes, i.e. the entire network of the blockchain.
An underlying if-then function might look like this:
IF payment of 0.2 bitcoin from person XY to person AB is confirmed, THEN person XY is newly registered as owner of person AB's car.
Another immense advantage is that the implementation of and compliance with smart contracts no longer requires monitoring institutions, which usually cost a fair amount of money.
Stands for Decentralized Financial System / System. Traditionally, credit institutions manage funds in a centralized way. For example, if you want a loan: The bank is completely free to decide whether it currently prefers to give loans to wealthier customers. Also, you are at the mercy of your case worker. If they don't feel sympathy for you, that could be the end of your loan.
De-Fi is different. The granting of loans is completely objective and only requires a smartphone with Internet access. So if you're creditworthy in and of yourself, you'll get a loan just like any other person would if the qualifications were right.
Also extremely exciting are interest earnings that can be generated with Proof-Of-Stake Coins, for example. Why is this exciting and how does it work?
While traditionally you would have to entrust your money to a bank, you keep your coins with you permanently while receiving the interest. This may sound a bit strange, but it is possible with coins like ADA from Cardano (or VET, respectively VeThor from VeChain) is already a reality today.
Erreicht wird dies, da du um Zinsen zu erwirtschaften, den Zugang deiner Coins nicht aus der Hand – oder besser gesagt deinem Wallet – geben musst. Es reicht deinen Public Key, an den entsprechenden Betreiber zu kommunizieren und dann, deinen Zustimmung zu geben. Dies geschieht mittels Eingabe (nicht Ausgabe!) deines Privat Keys. Anschliessend darf, der Anbieter / Betreiber deine Coins nutzen um neue Blöcke auf der Chain zu erzeugen und so entsprechend neue Coins als Belohnung (Reward) zu erhalten.
Also, the yields on cryptocurrencies are usually much higher than those on traditional banks.
Oh, and since it's a decentralized network, failures are virtually impossible. If certain nodes fail, no information is lost and operation continues without interruptions.
Supply chain verification
Another possible application is to store product information on a blockchain. This way you can be sure that the information for your red wine is true:
– Anbauregion korrekt
– Angegebene Reifezeit eingehalten
This would then again be defined with smart contracts and it could (simplified) look like this:
WENN Erzeugnis „Rotwein aus Valencia“ Trauben mit Ursprung ungleich Valencia enthält, DANN kein Kauf
WENN Erzeugnis „Rotwein aus Valencia“ Pestizidwert grösser Null, DANN kein Kauf
IF storage time less than 2016, THEN no purchase
For example, it could also guarantee that producers were paid fairly.
NFTs (Non-Fungible-Token – fälschungssichere Unikate)
Blockchains can generate tokens that are distinctive and unique. These properties are not only attractive for artists. There are also many other possible applications for NFTs. One such are for example Blockchain Domain Nameswhich I have described in the following article .
Internet Of Things
The Internet of Things (or IoT for short) is already making its way into our lives. For example, when your smartwatch and your surveillance camera are connected to your smartphone. But its use will continue to increase significantly.
Blockchain-Technologie ist für den Einsatz im Internet Of Things (IoT) prädestiniert. Die Möglichkeit für Smart-Contracts bieten sich für Automatisierungen im IoT an. Auch ist Blockchain durch die Manipulationssicherheit und Dezentralisierungsmöglichkeiten ein geeigneter Informationsträger für IoT-Anwendungen.
Stell dir vor dein Kühlschrank kennt deinen Einkaufszettel und Essensvorlieben. Dein Kühlschrank kriegt ein Update von deiner Smartwatch: du hast gerade Sport gemacht. Ein Bestellung wird an eine Lieferdrohne übermittelt. Du kriegst eine Notification auf deine Smartwatch gepusht: „Lieferung in 30 Minuten möglich. Bestätigen?“. Du bestätigst und gehst duschen. Pünktlich kommt die Lieferung an und du nimmst sie entgegen. Du freust dich über deine Lieblingslebensmittel, aber da ist auch ein dir unbekannter magnesiumreicher Hafterdrink und eine Glühbirne. Auf deiner Smartwatch poppt ein Hinweis auf: „Nimm nach erhöhter körperlicher Betätigung vermehrt Magnesium zu dir.“. Das erklärt schonmal den einen Unbekannten. Du läufst zum Kühlschrank um kurz einzuräumen. Auf dem Display des Kühlschrank blinkt eine Meldung: „Leuchtmitteleinheit im oberen Kühlfach defekt. Bitte auswechseln.“. Ein paar Minuten später lässt du dich auf die Couch fallen und probierst den neuen Haferdrink. Er schmeckt. Ist ja auch mit Vanille-Geschmack.
It could go like this or something similar.
The whole principle can be transferred to numerous areas. For example, industrial M2M (Machine-To-Machine) in which machines simply complete certain transactions on their own. For example, when a measuring station sells its data independently.
But for all of this to work smoothly and securely, solutions are needed that allow devices to exchange information and transfer value. Blockchain can do just that.
Election fraud is regularly in the news, and for understandable reasons: either allegations of fraud are made in countries where there is no evidence of a relevant rate of fraud allegations, or countries deny election manipulation even though there is massive reason to doubt the results.
The idea is to exploit one of the strengths of blockchain technology in this area as well: Protection against manipulation.
By using a blockchain, the results are immutable and can be viewed from anywhere at any time.
Although the technical implementation is challenging, it is only a matter of time before there will be corresponding solutions.
Those who do not follow suit and use such solutions for elections make themselves suspicious.
At the beginning, the use will probably only take place on a smaller scale (for example, at the municipal level, in companies, associations, etc.).
Each of the above-mentioned topics is incredibly complex and cannot easily be treated in corresponding depth (and certainly not by me). I have tried to explain the basic things in a simplified way and hope that I have succeeded to some extent.
If you liked this article and it helped you to get a rough overview, I am very happy.