As per the research global technology market is forecasted to grow 2.3 billion in U.S dollars by 2021. Isn’t that huge enough? Ever since Santoshi Nakamoto published his invention in 2009, Blockchain technology has added the flavour not only in financial industry but also across other verticals.
What is Blockchain technology and what problem it can solve?
Today, with the advent of new technologies, internet has revolutionized the way people communicate. We make the use of payment gateways to share and transfer information back and forth; but is that really secured? Databases cannot communicate with each other, it needs error-free human administration or a centralized station to run every node.
So, here the Blockchain technology comes into existence. It is decentralized ledger shared by multiple users and works without the interference of third-party. This technology tracks every details that happens on the internet – every digital transaction, private data, service etc. Data is encrypted into blocks and gets scatter into pieces across worldwide network of distributed nodes.
Hence, because of this reason:-
Electronic ledgers can become cheap than traditional account system
Distributed ledger system nullifies repetitive task and results into less error
Lessen up the risk of pending transaction as processing delays
Blockchain has three main features of distributed ledgers:
Veracity – multiple copies (as opposed to a single copy) of the complete historical record of ledger entries are each verified by consensus.
Transparency – it is a public record of activity that can be seen by all market participants.
Disintermediation – Instead of specific central organization, this operates using peer-to peer network.
Blockchain technology is the pillar behind the success of the bitcoin and is the first digital currency to solve the issue of double- spending. This technology is transformative and several predicts expects that it will have massive impact in the market.
“One Bitcoin can be divided by 100 million units, and each unit can also represent value in multiple ways – i.e.; cash, property, votes, energy.”
Implications of transaction in Blockchain technology
Blockchain technology will revolutionize the way we write, execute transactions and maintain records. Keeping accounts of all transactions is the core criteria for any business as it becomes easy to track the last performances and help in planning the need for the future. Some records consume time, energy and efforts and often creation and storage process results in errors.
In the current scenario transactions can be executed immediately but settlement of the funds takes a long process. For instance: Someone selling in the stock exchange can sell stocks immediately but settlement can take few days. Similarly, if someone is making the new deal of buying property, price can be negotiated and signed quickly, but process of registering takes more time and may involve lawyer, government and employees.
But, in the Blockchain technology, transaction process is quick and permanent and distributed across nodes, and details of transaction such as price, asset etc. are recorded, verified and settled within seconds across all nodes and any change in one ledger simultaneously affect the other copies of ledger. Since each transaction is transparent and permanently recorded, there is no need of third party verification and is open for anyone to see.
What makes distributed technology different?
The key difference of Blockchain is the ability to transact without the need of trusted third-party through distributed ledger.
Ultimately, distributed ledger technology represent significant innovations. They have broad implications, including:
Operational simplification and fraud minimisation
Digital identity
More transparency in transactions.
Fraud minimization
One of the advantages of distributed ledger technology is that manual efforts to perform reconciliation and resolving disputes can be drastically reduced. Traditional accounting system means parties involved in one project need to check the system and find the reason why they disagree. Instead with the help of Blockchain the same thing can be migrated in number of ways as all parties involved share the same record.
For businesses, Blockchain increases the efficiency, reduction in duplicated and manual tasks and cut-cost and provides opportunities for businesses to focus on value-adding task and facilitate trust along with supply chain. Businesses which regularly deal with unknown customers faces risks, where a business is not sure that its customer will comply with contractual terms. Goods are delivered, but the customer may not make payment for days or weeks. This ties up capital and can cause cash flow problems. Blockchain technology has the capability to minimise risk and settlement times, which ultimately aids in improving balance sheet efficiency.
More transparency in transaction
Distributed ledger provides transparent information in real-time transactions and hence, those currently gaining competitive advantages via imbalance of information is likely to put an equal foots with the rest of the market. Individuals will be able to understand which organizations have used which data under what circumstances and this enables more consumer decision making. The tracking of goods over Blockchain will also provide greater transparency and simpler process for businesses and would enable increased cooperation between regulators and regulated entities.
Example:
SimplyVital Health is using Blockchain technology to give healthcare industry a facelift. The company is using the Blockchain-based data storage and analytics platform aimed for streamlining medical data storage and sharing.
The Bottom line
Blockchain technology is here to stay and is transforming the way society functions. Being still in an early stage, crypto currencies are only its major use case. Above perspectives may sound promising, but business need to come up with the kickass solution or connect with the Mobile Application DevelopmentCompany that can nurture your product as per your requirements in a better way.
The victim-count of Coronavirus has increased to 28,276 while taking 565 lives already.
With the virus epidemic being on the verge of becoming pandemic, there is a cloud of concern hovering over not just the affected nations but also the rest of the entire world.
The grim picture of Coronavirus is not just of the virus making its way around the world, but also of the lack of crucial medical supplies. Red Cross China has also come under fire for failing to deliver urgent supplies to the front line hospitals. In its apology, Wuhan Red Cross mentioned that it has called for an overnight emergency meeting for discussing internal problems and have pledged to hold people who are in charge of relief distribution, accountable.
The fund shortage has led to a number of hospitals in Wuhan who are looking after coronavirus patients to seek charities on social media platforms. Many of them said that they are in dire need of basic protections against this contagious pathogen. While on the other side, people from all corners of the world who came together to donate money to the coronavirus patients and to aid treatment creation, expeditiously, are outraged at the unfair distribution of their funds.
To solve the challenge of unfair donation distribution in real-time, Hyperchain, together with Xiongan Group, Fuxing Group, and other well-known establishments, is taking Blockchain’s help.
Utilizing everything that Blockchain in Healthcare has to offer, Hyperchain is building a platform which would ensure that the entire Coronavirus donation process is traceable, immutable, and reliable. Announced in a press release on 4th February, the platform will act as a medical supply donations portal for supporting medical institutions operating in central China.
It is going to be a transparent portal that will also act as an information exchange enabling donors to see where their donations or funds are going. Through the platform, the donors will get proof of receipt and proof of need which would ensure that their funds have reached the intended party in real-time.
Hyperchain, Hangzhou Qulian Technology Co., Ltd , formed in 2016, is a tech company providing blockchain solutions. It excels in the development of underlying blockchain platforms, security platform and data sharing, supply chain finance SaaS platform, BaaS platform, and digital evidence services.
The lack of transparency and censorship are often two of most debated challenges that emerge during every epidemic outbreak. What happened with Red Cross China is simply a wake-up call for the dire need of the inclusion of a Blockchain development company in every world-affecting event and process.
There is a need for credible and transparent mechanism based society and Blockchain is the answer.
Over the past few years, we have become accustomed to the way large banks and other firms access and employ our personal information to deliver us an enhanced experience. We have over time given them a ‘green signal’ to the mechanisms that use our sensitive details to help us sustain in a certain way. But then entered the Blockchain technology and it totally changed everything.
The Blockchain technology brought various characteristics like transparency, immutability, decentralization, and distributed ledger into existence. It enabled users to act anonymously and perform transactions with high-end security.
[Before we look further, we strongly recommend taking the time to understand the basics of Blockchain.]
Blockchain, in simple terms, gave users control to their privacy and future back.
But, has Blockchain really succeeded in doing so?
In one word, the answer is NO.
Many blockchain networks use public databases. So, anyone having an internet connection can view the list of the network’s transaction history. They can see all the details associated with the transaction and your wallet details, but the name of the user will still be unknown to them. Instead, they will come across as a public key – the unique code representing the user on the blockchain network.
This way, the public key created via the cryptography technique safeguard your privacy to some extent. But, it is still possible for one to expose you via other techniques.
This put your anonymous cover blown; debunking the myth of Blockchain’s anonymity and privacy, and make you realize that –
Theuser’s sensitive information stored on a Blockchain network isonly confidential, not anonymous.
Likewise, there are various blockchain networks governed by consensus algorithms to deliver high-end privacy and stability, but decentralization is considered as a second priority in such cases. In many such cases, the two parties do not trust each other. [To read about these consensus models in detail, check out this blockchain consensus algorithm guide.]
This, as a whole, gives a clear indication that Blockchain is not that anonymous and decentralized as many of its enthusiasts believe it to be. And even gives birth to various questions, such as –
Do Blockchain networks really need to be anonymous? How can Blockchain offer more anonymity and better privacy protection to their users?
In the present Blockchain networks, the transactions are recorded in the public ledger and are transparent in nature. Because of this, various reputed brands and markets like Wall Street are hesitating to adopt this technology as the confidentiality of client and transaction is a must for them. This, as a whole, is questioning if at all Blockchain web 3.0 will be able to impact businesses.
Coming to the second question, there are various concepts and methods like Coin mixing, Ringct, and Coin Join that are making transactions anonymous in Blockchain, but the one that is highly appreciated is Zero-Knowledge Proof.
The one will cover in detail in this article.
So, let’s begin with a simple definition of zero-knowledge proof.
What is Zero Knowledge Proof?
Zero-knowledge Proof is an encryption scheme proposed by MIT researchers Silvio Micali, Shafi Goldwasser, and Charles Rackoff in the 1980s. In this method, one party (Prover) can prove that a specific statement is true to the other party (Verifier) without disclosing any additional information.
With definition being cleared, let’s take an example to understand how zero knowledge proof works.
Example: Kids and Candy Bars
Suppose, two children – Bob and Alice, have received some candy bars from a party. Bob wants to know if Alice has got the same number of candy bars or not. But, at the same time, none of them is ready to reveal the exact number.
So, what they do is that Bob brings four lockable boxes in a room, assuming that the number of candy bars received will be 10, 20, 30, and 40. He labels each box with a value corresponding to the number of candy bars.
Then, Bob keeps the key to the box that defines the number of candy bars he received in his pocket (let’s say he got 30 candy bars) and throws away the keys of all other boxes. And he leaves the room.
Now, Alice enters the room with 4 small pieces of paper and writes ‘+’ on one of them while ‘-’ on every other. Here, ‘+’ denotes the number of candy bars she got, while ‘-’ represents every other value.
She slips the paper piece with ‘+’ sign in one box (let’s say in the one representing 20 candy bars) and ‘-’ in the rest of the boxes. And she leaves.
Now, Bob enters the room again and opens the box whose key is in his pocket. Then, he checks if the box has a piece of paper with ‘+’ sign or ‘-’ sign. If it’s a ‘+’ sign, he realizes that Alice has an equal number of candy bars. While, in the other case, she doesn’t.
As we know that Alice has 20 candy bars and Bob has 30 candy bars, it is clear that Bob will find a ‘-’ sign in the lockable box whose key he has. This will make him clear that they both do not have the same number of candy bars.
At the same moment, Alice will re-enter the room and find a ‘-’ sign in Bob’s hand and she will also come to know that they have a different number of candy bars.
Note: By this method, Bob will learn that they do not have an equal number of candy bars. But, he will still have no clue if Alice has more or less candy bars than him, and vice versa.
Thus, the zero-knowledge proof maintains the privacy of users’ sensitive information, while making a transaction (in this case, the transaction is finding if they have the same number of candy bars or not).
Although this example would have helped you in understanding what exactly is Zero Knowledge Proofs (ZKPs), let’s refresh the concept with an image-
Now, as the concept of zero-knowledge proofs (ZKPs) is explained, it is the best time to look into what makes everyone prefer it over other available options.
Benefits of Zero Knowledge Proofs (ZKPs)
Simple – One of the prime advantages of zero-knowledge proof is that it does not involve any complex encryption method.
Secure – It does not require anyone to reveal any sort of information.
While these are the pros of Zero-knowledge proof, the concept has some disadvantages as well. A few of which are:-
Lengthy – In the zero-knowledge method, there around 2k computations, with each requiring a certain amount of time to process. This is the foremost con of going with zero-knowledge proof.
Imperfect – The messages delivered to verifier/prover might be destroyed or modified.
Limited – The zero-knowledge protocol demands the secret to be a numerical value. In other cases, a translation is required.
With this covered, let’s dig deeper into the technicalities before we evaluate when and how Zero-knowledge protocols can be introduced into the Blockchain ecosystem.
Starting with what are the core characteristics of a zero-knowledge proof.
Properties of Zero-Knowledge Proofs
1. Completeness
If the statement is true and both users follow the rules religiously, then the verifier would be convinced without any external help.
2. Soundness
If the statement is false, the verifier won’t be convinced in any scenario (even if the prover says that the statement is true for some small probability).
3. Zero-Knowledge
In both cases, verifier won’t be able to know any information beyond that the statement is true or false.
While the principles of Zero Knowledge Proof are covered, let’s talk about the different types of ZKPs a business enthusiast can invest in.
Types of Zero Knowledge Proofs
1. Interactive Zero-Knowledge Proof
In an interactive zero-knowledge proof, a prover performs a series of actions under the mechanism of mathematical probability to convince the verifier of a particular fact.
2. Non-Interactive Zero-Knowledge Proof (NIZKP)
As depicted from the name, Non-interactive zero-knowledge proof does not require an interactive process. Meaning, the prover can generate all the challenges at once and the verifier(s) can later respond. This restricts the possibility of collusion. However, it requires additional machines and software to find out the sequence of experiments.
Note: It is possible to make a transition from non-interactive to interactive ZKP.
Where to Implement Zero-Knowledge Proof in Blockchain System?
1. Messaging
In messaging, end-to-end encryption is imperative so that no one can read your private message besides the one you are communicating with. To ensure security, messaging platforms ask users to verify their identity to the server and vice-versa.
But, with the advent of ZKP, they will be able to build end-to-end trust in the messaging world without leaking any extra information. This is one of the prime applications of zero-knowledge proof in the blockchain world.
2. Authentication
Zero-knowledge proof can also facilitate transmitting sensitive information like authentication information with better security. It can build a secure channel for the users to employ their information without revealing it. And this way, avoid data leakage in the worst scenarios.
3. Storage Protection
Another possible use case of zero-knowledge proofs (ZKPs) is in the field of storage utility.
Zero-knowledge proof comes with a protocol that not only safeguards the storage unit, but also the information within it. Needless to say, the access channels are also protected to give a seamless and secure experience.
4. Sending Private Blockchain Transactions
When talking about sending private blockchain transactions, it is utterly important to keep it out of the reach of the third parties. Now, while the traditional methods are somewhat protective, they have some loopholes.
This is yet another area where ZKP comes into play. The concept, when integrated wisely, helps in making it nearly impossible to hack or intercept the private blockchain transactions.
5. Complex Documentation
Since zero-knowledge proof has the potential to encrypt data in chunks, it enables one to control certain blocks to provide access to a particular user, while restricting access for others. This way, the concept protects the complex documentation from those not authorized to see them.
6. File System Control
Another place where you can see an effective zero-knowledge proof implementation is the file system.
The concept adds different layers of security to the files, users, and even logins that makes it quite difficult for one to hack or manipulate the stored data.
7. Security for Sensitive Information
Last but not least, Zero-knowledge proof also refines the way blockchain technology is revamping transactions.
ZKP adds a high-end security level to every block containing sensitive banking information like your credit card details and history, such that banks need to manipulate only required blocks when a user requests for information. Other blocks remain untouched and thus, protected.
So, these were some of the use cases of zero-knowledge proof in the blockchain environment. To make your brand presence in the market by building one of these, hire a blockchain app development company.
And in case you are confused about its real-world implementation, check for the following existing projects operating with the convergence of two.
Real-Life Examples of Convergence of Zero Knowledge Proofs and Blockchain
1. ZCash
ZCash is an open-source and permissionless blockchain platform that offers the functionality to keep transactions ‘transparent’ and ‘shielded’ as per the requirement.
In the former case, the transactions are governed by a t-addr, just like bitcoin transactions. While in the latter case, a zero-knowledge proof called zk-SNARKs is used and the transactions are controlled by a z-addr.
2. ING
ING is a Netherlands based bank that has introduced its own zero-knowledge blockchain. However, they have modified their zero-knowledge system to make it a zero-knowledge knowledge range proof to lower down the need for computational power.
This way, they have prepared their zero-knowledge system to elevate the impact of blockchain in fintech.
3. ZCoin
The company uses Zerocoin protocol, which is based on zero-knowledge proof, to enhance security and anonymity in the transaction process. However, what makes it distinct from other projects working on this concept is that it offers scalability too.
Though various international actors have started showing an interest in implementing the concept of zero-knowledge proof into the blockchain, the adoption pace is too slow. And the prime reason behind is the following set of challenges associated with the addition of ZKP into the blockchain environment.
Challenges You Might Face While Integrating ZKP into Your Blockchain Project
1. Absence of Standards
Since blockchain technology itself is at its early adoption stage, there are no standards, system and homogeneous languages that enables app developers and business prospects to interact with the concept of ZKP and harness its potential in an efficient way.
2. Scalability
Another challenge that restricts the adoption of zero-knowledge proof in the blockchain environment is scalability, provided such algorithms require high computing capacity to operate on a high level.
Wrapping Up
Now that the concept of Zero Knowledge Proof and its scope in the Blockchain domain (along with real-life examples) is clear to you, we expect to find you investing in the broader application of the concept while stepping into the decentralized world. But, in case you still have any queries, connect with our Blockchain consultants.
KYC processes are the backbones of a financial institution’s anti-money laundering efforts. Find out how businesses are revolutionising the long, tiresome process.
Know Your Customer or KYC processes are the backbones of a financial institution’s anti-money laundering efforts. According to current estimates, the amount of KYC spending rose to up to $1.2 Billion in 2020 on a global level.
With a whopping amount as this being spent on making KYC processes better, it is easy to assume that the process would be unhackable and issues-free. But inspite of the importance of the process, KYC continues to operate inefficiently. Clenched by labor-intensive and time-consuming tasks, the high scope of effort duplication, and the risk of error, it is estimated that 80% of KYC efforts go on gathering information and processing while only 20% of efforts are assessing and monitoring focused.
While the current KYC process is failing to serve its purpose on the financial institution front, the tiresome, long, and repetitive process is creating an annoying experience for customers.
A hopeful respite to the situation comes from the fact that several financial institutions and service providers are trying to solve the issues by the way of incorporating new-gen technologies like cognitive technologies and AI.
In this article, we are going to delve into a technology that we believe carries the key to eliminating efficiencies and duplication in KYC processes – Blockchain.
In order to truly understand the changes that Blockchain can bring to the counterproductive KYC process, it is important to understand the problem areas of the present system. The problems will help us understand how blockchain technology for KYC is becoming a necessity.
The Lags in Centralized KYC Systems
Every bank or financial service provider comes with its individual set of specifications with no standardization. This often results in users performing the KYC process with every bank and provider they use. Moreover, a tight siloed system like this limits FIs from tracking consumers’ expenses on other platforms – leading to every institution having their specific set of incomplete data.
This centralization of data in silos combines to cause an inefficient KYC process. One that creates issues like:
Misidentification of fraudulent data
The inability of tracking customers
Customers entering fake data
Delayed processing time
The result of these challenges is spending numbers that we mentioned earlier and a constant rise in money laundering instances.
As a way of changing the situation, the KYC process is gradually being shifted to Blockchain. Let’s deep dive into the process of using Blockchain for KYC verification and the benefits that the movement offers to the fintech sector.
The Blockchain KYC Process
The process of using Blockchain for KYC happens through multiple stages in a Distributed Ledger Technology.
Let us give you a high-level understanding of the steps of how can Blockchain help KYC.
Step 1: The user builds a profile on the KYC DLT system
Financial Institution (FI) deploys a Blockchain-based KYC platform which the user completes as a one-time setup using their identity documents. Once uploaded, the data become accessible to the FI1 for verification purpose.
There are multiple options when it comes to storing the users’ data:
A centralized, encrypted server
On F1s private server
DLT platform.
Step 2: User performs transactions with FI1
When the user performs a transaction with FI1, they give them the right to access the users’ profile. The FI1 then verifies the KYC data and saves a copy of the data on their server. Next, they upload a ‘Hash function’ on the DLT platform.
Finally, FI1 transfers KYC digital copies to the user’s profile embedded with a Hash Function which matches the Hash Function uploaded on the DLT platform.
Now, if the KYC data is altered, the Hash Function of the KYC data won’t match the one posted on the DLT platform alerting the other financial institutions on the blockchain of such change.
Step 3: User performs a transaction with FI2
When FI2 asks the user to perform KYC, the user grants access to their user profile to FI2. FI1 then reviews the KYC data (and its Hash Function) with the Hash function uploaded by FI1. If the two matches, FI2 would know that the KYC is the same as the one received by FI1.
In case the Hash Functions don’t match, FI2 would have to manually validate KYC documents.
But what happens when the user obtains a new passport or driver’s license and their original document in DLT user profile changes?
In such cases, financial institutes leverage smart contracts for automatically updating their systems when the user provides new documents. Here too, the user submits the new document to F1 who then broadcasts the change across the blockchain (through the new Hash Function) which then becomes accessible to other FI participants.
The benefit of a Blockchain solution for KYC can be seen in:
Data Quality: all data alterations are tracked and monitored in real-time
Lowered turnaround time: through KYC Blockchain software solutions, FIs get direct access to the data which saves data gathering & processing time
Reduced manual labor: KYC on Blockchain eliminates paperwork from the process.
The benefits of KYC Blockchain implementation cannot be limited to these points. There are a number of sector benefits that the process of KYC using Blockchain offers.
Benefits of Blockchain in KYC/AML Process
The use cases of the decentralized technology in KYC technology is not just a Blockchain in Fintech offering. There are a number of sectors that are partnering with a Blockchain development company to explore the application.
Distributed data collection
The introduction of blockchain in KYC brings data on a decentralized network which can be accessed by parties after permission has been given to them. Moreover, the system offers efficient data security since the data can only be accessed after permission has been given by the users, thus eliminating instances of unauthorized access.
Better operational efficiency
The abilities like an unhackable digital process and sharing user information on a permissioned network can massively lower the effort and time needed in the early stages of KYC. This, in turn, expedites the customer onboarding time and lowers the regulatory and compliance expenses.
Validation of information accuracy
KYC Blockchain systems enable transparency and immutability that, in turn, allows financial institutions to validate the trustworthiness of data present in the DLT platform. The decentralized KYC process acts as a streamlined way for gaining secure and swift access to up-to-date user data. This lowers the labor-intensive efforts that an institution puts behind gathering information.
Real-time updated user data
Every time a KYC transaction is performed at a financial institution, the information is shared within a distributed ledger. This Blockchain technology KYC systems enable other participating institutions to access real-time updated information with a guarantee that every time there’s a new addition in the documents or there are any modifications, they’ll be notified.
Is Blockchain Development Solutions the Answer to KYC Issues?
Gathering information and processing it takes up a great amount of cost, time, and effort in the KYC process leaving very few resources available for monitoring and assessing user behavior for anomalies. By offering speedy access to up-to-date data, blockchain KYC solutions can lower the time needed for the laborious tasks, which, in turn, can be employed to find solutions to more complex KYC challenges.
However, blockchain cannot solve all the issues faced by KYC. After the data is acquired, financial institutions still have to validate the information. For this, AI and cognitive processing-like technologies have to be employed for greater efficiencies.
In its present state, blockchain when used in combination with other technologies can showcase high potential to help institutions lower the cost and time linked with the KYC process.
If you want to explore this side of Blockchain development services or are seeking to validate your decentralized KYC-based idea, get in touch with us – one of the leading blockchain development companies in USA.
Blockchain has come a long way since it was described by Stuat Haber and W Scott Stornetta back in 1991. The technology has become one of the biggest innovations of the century and has given rise to various new possibilities in different sectors and industries. Say it fintech, retail, healthcare, enterprises, real estate, or supply chain.
A clear evidence of which is that today, almost every entrepreneur, digital marketer, and even blockchain development firm is showing an interest in learning the basics of blockchain technology and looking ahead to entering the space. And eventually, getting a slice of the market which is anticipated to be valued USD 39.7 Bn by the year 2025.
They have also begun looking into the latest blockchain trends and the best business models top players are working with.
However, most of them are missing one main point.
With the growing popularity of the technology, different ways to embrace it for business transformation are coming into the limelight and so, the kinds of blockchain projects; making everyone intrigued to know which of these types is destined to aid them in leading the digital environments in 2020. Something that you will come to know by the time you reach the end of this article.
So, shall we begin?
[Just in case you want to take a recap of the role of blockchain on the industries, check our blog on ‘the impact of blockchain on the economy’.]
Explained: The 5 Categories of Blockchain Projects
1. ‘Fear of Missing Out’ Blockchain Solutions
The first kind of blockchain solutions that are getting developed these days is FOMO (Fear of Missing Out).
As depicted from the name, this type of projects are brought into life just to ensure that companies do not remain behind in the market. They have not held any meeting and discussed its role into their traditional business model and the possible outcomes they would derive from it in a particular time span. Or even looked into whether investing in blockchain app development is beneficial for them.
Rather, they have just taken this step just to show that they are innovative and work with the latest technology trends impacting the business world.
These kinds of projects, as you might have guessed so far, do not create much value for the business and remain a marketing act for the company. It just increases the chances of your target audience giving a second look to your business products/services or competitors fear of missing out and take the same step.
What’s more, the poorly planned blockchain projects might overburden the existing business ecosystem and demand additional costs. This can make leaders conclude that they ‘tried and failed’ blockchain or doubt on its future. Whereas, the only problem is that they kept on focusing and investing on the wrong use case of the technology.
2. Opportunistic Solutions
The second category in which blockchain projects fall is Opportunistic solutions.
These types of blockchain solutions are devised to solve any known problem, especially related to record-keeping. They add value to the business, even when not being operational for a longer period of time.
The only problem associated with this project type is that one might lose control over data and contracts later.
When looking into the real-life examples of Opportunistic blockchain projects, the blockchain solution developed by the Depository Trust and Clearing Corporation (DTCC) to regulate records from credit-default swaps is the right one to consider.
3. Trojan Horse Projects
Trojan horse projects also landed into the list of type of blockchain business ideas gaining momentum this year.
These projects, just like trojan horses, are attractive, backed by respected brands and address the usual and wide-reaching problem in a particular industry. But, they demand users to share their sensitive information and transfer some control in such a way that results in market consolidation for the prime blockchain owner. So, it is required to invite different groups of people/ecosystems to participate in its processing.
A potential example of a trojan horse blockchain project is a food-tracking blockchain system. This system run by blockchain, unlike the traditional centralized ones, take comparatively less time and effort to determine the point at which the food items were adulterated/replaced, the people responsible for the same, and prevent it further. It enables users to access the records in real-time and prevent dozens of people from falling sick or suffer in other ways. But only when the participants are ready to share their personal information on the network.
These kinds of projects are quite effective. However, there’s a risk involved with considering these projects. They become reliant on the owner’s technology and locked in to the contract terms. But, with the passing time, they gain more control over the market because of having heaps of user data.
Also, the business currencies involved in the ecosystem where Trojan horse blockchain projects exist usually trade at a much higher risk level for the participating users.
4. Evolutionary Blockchain Projects
Another type that business leaders focus upon is the evolutionary blockchain project.
As the name suggests, these projects evolve with time. They are designed to improve over time so as to employ tokens with decentralized governance.
One example of such kind of blockchain software/applications comes from UEFA – the central committee for European football. UEFA works with two Swiss technology companies, TIXnGO and SecuTix, to create an evolutionary blockchain platform that drives a more equitable and safer market for the sales of football tickets.
The blockchain-powered platform encourages ticket buyers to download the SecuTix and TIXnGO applications. Here, the tickets are tokenized so as to keep a real-time record of the ticket purchase and connect it to the ownership details.
In case someone wishes to give away their ticket to a friend or colleague, they can do it through the application, which then stores the record of the transfer in the blockchain ecosystem. And if they wish to send it to anyone in the open market, the SecuTix platform can help them by defining that markup resellers are empowered to charge. This, as a whole, ensures that no unreasonable pricing is being asked or illegal brokers come into play.
Besides, the secondary market for tokenized tickets could mature into a decentralized sales network with time, such that it brings all the second ticket sellers at the same place.
When compared to trojan horse blockchain projects, the business currencies in this type can trade at a comparatively low risk level for the participants.
5. Blockchain-Native Solutions
Last but not least, blockchain native solutions are also among the type of projects business leaders consider in 2020.
Designed by startups or extended teams of existing organizations, these projects are meant to bring forth a new market of opportunities or disrupt an existing ecosystem. They might begin with different perspectives and facilities, but are supposed to move in the direction of tokenization or decentralized governance with time.
When talking about blockchain-native project types, the two industries that come to the limelight are Education and Sports.
In the Education sector, these projects emerged as a non-profit digital education society where students and teachers from different parts of the world could come together and relish the perks of higher education without worrying about learning exchanges or payments. The best example of which is Woolf University, the one founded by a group of scholars from Cambridge and Oxford and known as the ‘decentralized Airbnb for degree courses’.
Likewise in the gaming sector, these projects enable users to create their own tokens to support their favorite games and players. A perfect example of which is Enjinn.
The Blockchain native solutions introduces new business approaches into the market but comes with major currency risks. Because of this, they are preferred only by those who wish to manage their own data and experiment with the concept of decentralization independently.
Now while the definition and approaches of the different kinds of blockchain projects might have helped you with understanding which one is the right pick for your business, you can reach our blockchain consultants to know further. Our team has years of experience in helping startups as well as established brands from different industries to determine the right way of integrating blockchain into their traditional system and reap higher benefits. And that too, without worrying about the hidden business and tech-based challenges.
The real-world applications of blockchain are expanding by the minute. But the resources and skill sets needed for developing blockchain applications and hosting them are neither cost effective nor popularly available. Is blockchain as a service for business the answer of how to make blockchain technology accessible to an audience?
In this article, we are going to look into the BaaS solution for business works, the benefits of blockchain as a service, and how to choose the best BaaS providers operative in the market today.
Table of Content
What is Blockchain as a Service?
How Does Blockchain as a Service Business Model Works?
How Blockchain as a Service is Shaping Businesses?
The Region Wise Adoption of Blockchain as a Service?
The Top Blockchain as a Service Providers
A Look Into Self-hosting Blockchain Applications
What is Blockchain as a Service?
For offering the benefits of blockchain based services to a wider audience, the technology has started being offered in the cloud as a service business model. On the operational front, it is more or less similar to the SaaS, PaaS, and IaaS models which enables using cloud-based apps and storage.
It allows businesses of all types and sizes to access blockchain based technologies without investing in the in-house development. The BaaS model enables companies to access the blockchain provider’s service wherein they can develop blockchain applications at minimal cost. This benefit is what has made it a key part of the blockchain technology trends.
The only limitation of the BaaS solution for business is that it asks for a certain level of centralization since the transactions have to be funneled through the host’s blockchain services. And because the answer to how blockchain is used in business lies at the center of decentralization, companies tend to be wary of its adoption.
Key takeaways:
Blockchain-as-a-Service is third party cloud infrastructure and management that businesses use for developing and managing blockchain applications.
It operates as a web host which runs an app’s backend.
BaaS acts as a catalyst which leads to widespread adoption of blockchain technology.
How Does Blockchain as a Service Business Model Works?
Blockchain as a service business model describes the process through which third parties install, host, and maintain a blockchain network on the behalf of organizations. The service provider offers setting up of blockchain infrastructure and technology in return for fees.
In many ways, the role of blockchain as a service for business is similar to that of a web hosting provider. It enables customers to make use of the cloud based solutions for developing and hosting blockchain applications and smart contracts in the ecosystem managed by the provider.
Here is a visual showcasing the working of Hyperledger Cello Blockchain-as-a-Service, which is a BaaS-like blockchain module utility system and toolkit under the Hyperledger project.
The BaaS integration in traditional business provides support around allocation of resources, bandwidth management, data security features, and hosting requirements. The biggest impact of BaaS on business is that the enterprises can concentrate on their main business without thinking of the complexities around blockchain operation.
How Blockchain as a Service is Shaping Businesses
Businesses and consumers are willing to adapt blockchain technology. But the operational overhead cost related to development, configuration, operation, and maintenance of infrastructure along with the technical issues act as a barrier. The advantages of blockchain for SMEs, no matter how massive, are very resource intensive and energy consuming – thus preventing the technology’s mass adoption.
Renting a blockchain infrastructure in BaaS allows businesses to acquire the skillset needed for operating the blockchain infrastructure. Additionally, the investment needed for entering the technology segment is also lowered, since the service agreement can be easily scaled up or even terminated within short notice.
It offers a way for businesses to stay at the edge of technology without any unnecessary risks.
BaaS for startups
The opportunities of BaaS for businesses, especially small businesses, is deemed ideal for organizations which outsource the technological aspects, and are not very hands-down involved with the blockchain’s working mechanism. It enables these firms to get the understanding of the technology without having to develop their proprietary blockchain.
The integration of BaaS solutions is being used by a number of industries for things like identity management, supply chain management, and payments. Blockchain development services are emerging as the ideal solution for a number of SME challenges like elimination of middlemen, lack of transparency, etc.
Use cases of Blockchain as a Service for business
Document tracking – Blockchain technology offers a distributed, immutable document tracking system. By keeping the documents on blockchain, all the participants are given equal access to the information. Additionally, blockchain technology is immutable, thus ensuring that the documents are secured.
Data storage – With the data stored in the decentralised blockchain, the amount of data loss risk is reduced by manifold. The regulated industries like healthcare, real estate, etc benefit a lot from this immutable, secure facility of data storage on blockchain.
Contract execution – Under the smart contracts service of blockchain, a platform is provided for the contract execution which promises high transparency levels. Its distributed nature implies that all the parties should be equally informed.
The benefits of Blockchain as a Service lies in the unraveling of the several use cases that are yet to be emerged. It offers enterprises an opportunity to work on those use cases without making any large term commitments. All they would have to do is partner with a blockchain service company and then fully embrace Blockchain’s capabilities.
Now that we have looked into how is blockchain as a service valuable for SMEs and enterprises, let us look into its regional adoption.
The Region Wise Adoption of Blockchain as a Service?
The impact of BaaS on business has led to a huge demand for the service – a sign of which can be seen in the fact how the BaaS market growth is poised to be USD 24.94 Bn by 2027.
The worldwide market of BaaS is big around the US, Mexico and Canada. One prime reason behind this is the presence of SMEs and large businesses operating in the US location along with a willingness to combine the technology with the public utilities services.
Europe has also been seen as the leading BaaS market. One of the major drivers of blockchain and BaaS adoption has been the government support from different countries.
The Asia Pacific (APAC) region is the third-most biggest market for the BaaS integration. Driven by the BaaS integration in traditional businesses and growing investment in Japan, China, and South Korea, the technology is poised to grow in the region.
To take the adoption of blockchain as a service for business further, a number of tech companies have emerged as BaaS providers. Here are a few of them:
The Top Blockchain as a Service Providers
A Look Into the Alternative – Self-hosted Blockchain
Up until this point, we have looked in the BaaS ecosystem and how Blockchain as a Service is influencing the small business, in addition to the list of top providers. While it all suggests that it is a good option to go with this approach, businesses can in fact lose out on the essence of decentralization – the foundation of blockchain fundamentals.
So what is the alternative? The answer is Self-Hosted Blockchain.
When we talk about the Self-Hosted Blockchain app cost, the ownership amount tends to be a lot higher because of the startup costs, retirement costs, and operational costs. Moreover, the amount of developing and deploying a smart contract under this model can amount to up to hundred thousand dollars or more.
In contrast, a blockchain app hosted on cloud as a BaaS offering can be around $0.29 per allocated CPU hour. This means, businesses would only have to pay as they go and only for the service units used.
The costs of the BaaS model vary on factors such as number of concurrent transactions, transaction rate, and the payload size on transactions, etc.
Blockchain has become the definition of Security in the present digital world. With a number of industries and even governments applying the technology to add a whole new level of security and decentralization to their processes, the technology has penetrated itself into the world beyond IT and Finance.
With forecasts as these, Blockchain has become a technology that is worth looking out for.
The trend of making technology a part of the business cycle have now moved into the world of mobile applications as well. While still ruled by a handful of Blockchain based apps, the technology is an open playground for brands to experiment and emerge as a champion in. A move that is also bringing in a demand for the presently very limited group of excelled Blockchain App Development Companies.
Let us look at how you can implement Blockchain in your next mobile app for an added security level.
The start of your aspiration is knowing everything about the technology. In this article, we will look at what the disruptive technology is about, the elements that will come together to give numerous advantages to your mobile app. In the end, we will also look at ways to implement the technology in your app, to make yours the category’s most secure application.
So let us start by looking at how Blockchain works.
Blockchains are sets of interlinked transactions. Every party involved in the chain, sign their transactions with the help of strong keys, which ensure that every transaction has been authenticated.
Next, two hash are being introduced in the block, one that gives tamper protection to the block and the other that safeguards the data transaction that went before the one added. These hash help in recording the data of all the events that happened in a block, making it impossible for any of the involved party to tamper with the block without alerting the other parties.
A deeper dive in the Blockchain technology will open doors of new unheard concepts and algorithms that the world of Blockchain live in. The world which is too deep and complex for brands to get a grasp on, keeping them away from utilizing the technology to its utmost potential. So, without going too deep, I’ll now highlight the significant elements of Blockchain that are the technology’s foundation.
As a brand owner who is new to the complex world of blocks and chains, read these elements as the features that your application would be based on, to be called the next big new age, disruptive mobile application
1. Mining
Mining in Blockchain stands for extracting data from the various transactions and creating a block of them. With each new addition to the transaction, the miner keeps extracting the data and adding them to the block, thus making a chain of the transaction.
2. Hash
By now you must have gathered how Blockchain has been introduced in the technology world as the torchbearer of Digital Security. When we talk about securing a system or an application, the implying notion is to secure the data, file, document, or the contract that is or will be saved in the mobile app.
In Blockchain, when a document or file is stored, a hash is created. Hash is that feature of Blockchain that converts the data in a unique output of fixed length for every transaction. Specific to Hash, every block contains the previous block hash, which has the reference to the hash the next one will be built upon. The block also has the hash of current transaction which will then be connected to the next hash, when the new block gets added.
The authenticity of the block can be identified by verifying its hash.
3. Decentralized System
Every digital asset ranging from a contract and property related papers to even the chain of related events documents was earlier a part of mesh which had to be broken down into several pieces and middlemen to get access. But, with Blockchain, every information is now available online, in a decentralized system.
Now every activity whether it’s record-keeping or keeping it up to date is handled by the users themselves. Irrespective of whether you wish to change the address in your official document or you have to extract the property tax paper related to the first property you purchased ages ago, you will no more have to go through intermediaries.
4. Distributed Ledger
The Blockchain is an open ledger that contains all information related to digital transactions they are meant to handle. By keeping the information in the sequential format as blocks, the ledger allows real-time tracking as soon as a new block of information is added.
By involving a group of users in the ledger who all have access to view and add real-time information of every transaction, Blockchain enables transparent and tamper-proof management of the ledger. For securing the internal communication within your mobile app, Blockchain uses metadata for communication, which is scattered in the distributed ledger and is impossible to collect at any one central point, thus making it impossible to hack.
5. Keyless Security Infrastructure
To store all the data hash and run a hashtag verification algorithm for their verification, Blockchain makes use of the Keyless Security Infrastructure. This enables spotting of any data manipulation in real time as the original hash is always available on other blocks linked in the system/chain.
So, here were the five elements that lay down the basis of Blockchain Technology. While still on the technical side, it’s time that we look into things from your perspective – a perspective that we have detailed in our Entrepreneur’s Guide to Blockchain.
Let’s look at how Blockchain will take your Mobile App Security to the next level by using the features that the world swears upon.
Benefits of Adding Blockchain Technology in Your Next Mobile Application.
1. Protection of Data
By using cryptography to assign private keys to the users, your users will be able to store, view, and manage all the transaction specific data and information in one place.
2. Data Transparency and Validation
Taking data identity to the next level, Blockchain allows users to make their data available in a decentralized system which every one of the involved parties has real-time access to. Blockchain makes it impossible for any single party to tamper with the information in the block and go unwatched, thus maintaining the integrity of the data and making it transparent for all, thus eliminating the need of middlemen.
3. Protection of Infrastructure
By storing the DNS entry on the Blockchain, the mobile app owners can shift the risk of hack to Blockchain’s secured platform. The distributed, transparent DNS that the technology offers, make it impossible for even the government to get into without the permission of the involved parties.
4. The End of Passwords
Blockchain allows the authentication of users, their devices, and the transaction that they do, without the need of entering a password. Its network decentralization feature helps create consensus among the involved parties for the authentication of Blockchain-based SSL certificates.
Blockchain, while still a new entrant in the mobile app market will soon become mainstream at the back of these and various other advantages that the technology has been introduced to the IT world with.
For you, who have decided to cut ahead of the competition and introduce the feature that will soon become a part of a major number of mobile apps, here are some tips on how to successfully implement the revolutionary technology in your next mobile application.
Tips on How to Implement Blockchain Technology in Mobile App
The first step to successful Blockchain implementation in your mobile application is to identify the app features that would need players to act on it. Only by having players and an incentive plan to keep them to contribute is how you can ensure the authenticity of how fail-safe your Blockchain app is.
The next tip to successful Blockchain implementation is to know the exact transactions that Blockchain will be authenticating. Majorly, Blockchain mobile applications focus on one of the two activities: mediating the ownership of a shared resource value or record facets of multiparty events, such as quotes/bids or bills and payment specific.
When thinking of Blockchain as a service model, plan a strategy around the notion of community. You will be able to get the most of the technology’s value and security feature when you include a community of members who would be a part of your Blockchain based app.
Now that you know what Blockchain is and how you can design your app’s security plan around the disruptive technology, the next step is the groundwork. Contact our team of Blockchain Application Developers today, to get a walkthrough on not just the technology but also its various applications beyond assuring security.
If you look back at the Evolution of Blockchain, you will find that the technology only came into the limelight because of its association with the groundbreaking element that Bitcoin is. Bitcoin and Blockchain were the two terms that were used synonymously by a number of people around the world till even some years back. But in the past few years, as the world got clearer with what the technology is about, the space between Blockchain and Cryptocurrency has extended and several best use cases for Blockchain have emerged sans cryptocurrencies.
And today, the non- cryptocurrencies Blockchain has not just established itself as a technology that Bitcoin is just a subset of, it has also marked itself as the solution of the two problems that all businesses, across industries, unanimously face – Security and Lack of Transparency.
In this article, we are going to look into the top use cases for blockchain in different industries, along with some brands that are transforming the question – what is blockchain technology to what are the use cases for blockchain technology in business and life.
Blockchain Technology Timeline
Blockchain Use Cases by Industry
Brands That Help Define the Use Cases For Blockchain Technology
FAQs About the Real World Blockchain Use Cases 2020-21
Let us briefly look back at how far the use cases for blockchain technology be tracked and the route it has charted for itself in the blockchain evolution timeline graph.
Blockchain Technology Timeline
As you can see in the Blockchain Technology Timeline above, the tangent on which Blockchain is walking is an answer in itself to all the naysayers who doubted its worth and called it a hype that would soon die.
The direction in which Blockchain is headed in and the direction it started from is a sign of how far and fast the benefits of the disruptive technology have been accepted and added in a number of processes across a range of different industries, something that we have detailed in our handbook curated especially for businesspersons, called Entrepreneur’s Guide to Blockchain.
Benefits that come attached with the use cases for Blockchain technology have not gone unseen by the industry leaders. The discussions that were earlier focused on Bitcoin and Cryptocurrency has now been fixated on to the Blockchain technology.
Here’s what the leading tech evangelists are saying about Blockchain –
Blockchain technology, along with its benefitting features is now playing the main character of successful industries’ growth stories – an event that is triggering the demand for Blockchain App Development Agency that would help businesses achieve greatness and profitability with the disruptive technology. There are several blockchain technology real use cases that show how the technology, even in the absence of cryptocurrency, holds the potential to change the world.
Here are the top use cases for Blockchain that have been recognized in a range of different industries –
Blockchain Use Cases Beyond Cryptocurrency
Here are the Best Uses for Blockchain that have been recognized in a range of different industries –
1. Banking
When it comes to the Banking sector, there can be a number of use cases of Blockchain technology in Banking beyond the exchange of digital currencies. Some of those prominent ones which involve blockchain and cryptocurrency to one extent or the other are:
Fraud Reduction – By bringing all the information on a distributed ledger with a timestamp and batches of specific transactions with a link to another block, the blockchain use cases in banking will make it impossible for the hackers to break into the system without the timestamp of the breach getting highlighted.
KYC – It is estimated that banks spend somewhere around $60 million up to $500 million per year in their ‘Know Your Customer’ project. These practices are followed to lower the money laundering instances and to keep terrorists out of the banking ecosystem. If the KYC process is brought on Blockchain, the verification time and associated cost will get lowered by manifold.
2. Cybersecurity
When it comes to cloud and the typical computer network usage in business, centralized servers are usually used to store the data. Now, when you save all your business data on a centralized system, you open yourself to risks like corruption, data loss, human error, and hacking.
But when you put your data on a distributed, decentralized system by employing Blockchain-as-a-Service model, the instances of hacks reduces by manifold.
3. Internet of Things
The mesh of connected devices, while connecting all the phases of a user’s life with each other, also brings it to a vulnerable position. When you operate in a connected ecosystem, the moment your one device gets hacked the chances of your connected devices to get attacked also increases by manifold.
Through Blockchain infused IoT adds the capability for you to exchange data on the platform instead of a third party. Also, since the devices are addressable with the benefits of the technology, businesses get access to the usage history of the connected devices, which comes in handy at the time of troubleshooting.
4. Unified Communications
Blockchain enables safer, faster, and a lot more reliable set of automated communications. While automated conversations are already a big part of a number of industries, the communication happening in an automated mode is mostly asynchronous – something that Blockchain can change.
With Blockchain, companies would be able to have more bi-directional and authorized communications.
Also, as the world is now moving towards chatbots, Blockchain would be the business solution for the time when bots interact with each other and the problem of transparency and time stamping comes up.
5. Government
The blockchain is a hot-topic in the government and political backdrop. There are several Blockchain government use cases that improve the government service quality, safeguards the citizen’s property rights, and cuts the red tape, all the while improving the transparency element in the system.
While governments all across the world – from Dubai to China and the US are exploring the Blockchain opportunity to better the nation’s lifestyle, the trend of adoption is mostly restricted to Ethereum.
Here are some of the examples of how the different Governments are employing Ethereum Blockchain to better their nation –
Dubai is prepared to become a completely integrated Blockchain based city by 2020.
Estonia matured in a ‘digital republic’ ecosystem by shifting a number of its national system on Ethereum Blockchain.
Chile makes use of Ethereum to track down the finance and data from the energy grid with the aim to curb exploitation and corruption by making the data available for the citizens to see.
Canada is testing the platform for providing transparency to how the government use grants for easing the concerns that citizen’s show related to corruption and misappropriation.
6. Charities
The number one reason that usually keeps people away from making a donation is not knowing whether or not the donations that they are making are even being used for the right reasons. When Blockchain solutions are introduced to the system, the technology helps ensure that the money is being used exactly where it was supposed to.
In order to bring in some transparency in the system, a number of Bitcoin-based charities are coming into existence that ensures that allows the donors to view how their money is being used.
7. Healthcare
The onset of multiple blockchain use cases in healthcare is the example of how disruptive an industry could be when clubbed with revolutionary technology. And this is the reason why Blockchain has found a place in the 10 healthcare trends that would be dominant in 2020.
The fact that Blockchain comes with an immutable architecture makes it possible to store the EHR data in a way that is safeguarded from any or all instances of hacks and breaches. Also, several experienced blockchain app developers are using the technology to help with the creation of new medicine or a more personalized treatment regime.
8. Ride-Sharing Economy
Mixed with the ride-sharing architecture, Blockchain has the potential to make the industry pioneers like Uber make a run for their money. When you look at the Uber ecosystem you will find issues like the brand making a cut from driver’s income or it calling the shots on all the terms and conditions that are majorly partial towards the brand’s profits.
By introducing Blockchain in the ride-sharing economy like what Arcade City does, the control comes in the hand of riders and drivers. They get to make all the decisions without looking up to a ruling agency.
9. Supply Chain
By identifying the production processes and components and then storing the information on Blockchain, a business can monitor their supply chain process from the raw material stage to the end delivery stage.
For example, Walmart uses Blockchain to enable its employees to scan the goods in the store’s app and then track them from the harvesting stage to the time it reaches the store floor. On the other hand, Makers use technology to monitor the cargo ships.
10. Encrypted Messaging
Blockchain takes the end-to-end encryption to a new level by introducing decentralization to the mix. Brands like Crypviser are doing the task of creating of a Blockchain-based communication platform perfectly.
Through a platform of this sort, businesses get to offer their users a place where they can make the to and fro of encrypted messages that have minimal to zero scopes of getting hacked.
A platform like blockchain-based encrypted messaging solutions is especially helpful when incorporated within an Enterprise system.
11. Elimination of Counterfeit Products
The fact that Blockchain technology is immutable, it becomes a lot easier for businesses to find out and trace the chain of asset ownership. By storing the serial number on a Blockchain, all the involved parties are able to verify whether or not the product in question authentic.
De Beers, the world’s biggest diamond producer, has created an immutable digital record using Blockchain which they use to keep the record of registered diamond and lower the conflict diamond transactions.
12. Contracts
The self-executing programs are one of the best offerings of Blockchain to the business world. Smart contracts Blockchain is designed in a way that they check the contract rule, verify, and process the transaction all without the need for an intermediary involvement.
Smart Contracts Blockchain are used in a number of different scenarios and across a number of different industries that deal with the creation of contracts in their processes.
13. Pharmaceuticals
The World Health Organization has estimated that 1 out of 10 medical products that are circulating in the low or medium-income countries are not just sub-standardized but also falsified. To lower the instances of pharma fraud, Verifier – a smartphone app that uses the phone’s camera to conduct a spectral analysis on the drug and loads it on Blockchain for verification of the drug’s medical footprint. It is just one of the blockchain case study, there are a number of other businesses working to make the pharma industry decentralized.
14. Microloans
Through the inclusion of decentralized blockchain ledger getting microloans approved and credited in the accounts have become a real-time, secure practice.
Twigga is an example of how Microloans work with Blockchain technology. The B2B Logistics platform for food stalls in Africa had expanded its services into adding financial services in the suite for their customers, with the help of Blockchain.
While they use AI to find out the credit score on the basis of mobile data, they incorporated Blockchain to manage the complete lending process from the application of loans to getting offers and accepting the conditions of repayment.
15. Advertisement
Delivering timely and relevant ad is every advertiser’s aim. And the answer to how Blockchain will change the world of advertisers lies in using the technology to navigate the tracks of the different service providers and linking them all together – an event that ensures the right people are targeted at the right time.
Also, it saves the advertisers from losing money when the hackers create fake web traffic and make fake bots visit the site in place of real humans by tracking the origin of the visitors and gauging if they are authentic.
16. Affiliate Marketing
The concept of Affiliate Marketing lies in businesses paying a set of the commission to the people who would promote their product on the social media platforms. The concept in itself is based entirely on trust. Trust that the people won’t remove the post after getting a commission or that they won’t use fake ids for promoting a website etc.
Smart contracts Blockchain functionality ensures that the money is transferred to the people only when they have done on ABC task.
Seeing these Blockchain use cases and how perfectly the technology is able to decentralize the various economies, a number of the world’s biggest brands, with the support of the Top Blockchain App Development Companies, have now started exploring the technology with the hopes to turn their business growth story alongside the growth in Blockchain future uses.
In Blockchain Use Cases Beyond Bitcoin, this is the section where we look at the brands that have decided to get involved with Blockchain. As you read further, you will find out that it is not just the B2C brands or ones which are heavily user data centric which uses the technology, but also agencies like NASA and Aerospace are interested in Blockchain technology.
Brands That Help Define the Use Cases For Blockchain Technology
1. Google
The tech giant is known to be the biggest investor and buyer of the startups working in Blockchain technology.
The Alphabet Inc section of Google is building its distributed digital ledger which third parties can make use of posting and verifying transactions. Google plans on offering this service for differentiating its cloud blockchain infrastructures from the competitors.
2. Apple
Apple filed a provisional patent in December which stated that the tech leader would be designing a Blockchain system for creation and verification of timestamps, which would help in fighting the hackers and certifying the digital signatures.
3. Porsche
The leading automobile maker has already introduced Blockchain in its cars. There are a number of benefits that the brand accepted going blockchain brought for it.
Some of them are –
Secure access to the vehicle
Fast data transfer and better security
Autonomous driving
4. Coca-Cola
The beverage leader, along with the US State Department is developing a Blockchain ledger which is designed to remove the state of forced labor from across the globe. Using the technology, they will develop a secure registry for the workers which would help with fighting the forced labor market, globally.
5. IBM
The company recently revealed its chip which they called the world’s smallest computer, that would help brands use Blockchain in verification of authenticity of the products in a supply chain.
IBM also uses Blockchain to deliver distributed ledger services to over 400 different clients around the world including government, banking, logistics, and healthcare.
6. JD.com
Alibaba competitor recently published a white paper where it described its Blockchain ambitions.
The brand shared its plan to build Blockchain protocols for authenticating goods to a better supply chain, protect big data, settle finance, and battle insurance fraud.
Properties of a Good Blockchain Consensus Mechanism
Consequences of Relying Upon a Bad Consensus Protocol
Blockchain Consensus Algorithms that are Popular in the Market
Proof of Work (PoW)
Proof of Stake (PoS) and Its Variations
Byzantine Fault Tolerance (BFT) and Its Derivatives
Direct Acyclic Graph (DAG)
Proof of Capacity (PoC)
Proof of Burn (PoB)
Proof of Identity (PoI)
Proof of Activity (PoA)
Proof of Elapsed Time (PoET)
Proof of Importance (PoI)
What is Blockchain Consensus Algorithm?
The simplest answer to what is Blockchain consensus algorithm is that it is a procedure via which all the peers of a Blockchain network reaches to a common acceptance or consensus about the real-time state of the distributed ledger.
A consensus mechanism enables the blockchain network to attain reliability and build a level of trust between different nodes, while ensuring security in the environment. This is the reason why it is one of the vital parts of every Blockchain app development guide and every dApp project in the distributed ledger environment.
These algorithms operate on the ground of different objectives, a few of which we will be covering in the next section of this article.
Objectives of Blockchain Consensus Mechanism
1. Unified Agreement
One of the prime objectives of consensus mechanisms is attaining unified agreement.
Unlike centralized systems where having a trust on the authority is necessary, users can operate even without building trustin on each other in a decentralized manner. The protocols embedded in the Distributed blockchain network ensures that the data involved in the process is true and accurate, and the status of the public ledger is up-to-date.
2. Align Economic Incentive
When it comes to building a trustless system that regulates on its own, aligning the interests of participants in the network is a must.
A blockchain consensus protocol, in this situation, offers rewards for good behavior and punish the bad actors. This way, it ensures regulating economic incentive too.
3. Fair & Equitable
Consensus mechanisms enable anyone to participate in the network and using the same basics. This way, it justifies the open-source and decentralization property of the blockchain system.
4. Prevent Double Spending
Consensus mechanisms works on the basis of certain algorithms that ensures that only those transactions are included in the public transparent ledger which are verified and valid. This solves the traditional problem of double-spending, i.e, the problem of spending a digital currency twice.
5. Fault Tolerant
Another characteristic of Consensus method is that it ensures that the blockchain is fault-tolerant, consistent, and reliable. That means, the governed system would work indefinite times even in the case of failures and threats.
Currently, there are a plethora of Blockchain consensus algorithms in the ecosystem and many more are heading to enter the marketplace. This makes it imperative for every Blockchain development company and enthusiastic Entrepreneur to be familiar with the factors that defines a good consensus protocol, and the possible effect of going with a poor one.
So, let’s begin with determining what makes a Blockchain consensus a good one.
Properties of a Good Blockchain Consensus Mechanism
1. Safety
In a good consensus mechanism, all the nodes are capable of generating results that are valid according to the rules of protocol.
2. Inclusive
A good consensus mechanism ensures that every particular node of the network participates in the process of voting.
3. Participatory
A consensus mechanism where all the nodes actively participate and contribute to updating database on Blockchain is called a Good consensus model.
4. Egalitarian
Another trait of a good mechanism is that it gives equal value and weightage to every vote received from the node.
With this attended to, let’s find out what happens when you do not consider these factors and introduce a poor consensus model to your development process.
Consequences of Choosing a Bad Consensus Protocol
1. Blockchain Forks
Choosing a poor blockchain consensus method increases the vulnerability of the chain. One such vulnerability that is faced by the blockchain enthusiasts and developers is Blockchain Forks.
Blockchain forks, in a layman language, is a situation or circumstances under which a single chain diverges into two or more. A detailed explanation about Blockchain fork and its types is available in the video embedded below.
When a Blockchain fork occurs, the application begins operating in an unpredictable manner, creating two or more diverged nodes ahead.
2. Poor Performance
When a bad consensus mechanism is considered, either the node gets malfunctioned or suffer from network partition. This delays the process of exchanging messages between nodes and increases the latency of the application, which ultimately lowers down the performance level.
3. Consensus Failure
Another effect of incorporating a bad consensus mechanism to your business model is consensus failure. In this situation, a fraction of nodes fails to participate in any process and thus, in the absence of their votes, the consensus fails to deliver accurate and desired outcomes.
With the basics of Blockchain consensus methods now covered, let’s dive deeper into the topic and look at the popular types of consensus mechanism.
Blockchain Consensus Algorithms that are Popular in the Market
1. Proof of Work (PoW)
Developed by Satoshi Nakamoto, Proof of Work is the oldest consensus mechanism used in the Blockchain domain. It is also known as mining where the participating nodes are called miners.
In this mechanism, the miners have to solve complex mathematical puzzles using comprehensive computation power. They use different forms of mining methods, such as GPU mining, CPU mining, ASIC mining, and FPGA mining. And the one that solves the problem at the earliest gets a block as a reward.
However, the process is not that easy. A puzzle can be solved only via trial and error method. Additionally, the level of complexity of the puzzle increases with the speed at which blocks are mined. So, it becomes mandatory for one to create a new block within a certain time frame to cope up with the difficulty level.
The Proof of Work mechanism is used by multiple cryptocurrencies like Bitcoin, Litecoin, ZCash, Primecoin, Monero, and Vertcoin to name a few.
In terms of its implementations, the Proof of Work (PoW) has not only influenced the financial industry, but also healthcare, governance, management and more. It has, in fact, offered the opportunity of multichannel payments and multi-signature transaction over an address for enhancing security.
2. Proof of Stake (PoS)
Proof of Stake is the most basic and environmentally-friendly alternative of PoW consensus protocol.
In this blockchain method, the block producers are not miners, but they act like validators. They get the opportunity to create a block over everyone which saves energy and reduces the time. However, for them to become a validator, they are supposed to invest some amount of money or stake.
Also, unlike that in the case of PoW, miners are provided with a privilege to take their transaction fees in this algorithm for there is no reward system in this consensus model.
This, as a whole, encouraged brands like Ethereum to upgrade their model from PoW to PoS in their Ethereum 2.0 update. Also, it helped various Blockchain ecosystem like Dash, Peercoin, Decred, Reddcoin, and PivX to function properly.
Now, while PoS solved various issues earlier associated with PoW, there were many challenges still undusted in the market. To mitigate those challenges and deliver an enhanced blockchain environment, several variations of PoS came into existence.
The two popular variations of Proof of Stake (PoS) are DPoS and LPoS.
Delegated Proof of Stake (DPoS)
In the case of Delegated Proof of Stake (DPoS), the participants stake their coin and vote for a certain number of delegates such that the more they invest, the more weightage they receive. For example: if user A spends 10 coins for a delegate and user B invests 5 coins, A’s vote gets more weightage than that of B.
The delegates also get rewarded in the form of transaction fees or certain amount of coins.
Because of this stake-weighted voting mechanism, DPoS is one of the fastest blockchain consensus models and highly preferred as a digital democracy. Some of the real-life use cases of this blockchain consensus mechanism are Steem, EOS, and BitShares.
Leased Proof of Stake (LPoS)
LPoS is an enhanced version of PoS consensus mechanism that operates on the Waves platform.
Unlike the regular Proof-of-Stake method where each node with some amount of cryptocurrency is entitled to add the next blockchain, users can lease their balance to full nodes in this consensus algorithm. And the one that leases the bigger amount to the full node have a higher probability of generating the next block. Also, the leaser is then rewarded with a percentage of transaction fee that has been collected by the complete node.
This PoS variant is an efficient and safe option for the development of public cryptocurrencies.
3. Byzantine Fault Tolerance (BFT)
Byzantine Fault Tolerance, as the name suggests, is used to deal with Byzantine fault (also called Byzantine Generals Problem) – a situation where the system’s actors have to agree on an effective strategy so as to circumvent catastrophic failure of the system, but some of them are dubious.
Learn more about the Byzantine Generals Problem through this video:-
The two variations of BFT consensus model that are prime in the Blockchain arena are PBFT and DBFT.
Practical Byzantine Fault Tolerance (PBFT)
PBFT is a lightweight algorithm that solves the Byzantine General’s problems by letting users confirm the messages that have been delivered to them by performing a computation to evaluate the decision about the message’s validity.
The party then announces its decision to other nodes who ultimately process a decision over it. This way, the final decision relies upon the decisions retrieved from the other nodes.
Stellar, Ripple, and Hyperledger Fabric are some of use cases of this blockchain consensus mechanism.
Delegated Byzantine Fault Tolerance (DBFT)
Introduced by NEO, the Delegated Byzantine Fault Tolerance mechanism is similar to DPoS consensus model. Here also, the NEO token holders get the opportunity to vote for the delegates.
However, this is independent of the amount of currency they invest. Anyone who fulfills the basic requirements, i.e, a verified identity, right equipment, and 1,000 GAS, can become a delegate. One among those delegates is then chosen as speaker randomly.
The speaker creates a new block from the transaction that is waiting to be validated. Also, he sends a proposal to the voted delegates who have the responsibility to supervise all the transactions and record them on the network. These delegates have the freedom to share and analyze the proposals to check the accuracy of data and honesty of the speaker. If, then, 2/3rd of the delegates validates it, the block is added to the blockchain.
This type of Blockchain consensus protocol is also called ‘Ethereum of China’ and can be a helpful resource in building a ‘smart economy’ by digitising assets and offering smart contracts on the blockchain.
4. Direct Acyclic Graph (DAG)
Another basic yet prime blockchain consensus model that every mobile app development services company working with Blockchain must be familiar with is DAG.
In this type of Blockchain consensus protocol, every node itself prepares to become the ‘miners’. Now, when miners are eradicated and transactions are validated by users itself, the associated fee reduces to zero. It becomes easier to validate transactions between any two closest nodes, which makes the whole process lightweight, faster, and secure.
The two best examples of DAG algorithm are IOTA and Hedera Hashgraph.
Though these are the prime consensus models in the development environment, many different blockchain consensus mechanisms have slowly and gradually starting gaining momentum, such as:-
5. Proof of Capacity (PoC)
In the Proof of Capacity (PoC) mechanism, solutions for every complex mathematical puzzle is accumulated in digital storages like Hard disks. Users can use these hard disks to produce blocks, in a way that those who are fastest in evaluating the solutions get better chances for creating blocks.
The process it follows is called Plotting. The two cryptocurrencies that relies on PoC blockchain consensus protocol are Burstcoin and SpaceMint.
6. Proof of Burn (PoB)
Considered an alternate solution to PoW and PoS in terms of energy consumption, Proof of Burn (PoB) consensus model works on the principle of letting miners ‘burn’ or ‘ruin’ the virtual cryptocurrency tokens, which further provides them with a privilege to write blocks in proportion to the coins. The more coins they burn, the more are the chances of picking the new block for every coin they get.
But, in order to burn coins, they are required to send it to the address where it couldn’t be spent for verifying the block.
This is widely employed in the case of distributed consensus. And the finest example of this consensus mechanism is the Slim coin.
7. Proof of Identity (PoI)
The concept of PoI (Proof of Identity) is just like that of the authorized identity. It is a piece of cryptographic confirmation for a users’ private key that is being attached to each particular transaction. Each identified user can create and manage a block of data that can be presented to others in the network.
This blockchain consensus model ensures authenticity and integrity of the created data. And thus, is a good choice for introducing in smart cities.
8. Proof of Activity (PoA)
PoA is basically a hybrid approach designed through the convergence of PoW and PoS blockchain consensus models.
In the case of PoA mechanism, miners race to solve a cryptographic puzzle at the earliest using special hardware and electric energy, just like in PoW. However, the blocks they come across holds only the information about the identity of block winner and reward transaction. This is where the mechanism switches to PoS.
The validators (shareholders appointed to validate transactions) test and ensure the correctness of the block. If the block was checked many times, the validators activate to a complete block. This confirms that open transactions are processes and are finally integrated into the found block containers.
Besides, the block reward is divided so that validators gain shares of it.
The two real-world implementation of this mechanism are Espers and Decred coins.
9. Proof of Elapsed Time (PoET)
PoET was introduced by Intel with an intent to take over cryptographic puzzles involved in PoW mechanism by considering the fact that the CPU architecture and the quantity of mining hardware knows when and at what frequency does a miner win the block.
It is based on the idea of fairly distributing and expanding the odds for a bigger fraction of participants. And so, every participating node is asked to wait for a particular time to participate in the next mining process. The member with the shortest hold-up time is asked to offer a block.
At the same time, every node also come up with their own waiting time, after which they go into sleep mode.
So, as soon as a node gets active and a block is available, that node is considered as the ‘lucky winner’. This node can then spread the information throughout the network, while maintaining the property of decentralization and receiving the reward.
10. Proof of Importance (PoI)
Introduced by NEM, PoI is a variation of PoS protocol that considers the role of shareholders and validators for its operation. However, this is not only influenced by the size and chance of their shares; various other factors like reputation, overall balance, and no. of transactions made through any particular address also plays a role in it.
The networks based on POI consensus model are expensive to attack on and rewards users for contributing to the network’s security.
The information shared so far would have helped you in differentiating the varied Blockchain consensus protocols.
However, to simplify it for you, here’s a blockchain consensus algorithms comparison table.
If we had to make a list of some of the top volatile elements of the world, the one name that would top even Mercury is Cryptocurrencies.
Ever since their launch in 2009, cryptocurrencies have found themselves being counted as one of the most fluctuating and volatile topics of the world seeking to get to the bottom of what is cryptocurrency.
There is hardly any investment enthusiast who has not tried to crack the code of why cryptocurrencies fluctuate and how to take that understanding and convert it into insights that would make the investment successful.
While the industry has managed to make itself one that is extremely difficult to gauge in terms of cryptocurrency price movement, let us try to decipher how the price of cryptocurrency changes in the market by understanding how and why the cryptocurrencies move.
But let us first start by drawing parallels between Cryptocurrencies and Fiat Money.
Cryptocurrency vs Fiat Currency: How the Two Compare Against Each Other
The biggest comparative factor that stands between the cryptocurrency vs fiat currency debate is their backing. The fiat currencies are backed by the central governments and its value are derived from the fact that central government states it has value and then the parties transacting in the value are putting their trust in them. In the case of fiat currency, central banks control the entire supply of money and thus inflation.
Cryptocurrencies, on the other side, was brought into existence to not let central government have the autonomy to regulate the funds of an individual. And because they have a fixed supply, the devaluation through inflation is next to nonexistent.
Apart from this, both cryptocurrency and fiat currency come with similar characteristics: they both can be used as the medium to exchange services and products and they can store value.
Why Does Cryptocurrency Prices Fluctuate So Much?
A single statement answer to the question of what drives cryptocurrency price movement would be – because it is still a nascent stage.
Being a market that is yet to find its set of logical use cases, cryptocurrencies are still at a very nascent stage. And the result of this newness is the high volatility in the industry, which is majorly driven by the heightened experiments that investors make to get a sense of how the prices fluctuate.
Factors That Affect The Changing Cryptocurrency Values
The factors affecting price of cryptocurrency could range from the scope of cryptocurrency application in the present day to the future uses of cryptocurrency coin and a series of other linked elements falling in the development of the cryptocurrency space. Here are some of those reasons that bring about a cryptocurrency price movement in the market
1. Utility of the Coins
Any sound Blockchain development company would tell you that a cryptocurrency should have a strong use case in order to incentivize people to hold the coins.
Let us look at Ethereum as an example to explain it further. For executing the commands and developing applications on the Ethereum blockchain, one would need to have ETH to convert into gas and represent the ‘fuel’ of Ethereum.
Thus, the more the people who execute transactions and develop applications, the more would be the demand for ETH and greater would be the prices. In short, the bigger role of cryptocurrencies, the greater would be the cryptocurrency market cap.
2. Scarcity
Scarcity denotes the finite mechanism of cryptocurrencies.
In economics, a stable supply of any item increases its value in the long term for it is assumed that the demand would also increase. This, in turn, creates a scarcity for there are only a few coins in circulation. Some brands even use a burning mechanism, which means destroying a part of the coin supply. This in turn, increases the coin value for there is lesser coin supply.
3. Assumed Value
A cryptocurrency can only be as valuable as the market deem fit and the market values it on the basis of factors which are at the center of the project development. Here are some factors that determine the value of projects –
One that constantly achieve the milestones mentioned in its whitepaper
Partnership and collaboration with credible companies
When the price of fiat currency declines, the price of cryptocurrency would automatically go up with respect to that currency. This happens because you would be able to get more currencies with your cryptocurrencies.
5. Mass Adoption
Driven by the sentiment that the more a product is demand, the greater would be its cost, the cryptocurrency price movement goes up with greater adoption that it sees in the market. This one formula has been the core reason behind the rise in prices of Bitcoin. So the more use cases a coin will see (like in case of Bitcoin) the greater would be its overall cost.
6. Whales
As the term denotes, Whales are those Bitcoin wallets that have around $1 billion in them. They make it very difficult to put any price target on the cryptocurrency. Per Wimmer, the founder of Wimmer Financial LLP, explains: “The crypto market is dominated mainly by ten big whales or privates. They are massive in the market and take up a lot space and volume so if you take the top 10 or even 50 you will have a lot of the volume covered already. It is too easy to manipulate the market so far”.
One way these ‘whales’ fuel price manipulations is through the rinse and repeat trading technique. Under this approach, a whale carrying huge crypto holdings begins selling them at lower than the market rate, which in turn causes a panic situation where small-time traders start selling off their holdings. The whale, meanwhile, waits through the panic state till the cryptocurrency value reaches rock bottom. And just when the price is low, they swoop in and buy more cryptocurrencies.
Besides these factors, if there is one thing that is and would continue to affect the cryptocurrency price fluctuations greatly is the regulations’ set. Presently, the speed at which governments are passing out regulations are limited to a huge extent, thus keeping cryptocurrencies reaching their mass adoption potential. But the more regulations, the greater would be the adoption and thus the rise in cryptocurrency prices.
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