The blockchain, a decentralized public ledger that records transactions across many computers, has the potential to disrupt many industries beyond the financial sector. But before we discuss some of the major industries that have the potential to be transformed by blockchain technology, let’s review how it works.
How Does Blockchain Work?
It’s easiest to think of blockchain as an open ledger system. The ledger is distributed, existing on many computers in many locations at once, updated in real time. Because there’s no central repository, it is hard to hack the blockchain, and because of the way it works mathematically, it is also nearly impossible to commit fraud. Blockchain is revolutionary because of its ability to prevent bad apples from claiming ownership over something that isn’t theirs or from erasing transactions.
Each transaction on the blockchain has a unique identifier attached to the one that came before it and is linked to the one that comes after. Because the blocks are linked in this way, the identifiers cannot be erased or moved backwards. At the same time, users on the blockchain simultaneously confirm the transaction, meaning the same information lives in several places at once, and any alterations are immediately identified. Because it is transparent and hard to alter, blockchain is the pinnacle of trust.
1. Cloud Storage
The peer-to-peer network of the blockchain, allows people in all parts of the globe to exchange goods and services with one another in an unprecedented way. One startup company, Storj, lets people rent their unused cloud storage to others elsewhere who need it. That means there’s no wasted capacity in your storage, and people can recoup the value of the asset they are not using.
2. Community Power
In Brooklyn, users of solar power have developed the capability of selling excess energy to their neighbors. They do this through the use of blockchain technology, which tracks and exchanges the units of power in a secure, open and fair system that benefits all participants.
3. Music Royalties
Perhaps no asset is as fluid and coveted as art and entertainment. Despite the technology that allows anyone to download a piece of work and make a copy, it has been challenging to track and recoup royalties. That constrains the ability of artists to make a living and to crack down on unauthorized use of their work. The startup BigChainDB attempts to solve this problem by putting music on the blockchain. That way, the artist can track their sounds as they go through elements of technology, retaining some measure of control over their livelihood.
Blockchain’s Lasting Impact
This is only a small sampling of the ways new companies are using the blockchain to solve real social, economic and environmental problems. The potential applications for blockchain technology are vast, from helping nongovernmental organizations to ensure aid gets to the right recipients without interference, to reshaping the state of retirement.
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