Is Blockchain a future? Yes, of course!

by on July 12, 2018 9:16 am
Categories: Week2
Tags: , , ,

Blockchain is definitely one of the “hot” buzzwords nowadays. What is Blockchain exactly? There are many explanations of Blockchain. I love this definition [1] from The Wall Street Journal.

“A blockchain is a data structure that makes it possible to create a digital ledger of transactions and share it among a distributed network of computers. It uses cryptography to allow each participant on the network to manipulate the ledger in a secure way without the need for a central authority.”

Why Blockchain is a future? Because it has three core benefits from which many benefits are derived.

1. decentralized and distributed: Every node in Blockchain must follow a kind of rule in order to write transactions to the digital ledger. This rule is based on some security algorithms NOT traditional trust. All transactions need all nodes to validate, so there is no need for “trusted” third-parties to endorse. In traditional centralized networks, an effective attack on “trusted” third-parties can destroy the entire networks. However, in Blockchain, an attack on a single node cannot control or destroy the whole network. “Bad guys” need to control over 50% of nodes in order to launch an effective attack.

2. no centralized trust authorities at all: In Blockchain, there are no central authorities to endorse a single transaction at all. All the nodes and transactions are secured by mathematical algorithms, all “bad” behaviors are resisted by other nodes. In traditional centralized trust system, all participants need to trust the central authorities in order to make a transaction. The more participants, the less security of the system. The Blockchain is on the opposite side. participants don’t need to trust anybody and the more participants, the more security of the system.

3. extremely difficult to change block data: In Blockchain, all blocks are generated according to timeline. Because time cannot go back, it makes blockchain’s history can be easily recovered and any change in any block can be easily traced. Any node in the Blockchain can easily verify the proposed transaction. So, it can resist “bad” behaviors efficiently and effectively.

Does Blockchain fundamental change the world? Yes. Blockchain is “zero”-cost of the transaction (no agent at all). Overall, Blockchain can impact all transaction-based applications. The transaction here is not only money, it can be anything transferred from A to B. For example, it can be contracts, licenses, etc. Below is a great picture about use cases [2]. You can zoom in for a better view.

 

 

Reference:
1. http://blogs.wsj.com/cio/2016/02/02/cio-explainer-what-is-blockchain/
2. https://letstalkpayments.com/an-overview-of-blockchain-technology/

3+

Users who have LIKED this post:

  • avatar
  • avatar
  • avatar

11 comments on “Is Blockchain a future? Yes, of course!”

  1. Even if blockchain eventually finds a problem to solve – say payments/transactions – I think there will be heavy resistance from traditional “middlemen” – aka. the big banks that survive and thrive on making money off transactions and loans. This is why companies such as Accenture have already applied for patents that allow them to edit an un-editable technology – https://newsroom.accenture.com/news/accenture-debuts-prototype-of-editable-blockchain-for-enterprise-and-permissioned-systems.htm – giving back control to the big banks.It’s such a shame – because this basically nullifies the entire ” no centralized trust authorities at all” point you made above – because I think banks ultimately will find a way to survive and maintain control of the way society interacts with money.

    0

    1. How funny! Our comments were posted at the exact same time. I hadn’t heard of the Accenture patents you posted (thank you for sharing!). Those would be unfortunate for the industry, but I’m not surprised that banks and issuers are trying their best to reinsert themselves as middle men.

      0

    2. Agreed. Some big banks take actions on patenting and investing Blockchain to protect themselves without a very clear view.

      0

  2. Hi puyang,

    This was a great and educational post! Do you have more information on how a node can be taken over by bad behavior, or how it can be attacked? Are they somehow hacking the security algorithm?

    On a tangential note, I work in the payments industry, and I know many payments and fintech companies are interested in blockchain applications since (as you mentioned) they cut out the middle man. Right now in payments, credit card issuers like Visa are often the middle man between retailers-consumers or retailers-banks, and they are making a lot off their fees. It will be interesting to see how these issuers adapt and how the payments industry evolves as blockchain gains increasing adoption.

    0

  3. This is a great summary of why blockchain tech has massive potential to be highly utilized as a secure transaction platform. However, I am curious to know more about the actual security underlying the technology. When you say that a hacker would need 50% of the network to perform malicious acts, how is it then that so many cryptocurrency networks are being hacked? Are they actually managing somehow to gain that much control over a seemingly secure and reliable technology?

    0

    1. Hi Alekos,

      In theory, because of Blockchain peers voting to verify the transaction, if someone control half of peers/nodes in the Blockchain network, she/he controls the whole system. However, consider how expensive computation resource needs and taking over more than half of nodes is super hard. With time and computation limit, Blockchain is considered “security”, however, with GPU cheaper and cheaper, supercomputer research growing, it is possible. We have already heard some of the news.

      0

  4. Good post, thank you!

    What is especially interesting about blockchain is that it’s not only a technology, but it’s mass adoption requires a cultural change.

    For example, let’s compare blockchain with machine learning: the decision to integrate machine learning is obvious since it enhances people’s, businesses’ and governments’ productivity, disrupts existing industries and procedures, enables innovations and releases human capital for more productive use. For blockchain, even though the solutions would be axiomatic for both individuals and the society, their widescale deployment depends on people’s trust (or lack of trust) towards the prevalent system.

    What is your take on this?

    0

    1. Agree. People’s adoption is very important to all technologies and Blockchain is same too.

      0

  5. Hi puyang,

    Great post on Blockchain! This post was very informative, and the benefits were clearly laid out. Would have loved to see how Blockchain contrasts from machine learning/AI as it feels like machine learning/AI and Blockchain are one of the most used buzzwords floating around.

    0

Comments are closed.