Years ago, way back when people used their phones for phone calls and summoning strangers to your door to give you a ride still seemed like a bad idea, I found myself in the middle of a horrible day simply because I didn’t save a document properly. The presentation I was meant to give that morning, the one I had spent hours on, was trapped on a lowly thumb drive, saved in a version of Word that wasn’t compatible with the office computers.
After some grumblings, delays and a frantic drive home during lunch, all was finally settled but it was seriously touch and go for a bit. Fast forward a decade or so and the concept of having a freak out because of an ill-saved document seems downright quaint due to the advent of cloud computing.
Thanks to third-party servers like the almighty Google, Microsoft, Amazon and various social media platforms we can save all of our stuff and access it from any device. This is supremely convenient and easy to use, but is it safe?
Unfortunately, a variety of hacks by individuals, organizations and even governments have answered this question and shown the vulnerabilities of a centralized design. What we’ve gained in easy accessibility is often overshadowed by what we lose in security. So, what hero can save our data and keep it secure?
While much of the discussion around blockchain has focused on its use in cryptocurrency, its real value exists in its private applications and ability to protect data while disrupting a range of industries. In fact, blockchain has gotten a bit of a bad image because of its associate with cryptocurrency which is seen as having a high potential for unscrupulous behavior. However, this image isn’t warranted because 1) blockchain is far more than cryptocurrency and 2) a cryptocurrency public key provides far more information about a user than a bank account number.
Leading the charge in this disruption of third-party servers is Ethereum, a Canadian company that is using blockchain technology to decentralize the storage of information, financial tools and contracts.
Ethereum would replace centralized, privately held databases, which rely on third-party servers, with “nodes” that would be kept on thousands of computers around the globe and managed by volunteers. This would create a kind of giant, global super computer that would allow more people equal access to tools and information.
If Ethereum is successful in this, it would make it possible for users to retain control over their information the way we did before third-party servers, but still give us the convenient access we’ve grown accustomed to.
However, while having greater control and security for various documents is important, the value of Ethereum and blockchain technology gets even greater when we explore Smart Contracts.
What Makes Smart Contracts So Smart?
A smart contract, or cryptocontract, is a program that controls the transfer of digital assets between two properties. On the surface, this seems like it serves the same function as a paper contract, but a smart contract can actually enforce the rules, not just define them. This even extends to gambling. Individuals can set up their own games and the smart contracts can execute them. For example, if you bet your coworkers on the next Oilers game, the smart contract can watch for the outcome from a trusted source (TSN) and it’ll pay the winner automatically.
With this functionality, smart contracts are able to automate a wide variety of processes including payments and other financial transactions which will greatly reduce the time and money spent on the services of financial intermediaries. Fraud reduction in financial services and trading could also be greatly reduced.
Other Practical Uses of Blockchain
While financial uses are some of the most obvious applications, there is a whole world of practical uses for blockchain, even so far ranging as to aid in the refugee crisis. In late 2017, Ethereum’s co-founder Gavin Wood along with blockchain firm Datarella, Parity Technologies, was able to give refugees direct access to donations through cryptocurrency-vouchers that allowed them to buy supplies. Without this, the wait for supplies would have been longer and the process far more tedious.
Blockchain could also help to reduce the waste created by bureaucratic red tape in many government functions. This could accelerate normally slow processes associated with healthcare, government benefits and public education. To see what the future of a government with blockchain looks like, consider Estonia where blockchain is being used to give citizens more control over their own information. Additionally, blockchain could further aid in creating better government by preventing fraudulent voting in elections.
Even all of these uses still don’t cover everything that is currently possible for blockchain and certainly not everything that will become possible. Because of the security of blockchain along with the democratizing nature of decentralized technology, we can look forward to a broad range of practical applications in our everyday lives.
While this might not be as exciting as the fast-moving and chaotic world of cryptocurrency trading, it does appear destined to become a part of what will improve our futures from behind the curtain. If nothing else, it should ensure I can open my presentation for work on any computer even without Google giving the thumbs up.
However, this is still only the beginning of the potential for blockchain. As autonomous driving technology grows, blockchain could be employed to take micropayments that would allow your car to have a side hustle as a taxi while you’re at work. Your car could literally drop you off at your job, then drive others around while getting paid to its own digital wallet. Whole decentralized, autonomous organizations could run entirely on code and only hire humans to do things it can’t. But more on that in the next blog that my autonomous writer bot is almost done proofreading.