Remember when you studied bank ledgers in school? Blockchain sort of acts as a bank ledger. It keeps track of all the transactions your bitcoin has gone through.
The exciting difference is that the system is open-source. Unlike a bank ledger, which is only managed by financial institutions, the blockchain can be accessed by anyone for peer-to-peer review — all around the world.
What could be better? The blockchain can be innovated at any time. Central banks have strict rules and numerous points of failure when it comes to updating this bank ledger. The blockchain only needs the people using it to agree that innovation would be useful and beneficial to all.
How Does Blockchain Work with Bitcoin?
As mentioned earlier, the blockchain monitors how a bitcoin is being spent. The people on the blockchain make sure that bitcoins aren’t being double-spent, meaning someone can only send their one bitcoin to one person.
Let’s say Tom wants to send his one bitcoin to his brother, Bob. Tom will send a special code and the amount he wants to send to the blockchain. People on the blockchain network, called miners, make sure that Tom owns the coin. Once confirmed, Bob will receive the bitcoin.
Can Blockchain Be Used Outside of Bitcoin?
Yes! Due to blockchain’s versatility, it can be applied in numerous industries — not just bitcoin and finance. Check out the examples below.
Let’s pretend that you had some vision problems. Your doctor wants you to get an MRI of your eyes to see what’s wrong, but it must first be approved by your insurance…
Rather than waiting on the people at your health insurance company to approve the test, the blockchain could be used. If your medical record met certain criteria, the blockchain would automatically approve your test.
This allows for quicker turn-around time and fewer cases of human error. You can have your test approved and know your results faster. The sooner you know the results, the sooner your doctor can fix the problem.
Let’s say you heard on the news that oranges purchased from a certain farm in California have been contaminated. California oranges are your favorite. Despite the news, you still want to buy some California oranges…
This is where blockchain can save the day. When you’re at the supermarket looking at the bag of oranges, you might see a code. By scanning the code and researching it in the blockchain, you could see where the oranges are from. If you see they’re from the farm you heard about on the news, you’d know not to buy those.
There would be no guesswork involved. With a few quick steps, you could easily see if the oranges were safe to eat.
Many times, government officials will be given copies of documentation for review and approval. The issue lies in ensuring that the copy is precisely the same as the original. Audits for this sort of cross-checking can eat up precious time and make government approval process run even slower. And who wants the government to run even slower?!
The blockchain solves this. Since all transactions (in this case, paperwork) must be approved before another can be made, we would know that the paperwork in the blockchain is the original. The blockchain also does not allow for changes once the original paperwork has been added to the blockchain. This acts as the audit to ensure that only the original paperwork has been added.
So, with blockchain, when those government officials want to review a document and know it’s the original paperwork, they only need to pull the data out of the blockchain. There would be no auditing time or guessing that they had the correct paperwork — the blockchain already did the work for them.
Has Blockchain Affected Sectors, Too?
The energy sector is often thought of as being slow to change. With the innovation of blockchain, however, this is becoming a thing of the past. Many start-ups are jumping at the opportunity to use the network in new and exciting ways.
Take the Brooklyn Microgrid, for example. Solar panel arrays have been spread across rowhouse rooftops. The arrays are then wired into the network. The people on the microgrid can sell their excess electricity to their neighbors.
The microgrid blockchain makes sure that those selling the electricity can only send it to one person — again, protecting against the threat of double spending.
How does the Brooklyn Microgrid help, though? It allows those on the microgrid to help each other. They do not need to go through the central authority of the utility to transfer their excess electricity. They simply identify each other’s needs and willingness to buy and sell. Then, they submit the transaction to the Microgrid Blockchain.
And this energy-sharing blockchain is being used all around the world as well.
In Germany, Sonnen has created a network of over 8,000 customers. Just like the Brooklyn Microgrid, they can transfer excess electricity to one another.
In Bangladesh, ME SOLshare developed its peer-to-peer blockchain so that rural communities can buy energy too without going through the utility department.
Power Ledger in Australia is breaking into the energy-sharing blockchain technology as well so those on the network can also share their energy.
Why Does Blockchain Matter?
Blockchain can be a major game-changer. It can also allow for innovation in many industries and sectors – such as improving your healthcare, tracking your product’s point of purchase, sharing energy, and more.
Currently, the largest use of blockchain is in bitcoin and other cryptocurrencies. Its decentralized nature allows for quick innovation while also providing security for all transactions made through the blockchain.
Considering that all transactions made through the blockchain cannot be edited or hacked, we are undoubtedly entering a new golden age … and we’ve barely scratched the surface.