Blockchain application spectrum

Introduction:

Many have heard of the term blockchain, but few have delved into the knowledge of this system.

Blockchain is born from a project that we could call crypto-anarchic, and its fascination derives from the opportunity to bypass institutional controls. It is therefore a revolutionary technology, a system capable of simplifying and speeding up information exchanges on the Internet by certifying their value.

Practically anything can be exchanged on a blockchain network, reducing risks and costs for all parties involved.

The Italian translation of the term means “chain of blocks” and essentially corresponds to packets of information linked to each other, which are the blocks, or if you will, the links of the chain.

It is a completely decentralized system that, through software, validates the content of the blocks in a sort of public register distributed among all parties connected to the network, without the need to resort to any intermediary that serves as a guarantor. The blocks of information, once accepted, are transparent and permanent and cannot be modified.

In this way, the system becomes its own guarantor thanks to the fact that the registration of the transaction, and therefore the birth of the block (packet) of the chain, is identified by the entire network. The validity and certification of the packet occur if at least 51% of the nodes participating in the network give a positive consent. Subsequently, the block is inserted into a special register.

The guarantee of non-modifiability of the register occurs thanks to the high number of replicas of this deposited in the network and the cryptography systems used to create the file. The register, in turn, is inserted into a particular custody system called a wallet.

All users of the network can freely analyze the information that corresponds to the acts and decisions taken to create the blockchain and deposited in the wallets. In practice, blockchain technology is the basis of a new digital concept of trust.

Scope of application:

So far, 80% of this technology has focused on managing cryptocurrencies, but the range of applications is vast, and smart contracts and licenses, for example, can make extensive use of it. The blockchain system can be used to track orders, payments, goods such as perishables, it is useful in accounting and certifications, in protecting our online identity.

Potentially, this technology can be used for banking activities, financial transactions, voting, insurance, and commercial contracts. But even the concept of energy will be touched by this technology. This point is probably the “weak link” of the “chain.”

All the potential that we have seen can develop if the energy used for the digitalization of the blockchain is sustainable. The energy cost required for the realization of each block of the chain is enormous compared to the normal digital transactions that we are used to.

For example, every use of a credit card requires 0.0006 kWh (kilowatt-hours), while every Bitcoin transaction consumes 980 kWh. Bitcoin, in fact, requires 80/130 terawatt-hours of electricity per year, more than what a country like Sweden needs.

It is intuitive that using fossil energy for the management of blockchains would cause an environmental and climate catastrophe, much worse than what we are witnessing. For this reason, in addition to the need for green energy, less energy-intensive validation methods for blockchains are being experimented with.

One of the most effective examples is that of the Ethereum Foundation, which uses the Proof of Stake (PoS) project. According to their program, the energy cost of each transaction could be reduced by up to 99.95% of the current one. But in addition to negative effects in the energy and environmental fields, we also find positive prospects.

The UN has highlighted how blockchain can be useful, for example, as a tool to eliminate illegal fishing: people would simply need to scan the barcode to have the entire history of the fish in front of them. But not only is blockchain useful for reducing greenhouse gas emissions: thanks to the CarbonX platform, those who reduce CO2 emissions can receive cryptocurrency benefits.

But the blockchain system can also be significant in the field of humanitarian aid. The United Nations World Food Programme (WFP) emphasizes that the blockchain system can ensure that money reaches those who need it most quickly and securely without going through a local bank: it is the “Building Blocks” system tested in Pakistan and Jordan.

The blockchain technology is still in its early stages, and there are still many technical and political challenges to overcome, but it is already evident how this system could be the future of the internet and beyond.