Blockchain? A Problem Solver.

Introduction.

Blockchain is a technology. And like all technologies, if you agree that when used properly they help humans progress, then read on, because Blockchain is a problem solver.

Whether you want to be part of the change or not, it is undeniable that Blockchain is a technology that is here to solve and help. And it is already doing so in many fields, in many applications.

To understand why Blockchain can be defined as a problem-solving system, it is important to understand what this innovative technology is and how it works.

What are Blockchain technologies?

Literally, Blockchain technologies are “chains” of data composed of information recorded in “blocks”. Each of these blocks contains a specific group of data. Whenever a new group of data is added, they together create a brand new block that “chains” to the previous one. Data groups are decentralized.

Hence the name “blockchain”.

Blockchain technology is therefore a register of data that is shared and immutable and that facilitates the process of recording the data itself, transactions and tracking of digital assets. We are only at the beginning of the applications of this new technology, but thanks to it, it is possible to represent both physical goods (such as clothing, cars, real estate, etc.) and immaterial goods (such as patents, copyrights, trademarks). Regarding trademarks, among the most recent developments related to the use of blockchain technology, in Italy, for example, there is the tokenization and digitization of the certification of the “100% Made in Italy” trademark of Federitaly, developed on the blockchain named Internet Computer Protocol (ICP), an innovation in the field of authenticity for products of 100% Italian origin. Many other examples can be found all over the world and with different blockchain technologies (such as Bitcoin, which is the first blockchain created and parent of all the others, Ethereum, Algorand, Polygon, Avalanche, BNB Chain, etc.), each with its own specificities and capabilities.

The data registry of blockchain technologies is structured as a chain of blocks containing transactions, data, information, and the consensus is distributed across all nodes of the network. The data registry is distributed, immutable, verifiable, and shared.

What is Consensus?

We said that blockchain technology is a shared and immutable data structure, which can be defined as a digital registry whose entries are grouped into “blocks”, which are concatenated in chronological order. The integrity of the blocks is guaranteed by the use of cryptography.

Consensus is a compound of algorithms, also called consensus protocols or consensus mechanisms, that allow distributed systems to interact with each other and remain secure. These mechanisms are used to establish consensus among nodes within a particular blockchain protocol and enable agreement on the state of the network, and in particular help prevent certain types of attacks within the network.

All nodes can participate in the process of validating transactions and data, that is, in consensus.

Among the most famous proofs of consensus, we can include the Proof of Work (PoW), which was first used for the Bitcoin blockchain and is now used by dozens of blockchains, and the Proof of Stake (PoS), used by different blockchain networks, which rewards the weight of staking compared to the strength and quantity of computational energy. Ethereum is the world’s first blockchain network to have changed the Consensus mechanism from PoW to PoS.

Where do Blockchains come from?

Blockchain technologies are a subset of Distributed Ledger Technologies (DLT), which are distributed registry technologies.

Anyone can create a blockchain with the right tools, but in order to be considered a blockchain, it must meet certain requirements inspired by the first one ever created, namely Bitcoin in 2008:

• It has a native digital asset.
• It has a consensus mechanism that brings competing actors (nodes) to agreement.
• It is permissionless, meaning it is an open network where anyone can interact and participate in the consensus mechanism.
• Transactions are uncensored and irreversible.
• An “adequate number of nodes” distributed and decentralized participate.
• It is trustless, transparent, and immutable.
• There is democracy among validator nodes.

What is a Node?

A blockchain node is a device, typically a computer, that participates in a blockchain network. Anyone can become a validator node, including you as you read this.

Nodes manage the blockchain protocol software, allowing it to validate transactions, data, and keep the network secure. Blockchain nodes communicate with each other and possess a copy of the network’s ledger.

Why is Blockchain a problem solver?

If you’ve read this far, you likely believe in blockchain’s potential.

Finally, here’s a list of nine applications that blockchain technology finds demonstrate the benefits it brings and its innate problem-solving nature:

• Safer payments and money transactions: better performance and economic advantages, no intermediaries (peer-to-peer transactions), low fees, and cutting-edge speed.
• Data registration and maintenance: immutable data and information, shared, transparent, and accessible to all.
• Fundraising, charity, and NGOs: charitable activities, fundraising, and donations are accurately monitored, so anyone can see where the funds end up.
• Physical assets: tokenizing physical assets, such as real estate and property, increases transparency during and after buying and selling operations, reducing paper and public registry errors such as potential fraud and errors.
• Schools and Universities: authentication of academic titles and certificates that remain immutable over time, unique and non-replicable.
• Art and Music: digitalization of intellectual property and copyright in the form of Non-Fungible Tokens (NFTs).
• Cybersecurity and Risk Management: greater data security thanks to advanced encryption techniques, lower probability of database hacking or tampering attempts.
• Contracting: various types of contracts, such as inheritances and wills, benefit from smart contracts and their reliability and automation, eliminating disputes and making it easier to identify certain types of information.
• ESG: tracking and certifying green or socially impactful activities has never been easier or safer, reducing fraud and exposing false documentation.

But it doesn’t end there; many more fields of application could be added.

What other items would you add to the list? What other problems does blockchain technology solve?