We live in a rapidly changing world that seems to get less and less stable every day. The institutions that have been the cornerstone to our societies are no longer trusted. The systems that have upheld them have proven to be rotten to the core.
Never before has the need for profound change been so pressing. Thankfully, this need coincides with the emergence of technology that can help make this change happen.
Blockchain promises to reshape the foundations of our everyday lives. It threatens to bring down the centralized powers that have, for far too long, drained resources from the very people they were designed to serve.
Let’s take a look at how blockchain will revolutionize industries and, in the process, protect us from hacks, scams and all other dishonest dealings that have been a blight in our lives for so long.
How blockchain will change finance
Previously, finance has been dominated by centralized powers who take a massive slice of the pie. They operate within a system that ciphons money from its owners and have got away with it for so long. This is because it’s so difficult to stop the massive, rusty old wheel of legacy finance, especially as it’s been in motion for so long.
It was difficult. But blockchain put a spanner in the works.
While traditional banking involved a large number of fees, a tangled knot of maddening bureaucracy and a greedy middleman who took a slice for themselves, it also has been frivolous with people’s money and exposed its customers to incredible risk.
This risk was epitomized and laid bare in 2008 with the huge financial crash that left millions of people around the world in economic ruin. The weakness of the system and the dishonesty that lurked beneath was laid bare.
Blockchain brings with it the potential to do things differently.
In essence, it’s a decentralized system that gives control back to the individual. It removes the need for trust, as everything is pre-written in code and based on algorithms. Blockchain is changing the nature of finance. This decentralization of finance is known as DeFi.
One of its main features is automation, which removes the idea of financial systems being driven by selfish motivations and corrupt actions. Instead, blockchain is totally transparent, taking away the need for trust and, in the process, creating a trustworthy decentralized system.
As it’s decentralized, it’s also a system that’s infinitely harder to hack than the traditional financial system. So, not only is it more efficient, more accessible, less open to human interference and more cost effective, it’s also stronger in the face of attempted hacks and scams.
What makes blockchain secure?
Blockchain is built on a digital, decentralized ledger that is made up of a network of nodes (or peers). Each of these nodes is interconnected and plays their own role in confirming each transaction that is made through the system.
It’s like a sea of molecules making up one definable truth. When an anomaly happens, the system detects it and doesn’t allow it to slip through. This is the principle that blockchain is built on and what makes it so secure.
Underneath the technology, blockchain is built on four core elements:
The very core of blockchain is based around the principle that it is unalterable. This means that once transactions are made, they can’t be changed or erased. Everything is transparent and traceable, the antithesis of legacy finance where only the centralized elite were in control. Immutability is the bedrock idea of blockchain and is what makes it such a revolutionary concept.
The ‘all for one and one for all’ nature of the decentralized ledger that is blockchain is underpinned by consensus algorithms. These algorithms ensure that everybody using the network is in agreement with the way it is running and that all the rules of the system are being followed.
Each user within the blockchain system is provided with a unique key. This key, or ‘hash’ as it’s sometimes known, gives the user exclusive access to their wallet, which acts as a digital safety deposit box, formed by an algorithmic process that safeguards the users assets and prevents access from outside users.
Blockchain miners (or bitcoin miners) essentially validate new transactions made and record them on the decentralized ledger. They confirm that each transaction is valid and, in the process uphold the security of the system and the integrity of the technology. They’re like mathematical problem solvers, adding mortar to the bricks of blockchain, getting paid in bitcoins in the process. And bitcoin miners are getting better every day.
How blockchain will protect our data privacy
All these aspects of blockchain help to underpin the security of the system that protects our data and privacy. Through cryptography, each individual output on the blockchain, or ‘hash’ is used as a unique identifier for each data block.
The hash is entirely linked to the data contained within it, which means that if there’s a change to the data, there has to be a change to the block itself. This makes it incredibly hard for hackers to hack the system and secures the personal data and privacy of the blockchain user.
Cryptoeconomics also plays a big role in protecting our data on the blockchain. As mentioned before, bitcoin miners are employed to reinforce the integrity of the system. This incentivization helps to make blockchain even more secure and enables an ongoing analysis, a constant audit of the state of the network.
The main principle behind cryptoecomonics is that nodes are more incentivized to act honestly and true to form than to act maliciously. This, in a nutshell, is what really makes blockchain so revolutionary.
There are also extra measures and layers of protective technology emerging that are enhancing the security of blockchain.
Separated from the internet, cold wallets store cryptocurrency in a remote location, giving user’s an extra degree of protection from hackers. A much safer form of crypto storage than hot wallets (which store funds online) cold wallets give an extra degree of separation from would-be hackers. It’s like keeping your money safely stowed away, instead of walking around with a wad of notes in your pocket.
Two step verification, known as ‘2FA’ adds an extra layer of security to the crypto wallet by providing a one-time password (OTP) which acts as a backup to the wallet key. If hackers were to gain access to the key, they would need a one-time password, delivered by a device in your possession, to gain access to your wallet.
This method is particularly effective at adding protection from large-scale hacks, as hackers have no way of gaining access to multiple devices.
Cryptocurrency services and exchanges are compiling their own blacklists – lists of fraudsters who have attempted to hack the system. As blockchain technology develops, they will look to combine lists to create one overarching list, further securing the data and privacy of blockchain users.
How blockchain can revolutionize the voting process
Blockchain technology has the potential to reshape many aspects of our daily lives, most notably, perhaps, by overhauling the voting process.
The voting process is a key tenant of democratic societies, but it’s in danger of being out of step with the times. Technology has advanced to such an extent that, with every election, the need for a revamp of the whole process becomes more and more apparent.
Through blockchain, not only could the security of the voting process be massively improved, but the ease and accessibility of voting could be increased drastically. This could have huge implications for the way our societies are governed.
The method through which blockchain would be integrated into the voting process would be smart contracts. With the potential to be infinitely more secure than the current process, a smart contract based voting system would see ledger-protected, encrypted votes that are immune from being hacked, even by the most powerful computer.
And, without the bureaucratic system we’ve grown accustomed to, with endless forms to fill in, neverending queues, countless procedures to register and, in general, a process that discourages certain parts of the population from voting, blockchain will change voting forever. It will incentivize everyone to vote – something that threatens the old guard as much as blockchain itself.
To actually see how blockchain revolutionized voting system looks like, check out our infographic:
In fact, in Estonia, online voting or i-voting is already reshaping the Estonian electoral landscape. Voting online was introduced in 2005 and, since then, there’s been a huge increase in online voting and a steady increase in total voter turnout. Last year, almost 250,000 Estonians voted online, almost 40% of total voter turnout.
This is just through online voting, remember, not using blockchain. Just imagine how much things will change once blockchain is brought on board.
Blockchain and peer to peer lending
Another industry that’s being reshaped and redefined by blockchain is investment and borrowing. Through blockchain-based peer to peer lending platforms, an efficient, transparent, secure, fair and far cheaper way of borrowing/investing has been created.
Decentralization means there’s no middleman, so bureaucracy and costs have been cut out of the equation.
Blockchain-based peer to peer lending platforms like Raise are giving investors the chance to connect with projects they care about, putting their money into emerging industries and making a real difference while reaping extra rewards with a larger ROI than typical investment streams.
And instead of entrusting their assets and personal data to an irresponsible legacy finance company, investors can now watch their money grow within a system that is built on rock solid foundations, honest principles and is growing stronger by the day.
So, rather than putting their money into a system that has failed time and time again to safeguard their money and data, with dishonest agents who played fast and loose with assets that didn’t belong to them, investors are looking to peer to peer lending for a better deal.
Fair, transparent and traceable, the simplicity and ease of use appeals to the average lender. And with dealings that are underpinned by smart contracts, which remove ambiguity and complexity while automatically executing payments based on pre-agreed principles, investors are free to make real gains on their assets, while avoiding the risk associated with the antiquated system of legacy finance.
Peer to peer lending is decentralized lending, using blockchain technology to empower people to change their own lives and, in doing so, empowering other people to change their lives too.
Blockchain and decentralized trading
DeFi and blockchain technology have the potential to have a massive impact on trading, with the potential to hugely increase the level of security, simplify and speed up the bidding process and drastically reduce trading transaction costs across the board.
Some decentralized trading platforms already offer an all-in-one service that automizes trading, investment portfolio management and investment analysis at the same time.
However, tight regulations mean that decentralized trading platforms may struggle to compete with regulated traders at the moment. That could change in the very near future though. Blockchain holds all the cards… it’ll have to wait patiently to play its hand.
There’s still work to be done
While blockchain, DeFi and peer to peer lending offer enormous potential, there’s unquestionably still work to be done. Some peer to peer lending platforms have been exposed as scams, with the platform Grupeer, previously regarded as one of the most respected players in the peer to peer lending field, recently being accused of foul play and having its accounts frozen.
For the peer to peer industry, this was an eye opener. The industry is new, much like blockchain itself. For a system that’s based on trust and promises to overthrow the untrustworthy old guard, it’s crucial that DeFi and blockchain on a wider, pan-industry scale develops its full potential and becomes as safe as it can possibly be.
Only then will it be able to capture the trust of the public at large and truly begin to revolutionize our daily lives.