When blockchains first emerged into the global consciousness, they ushered in a new era of not only technological breakthroughs but also spiritual ones. Blockchain technology has breathed new life into the 500-year-old invention of double-entry bookkeeping by democratizing trust. Sometimes referred to as a “trust protocol” blockchain, it can help establish trust between two strangers over an insecure medium like the internet. Let’s take a look at how blockchain ensures trust and how their principles can be applied to real life.
What Makes Blockchain Unique?
Blockchains derive their power from the fact that instead of being managed by a single centralized entity like a government or corporation, blockchains are managed by the people who use them. This is sometimes called the democratization of trust because the users themselves are responsible for their assets rather than the companies. Gaining trust in a trustless environment like the internet is a daunting task that requires some significant development before it becomes possible. Simple RSA encryption became popular before the 1990s with the first generation of computers for tasks like security and secure communication. However, cryptocurrencies were not the forerunners of the modern blockchain. Other important developments were the rise of the Internet and the emergence of consensus algorithms. Since there is no centralized verification authority, the blockchain needs to ensure that all nodes on the network remain in sync. This is done using a consensus mechanism like Proof of Work or Proof of Stake, which is a set of instructions for settling new transactions that all nodes on the network must follow.
Taken together, all of these innovations have enabled people to reliably transfer value globally for the first time in history. Because of the vast amount of computing power that powers the Bitcoin network, it is virtually impossible to change the information stored on the Bitcoin ledger. Services like Factom take advantage of the infallibility of the Bitcoin ledger to give credibility to other sensitive applications, leading to the creation of a so-called “ledger of truth.” Such a ledger of truth is of immense value to all of humanity in a world where tech giants like Amazon and Google keep users’ personal information private and where countries like China China and Saudi Arabia used every means to silence any strong objections against them. modes.
Applications of Blockchain in life
Blockchain heralded a new era in the world that promised to break away from the traditional banking apparatus that had caused countless people to lose their savings overnight. The Fiat currencies that dominate all the countries of the world at the moment have their value closely tied to the reputation of the respective governments. In countries in the Middle East and Venezuela, which have seen drastic changes in government or even government corruption, those who hoard their life savings in fiat have seen the value of all their assets quickly became nil. In Venezuela, the national currency has fallen to near zero over the past five years due to the president’s senseless economic policies. In 2013, a million Venezuelan Bolivars would now be worth just $3.40. This is a nightmare, especially for retired citizens who rely on their savings for a living. Therefore, having a safe and globally accepted store of assets like Bitcoin is invaluable to us as nothing like this has ever existed in our world. The ledger of truth has also found many uses in supply chain logistics and other financial instruments due to the advent of smart contracts similar to “programmable money”. Smart contracts have allowed us to trust code more than promises and create applications for betting and prediction markets that until recently were impossible.
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