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What is Blockchain?

Blockchain is a common term that has been appearing in tech news almost every single day. Even if you are not aware of what exactly blockchain is, you’ll have heard about it. There are many companies utilizing the blockchain technology and increasing uses of blockchain across industries. Evidently, there is a huge hype around it.

In simple terms, blockchain is a database shared across a network of computers. When a record has been added to this chain, it is extremely difficult to make a change. For all copies of the database to be the same, the network has to be constantly updated. A database is formed with records that are bundled together in blocks and added to the chain one after another, hence: blockchain.

Blockchain is formed with three main components:

  • The record: any information
  • The blocks: the bundle of records
  • The chain: blocks linked together
blockchain data node

Blockchain is a decentralized ledger tracking of one or more digital assets on a peer-to-peer (P2P) network. A decentralized network communications model that consists of a group of devices (nodes) that collectively store and share files where each node acts as an individual peer. P2P communication is done without any central administration or server, which means all nodes have equal power and perform the same tasks.

For example, when a trade is made between two parties – the records list the details of the trade and digital signature of both parties. The record will then be checked by the nodes on the network to make sure it is valid. All the nodes in the network will create consensus before the records are accepted by the network will then be added to a block. Each block contains a unique code (hash) which contains the hash of the previous block of the chain. The block is then added to the block chain, connected by the hash codes in a specific order.

Tampered blocks will be rejected by other nodes of the network. In short, to tamper with blockchain, you will have to tamper with every single block in the chain, redo proof-of-work of each block and take control of more than 50% of the P2P network. It is a near-impossible task for anyone!

The History of Blockchain

Blockchain was introduced in 2008 as the distributed ledger behind Bitcoin transactions, however over time, blockchain has involved into a technology applied across sectors. Government and businesses are utilizing blockchain technology due to its security, immutability, traceability, and transparency. This makes it compatible in situations where it is difficult to support with traditional infrastructure. The infographic below is a brief timeline on how blockchain evolved into the technology we know today:

blockchain timeline history

Where Is Blockchain Used?

Blockchain in Cryptocurrencies

blockchain cryptocurrency bitcoin ethereum

When we think cryptocurrencies, it is no doubt we associate them with blockchain. One of the most famous cryptocurrencies of all time, ‘Bitcoin’ and all other cryptocurrencies’ existence are built on the very core of blockchain technology. Cryptocurrency is a medium of exchange, created and stored electronically in blockchain itself. With encryption methods used to control the creation of monetary units and verify any transactions or transfers. Cryptocurrency has no intrinsic value, which is not redeemable for another commodity like gold. It also does not have any physical form like bank notes, and it exists only in the network. Unlike our cash and currencies, the supply is not regulated or determined by a central bank as the network is completely decentralized.

Beyond cryptocurrencies and bitcoin, it is growing increasingly common to see companies utilizing blockchain in their business model due to its transparency and versatility to be applied across sectors. Companies like Coinhako uses blockchain in their bitcoin wallet service that allows consumers to buy, sell and secure their bitcoins. CoinHako is also the first Asian bitcoin exchange to have fully insured bitcoin deposits via Bitgo’s wallet insurance program.

Blockchain in Asset Tokenization

Asset tokenization is the process by which an issuer creates digital tokens on a distributed ledger or blockchain, which represent either digital or physical assets. Blockchain ensures that once you buy tokens representing an asset, no single authority can erase or change your ownership — your ownership of that asset remains entirely immutable. Example of companies utilizing blockchain technology in asset tokenization are:

DigixGlobal is an asset tokenization platform built on the Ethereum blockchain that aims to combine the functionality and transactional characteristic of cryptocurrencies with real world physical assets.

DXMarkets is a software company specialized in blockchain technology for capital markets. DXMarkets leverages blockchain technology to help financial services firms benefit from reduced costs, real-time settlement and transparency.

Payment Processing and Money Transfers

Blockchain technology helps to facilitate fast, secure, low-cost international payment processing services using encrypted distributed ledgers that provide trusted real-time verification of transactions without the need for intermediaries such as correspondent banks and clearing houses. For example, Everex is a Singapore-registered global blockchain financial technology company, that enables P2P transfers using Ethereum-based tokens (Stablecoins). Its solution allows transaction settlements to take place 25x faster than traditional international money transfers at virtually zero cost.

Potential Opportunities in Blockchain

Blockchain can be a reliable method for keeping data, besides monetary transactions. Some potential applications are:

  • Voting
  • Healthcare
  • Property Record or Automotive Record

coding blockchain

Voting Securely

Voter fraud has been an existing issue as voting are still commonly done traditionally with a pen and paper. With blockchain, voting can be brought online and in a secure manner due to the nature of blockchain. It prevents vote from being changed and protect the identity of voters as well. Officials can count votes with absolute certainty, as each ID can be attributed to a single vote.  No fakes can be created, and tampering is near-impossible.

Healthcare Records

Healthcare companies have the power to sell and commercialize your medical data. By implementing blockchain, it helps to provide ownership and protection to patients’ medical records. Information can be encoded to allow certain people to access them. This provides an alternative to prevent medical records to be stored securely without alteration and deletion.

Property/Automotive Recordkeeping

Blockchain in property/automotive record uses the basis of smart contracts. Maintaining records of property/automotive records can be time-consuming due to the inefficient process. Blockchain has the potential to eliminate the need for scanning documents and keeping physical. If ownership can be stored and verified on the blockchain, owners can trust that the records is accurate and permanently recorded.

The above are just a few of many potential solutions from blockchain technology, Blockchain’s unique characteristics show a lot of promise for useful applications that could solve the common problems and disrupt the status quo.

Challenges In Blockchain

Blockchain technology has unlocked several benefits not limiting to the FinTech industry, but it comes with disadvantages like its complexity nature, regulatory restrictions and implications, implementation changes and increasing competing platforms and companies.

Currently, there are still too many solutions targeted to resolve core issues but not enough working together to standardize it. Blockchain is also a relatively young technology which means that it still need time for maturity. We can see many players entering the field of blockchain to solve decentralized problem with unique solutions, for example, Corda, Hyperledger, Ripple and more. As blockchain require more time for maturity, there might still be a long way more to witness a change in standardization of blockchain technology.

Blockchain technology also suffers from interoperability. With multiple blockchain networks and companies, there are instances of interoperability issues when chains are unable to communicate effectively. Furthermore, interoperability is also a problem for traditional systems.

Recruiting in Blockchain

For many companies, the complex nature of blockchain results in the difficulty to implement without the right talent and knowledge. A large amount of investment is required for the company to acquire the technology, in additional to hiring and maintenance costs. It also requires thorough knowledge and multiple experts to fully utilize blockchain properly. Existing professionals will also be expected to be trained to manage the complexities and outcomes of a blockchain-powered business. This can be a challenging aspect as the right talent is harder to find due to demand-supply ratio in the job market right now.

At Storm2, we know how important the right hire is, and we know Blockchain. We work with the most innovative Blockchain companies worldwide. If you’re a blockchain business looking to hire a blockchain specialist to grow your team, we have specialized candidates ready for you to connect with. Get in touch with us!