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Why Use a Blockchain?

Why Use a Blockchain?

As the implications of the invention of have become understood, a certain hype has sprung up around blockchain technology.

This is, perhaps, because it is so effortless to imagine high-level use cases. But, the technology has also been closely examined: millions of dollars have been spent researching blockchain technology over the past few years, and numerous tests for whether or not blockchain technology is suitable in various scripts have been conducted.

Blockchain technology offers fresh contraptions for authentication and authorization in the digital world that preclude the need for many centralized administrators. As a result, it enables the creation of fresh digital relationships.

By formalizing and securing fresh digital relationships, the blockchain revolution is posed to create the backbone of a layer of the internet for transactions and interactions of value (often called the ‘Internet of Value’, as opposed to the ‘Internet of Information’ which uses the client-server, accounts and master copy databases we’ve been using for over the past twenty years.)

But, with all the talk of building the digital backbone of a fresh transactional layer to the internet, sometimes blockchains, private cryptographic keys and cryptocurrencies are simply not the right way to go.

Many groups have created flowcharts to help a person or entity determine inbetween a blockchain or master copy, client-server database. The following factors are a distillation of much of what has been previously done:

Is the data dynamic with an auditable history?

Paper can be hard to counterfeit because of the complexity of physical seals or appearances. Like etching something in stone, paper documents have certain permanence.

But, if the data is in constant flux, if it is transactions occurring regularly and frequently, then paper as a medium may not be able to keep up the system of record. Manual data entry also has human limitations.

So, if the data and its history are significant to the digital relationships they are helping to establish, then blockchains suggest a supple capacity by enabling many parties to write fresh entries into a system of record that is also held by many custodians.

Should or can the data be managed by a central authority?

There remain many reasons why a third party should be in charge of some authentications and authorizations. There are times when third-party control is totally suitable and desirable. If privacy of the data is the most significant consideration, there are ways to secure data by not even connecting it to a network.

But if existing IT infrastructure featuring accounts and log-ins is not sufficient for the security of digital identity, then the problem might be solved by blockchain technology.

As Satoshi Nakamoto wrote in his (or her) seminal work, “Bitcoin: A Peer-to-Peer Electronic Cash System”: “Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable.”

Private key cryptography enables thrust transactions, which don’t require centralized systems and the elaborate accounts used to establish digital relationships. If this database requires millions of dollars to secure lightweight financial transactions, then there’s a chance blockchains are the solution.

Is the speed of the transaction the most significant consideration?

Does this database require high-performance millisecond transactions? (There is more on this point in our guide: “What is the Difference Inbetween a Blockchain and a Database?”).

If high spectacle, millisecond transactions are what is required, then it’s best to stick with a traditional-model centralized system. Blockchains as databases are slow and there is a cost to storing the data – the processing (or ‘mining’) of every block in a chain. Centralized data systems based on the client-server model are swifter and less expensive… for now.

In brief, while we still don’t know the utter boundaries and possibilities of blockchains, we can at least say the use cases which have passed inspection have all been about managing and securing digital relationships as part of a system of record.

Authored by Nolan Bauerle; photos by Maria Kuznetsov

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Blockchain: The e-commerce of trust – BBVA NEWS

Blockchain: The e-commerce of trust

CEO of Dejaki.com

CEO of Dejaki.com

Blockchain has the potential to convert the way business is conducted, whether in transactions inbetween private individuals or relations inbetween government agencies and citizens. With this column about e-commerce,В Adolfo Contreras Ruiz de Alda, co-author of Blockchain: the Industrial Revolution of Internet, starts a series of articles that will describe the influence of the fresh decentralized technologies on different areas and activities.

In how many online stores does a person usually shop? I would dare to say that regular online shoppers don’t buy in more than 20 stores in total, fifty at the very most. But how many online stores are there in the world? There are ems of millions.

Thanks to the internet of information and peer recommendations, ‘newborn’ online merchants are able to tap into meaty markets. But these contraptions have their limitations. People only trust the social media recommendations from certain circles of peers or friends. Very infrequently, hardly ever, they rely on recommendations coming from people or groups beyond their domestic borders.

The question here is what would happen if there were a instrument that permitted us to find out whether or not a company is trustworthy”

. A system that permitted us to pay only after receiving the items we ordered in ideal condition, where recommendations are always from actual buyers because that system can ensure that the person did buy the item from that specific store, a system that keeps logs to certify that the practice was just as described in the recommendation.

All this is what blockchain can make possible, if applied to e-commerce. To understand why it is possible to trust incorruptible data, very first we need to understand some of the fundamentals of its underlying technology. When we shop online, virtually all the activity – from the moment we log onto the store, to the moment we receive our order at home – can be digitized, i.e., turned into data.  This means that each transaction, each step in our shopping process can have a datum linked to it. Blockchain permits these data to be verifiable, as it ensures that the data reflect what indeed happened.

The potential of this fresh way of trust is tremendous, as it would entail being able to access stores from across the world with total assures. For online merchants, a technology such as this would permit them tap into truly global markets”

The internet of information promised us the demise of the middleman, but what’s actually happened is that we have substituted a bunch of them with just a few (Amazon and Alibaba, primarily). Amazon doesn’t just suggest an utterly convenient check-out process; it also has sales, comebacks and delivery processes that are all very convenient for the user. Wouldn’t it be good if there were a way to make sure that, regardless of where we shop online, we’d always love this level of service?

A plethora of trials, pilot tests and proof of concepts are presently taking place, to probe the numerous applications of the blockchain technology. But we’ll have to wait to see which ones of them end up succeeding. Thanks to blockchain, we may soon begin to love the e-commerce of trust, the logistics of trust, and many other switches that were implied by the e-commerce of the disruptors of the next twenty years.

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