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Blockchain is Going to Improve Life of Common People

12 July 2017 11:56, UTC
Margareth Nail

Emergence of a blockchain technology made a splash, first of all, in professional circles and then far beyond their limits. Many people began to consider distributed ledgers as a technology mission which will turn around not only the existing relations in the society but also transform mass consciousness. However, while people familiar with the technology world understand how "miracle" blockchain works and why it can be useful (although not all the professionals understand this issue well), common people have no general idea what it is about and how ledgers can affect their lives.

Blockchain technology in layman’s terms

Before arguing where the blockchain can be applied and what processes it can change, let us consider the essence of this technology and principles of operation. The blockchain represents a technology which allows creating a distributed database containing any facts. It means that a register of events is created which can be seen by all participants who can add data there under certain conditions. These events can be personal data, issuance of a loan, purchase of a thing, money transfer, entry of information about a patient and many other things.

Many people will tell that there are already many different ledgers: each insurance company has a register of insured persons, banks have registers of issued loans or opened deposits, different tax ledgers, etc. However, the database developed on a blockchain has a number of differences.

First of all, blockchain is called a distributed ledger. That means that the database is visible to all participants of a network (let us remark that the network is formed by computers connected to a database), each participant can make changes in it and also see all changes made by other participants. While in banks, insurance and other companies, ledgers are located on a company server and their access is limited to a number of users. Also the company-owner of the ledger can delete it at any time while blockchain works until at least one computer is connected to a database.

Secondly, reliability of blockchain operations is ensured by a complex way related to enormous mathematical calculations. In common ledgers changes are made by "the owner". It can lead to disputes. For example, there were some cases when licenses of some Russian banks were revoked, depositors could not prove existence of their deposits and the fact that funds have been credited to their accounts. It occurred because bankers removed from their ledgers the information about investors’ funds and didn't make appropriate accounting operations. If information about their deposits was reflected in a blockchain database, such situation would not be possible because bankers could not remove a record about deposit of funds, and a depositor could track how a corresponding record was formed.

The second part gives rise to the third distinction of a blockchain from other ledgers: all participants of the network can see information entered in the database. And they only see the fact of transaction (events, data records). Data that could be used in fraud schemes is not visible. For example, if we consider deposits, participants of the network will see if someone opens a deposit in a bank, but this person’s identity as well as his bank will remain unknown (unless participants of this relationship would like to disclose the secret).

Fourthly, people can enter any information about themselves using the blockchain and put restrictions what information can be visible to other participants.

Fifthly, it is possible to see all blockchain-based operations made. That is if a person opened deposits in different banks at different times, all this information can be tracked.

So, to conclude the above-mentioned blockchain will:

  • help to increase reliability of operations/transactions and make highly unlikely certain types of fraud;

  • accelerate some transactions;

  • make many processes more convenient;

  • help to reduce the number of intermediaries, etc.

What can blockchain be used for?

The blockchain technology has already found the first application: cryptocurrencies have been created and will develop further. And now not only professional players of the IT market and banks, but also regulators of many countries think about the cryptocurrencies future and their effect on economy.

Different options are analyzed how to introduce blockchain in medicine along with development of the Internet of Things. It is supposed that distributed ledgers together with a system, which ensures exchange of information between patients, doctors and things (different medical sensors, implants, etc.), will help to improve quality of health care and save many lives.  

The blockchain will become essential in the fields where it is necessary to maintain ledgers and make changes in them from time to time. For example, cadastral databases, a database of traffic offences, insurance databases, a database of diplomas, databases of different issued documents, permissions, etc.

Get rid of intermediaries

As it was mentioned above, the blockchain will allow to get rid of many intermediaries. If distributed databases containing all necessary information about citizens are created (for example, marriage certificates, birth certificates, diplomas about education, tax documents, etc.), there will be no need for notaries (and other intermediaries) who "eat away" considerable amounts of money, time and sometimes nerves when they certify entire volumes of various documents.

Such options as organization of blockchained-powered electronic voting are worked out. It is supposed to make this process more honest.

And it is not the full list of how blockchain can be used. In general the distributed ledger technology will simplify many processes, which now unreasonably waste our time. Also many processes will become more transparent and clear.

Can blockchain resolve all issues?

Despite all advantages of the blockchain, at this stage of development, the distributed ledger technology is not a magic pill as its introduction also involves unresolved issues. For example, if more than 50% of network participants are frauds, then they will be able to act in bad faith that may lead to stealing funds, etc.

However the mechanism has already been launched and one need to wait for ready blockchain-based solutions, which will simplify lives of common people and make the world more honest.