Blockchain: What is it, how it works and how it is being used in the market

Blockchain is generally associated with Bitcoin and other cryptocurrencies, but these are just the tip of the iceberg. This technology was originally …

A closer look at the technology that is rapidly growing in popularity

Blockchain is generally associated with Bitcoin and other cryptocurrencies, but these are just the tip of the iceberg. This technology was originally conceived in 1991, when Stuart Haber and W. Scott Stornetta described their first work on a chain of cryptographically secured blocks, but only gained notoriety in 2008, when it became popular with the arrival of Bitcoin. It is currently gaining demand in other commercial applications and its annual growth is expected to reach 51% by 2022 in numerous markets, such as those of financial institutions and the Internet of Things (IoT), according to MarketWatch.

What is blockchain?

A blockchain is a unique, consensual record that is distributed over multiple network nodes. In the case of cryptocurrencies, think of it as the accounting ledger where each transaction is recorded.

A blockchain transaction is complex and can be difficult to understand if you delve into the inner details of how it works, but the basic idea is simple to follow.

Each block stores:

  • A number of valid records or transactions.
  • Information referring to that block.
  • A link to the previous block and next block through the hash of each block—a unique code that can be thought of as the block’s fingerprint.

Accordingly, each block has a specific and immovable place within the chain, since each block contains information from the hash of the previous block. The entire chain is stored in each network node that makes up the blockchain, so an exact copy of the chain is stored in all network participants.

As new records are created, they are first verified and validated by the network nodes and then added to a new block that is linked to the chain.

How is blockchain so secure?

Being a distributed technology in which each network node stores an exact copy of the chain, the availability of the information is guaranteed at all times. So if an attacker wanted to cause a denial-of-service attack, they would have to annul all network nodes since it only takes one node to be operative for the information to be available.

Besides that, since each record is consensual, and all nodes contain the same information, it is almost impossible to alter it, ensuring its integrity. If an attacker wanted to modify the information in a blockchain, they would have to modify the entire chain in at least 51% of the nodes.

Ultimately, since each block is mathematically linked to the next block, once a new block is added to the chain, it is rendered unchangeable. So if a block’s relationship with the chain is modified, it is broken. In other words, all information recorded in blocks is immutable and perpetual.

Therefore, blockchain technology allows us to store information that can never be lost, modified, or deleted.

Moreover, each network node uses certificates and digital signatures to verify the information and validate the transactions and data stored in the blockchain, which ensures the authenticity of this information.

You could say that blockchain is like a record keeper. A means of certifying and validating any type of information. A reliable, decentralized registry, resistant to data manipulation, in which everything is recorded.

We are currently used to working with centralized models. We give all our information to companies like Google or Facebook to administer, send all our messages through Telegram or WhatsApp servers so that they can send them, or spend fortunes on record keepers and institutions to certify and store our important deeds or documentation.

In blockchain, data is distributed across all network nodes. With no central node, all participate equally, storing, and validating all information. It is a very powerful tool for transmitting and storing information in a reliable way; a decentralized model in which the information belongs to us, since we do not need a company to provide the service.

What else can blockchain be used for?

Essentially, blockchain can be used to store any type of information that must be kept intact and remain available in a secure, decentralized and cheaper way than through intermediaries. Moreover, since the information stored is encrypted, its confidentiality can be guaranteed, as only those who have the encryption key can access it.

Use of blockchain in healthcare

Health records could be consolidated and stored in blockchain, for instance. This would mean that the medical history of each patient would be safe and, at the same time, available to each doctor authorized, regardless of the health center where the patient was treated. Even the pharmaceutical industry could use this technology to verify medicines and prevent counterfeiting.

Use of blockchain for documents

Blockchain would also be very useful for managing digital assets and documentation. Up to now, the problem with digital is that everything is easy to copy, but Blockchain allows you to record purchases, deeds, documents, or any other type of online asset without them being falsified.

Other blockchain uses

This technology could also revolutionize the Internet of Things (IoT) market where the challenge lies in the millions of devices connected to the internet that must be managed by the supplier companies. In a few years’ time, the centralized model won’t be able to support so many devices, not to mention the fact that many of these are not secure enough. With blockchain, devices can communicate through the network directly, safely, and reliably with no need for intermediaries.

Blockchain allows you to verify, validate, track, and store all types of information, from digital certificates, democratic voting systems, logistics and messaging services, to intelligent contracts and, of course, money and financial transactions.

At present, the following projects, which are worth taking a look at, are already being developed:

HyperLedger Project

This involves a consortium of large companies looking to develop blockchain-based solutions. They have several active projects.

R3 Cev

In this case, the 40 largest banks in the world have come together to develop blockchain-based solutions for their financial processes. They also produce reports and conduct research on this technology.

Storj

The first blockchain-based storage initiative available to everyone. User data is encrypted and stored in blockchain to keep it secure and available.

Proof of Existence

An online certification service for any type of document. It allows users to save documents in blockchain, which can never be altered or deleted.

According to a survey conducted by the consultancy firm Deloitte, 74% of the companies asked consider blockchain to be an improvement for the business and plan to invest in this technology, while almost half of them already have blockchain implemented in some way in their business.

Without doubt, blockchain has turned the immutable and decentralized layer the internet has always dreamed about into a reality. This technology takes reliance out of the equation and replaces it with mathematical fact.

9 Oct 2018 – 02:00PM

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Changing the world, blockchain by blockchain

JUDD WILSON/Press Travis Jank, Lawrence Sowell, and Dolan Valenzuela strategize around blockchain hardware designs at Krambu in Coeur …

COEUR dALENE Imagine a world without the internet, without smartphones, without wireless technologies. The world of the 1980s was a clickity-clack world of typewriters, ringing phones mounted to walls, and cords stretched like trip hazards across kitchen floors while kids waited for commercials to be over so they could watch cartoons.

The technological changes of the past decades have made 2018 far different. Workers make calls on phones that fit in their pockets, cooking parents access recipes from online catalogs, and kids stream videos that used to be controlled by movie theater execs, Blockbuster clerks, and television network programmers.

Just as the world has changed in our lifetimes due to technological advancements, the world may change yet again thanks to the emerging technology known as blockchain. You may have heard of its famous cousin bitcoin and a host of other cryptocurrencies. They became famous overnight when their values shot up toward the end of 2017, reaching a high of more than $20,000 per bitcoin last December.

Bitcoin and other cryptocurrencies are like skyscrapers that attract the attention of passers-by, but they cant stand without solid foundations, streets, and other public works infrastructure undergirding them. That infrastructure is blockchain. Just as streets and infrastructure undergird everything from schools to homes to skyscrapers, blockchain may soon undergird everything from your health care records to your bank accounts to your cryptocurrency wallets.

Coeur dAlene has its own blockchain innovators at Krambu. Dont let the name fool you. Krambu isnt short for anything. It has meanings in two different languages, but essentially its just a memorable way to remember the unique work Krambu does: making the worlds best blockchain hardware.

Coeur dAlene High School class of 2006 alumni Travis Jank joined forces with Oregon transplant Lawrence Sowell to create the company in 2017. They already had decades of experience in entrepreneurship, computers, and blockchain under their belts. Jank set world records for building the worlds fastest computers, servers, and workstations. He has consulted for Intel, Invidia, Microsoft, AVD, and other major players. Sowell has started up businesses since he was 18 years old. He also runs Codera, an app development company, and has been in the tech space for more than a decade.

When Jank and Sowell formed Krambu in 2017, they established that transparency would be one of the companys core values. Theres a lot of misinformation about blockchain thanks to the hype surrounding cryptocurrencies, Jank explained.

Its not bitcoin that matters, its blockchain that matters, he said.

Krambu chief information officer Ben Meyer said, Blockchain is like the freeway, and cryptocurrencies are most of the semi trucks on the freeway.

Blockchain works in this way: Imagine a single ledger that contained every transaction consumers in Kootenai County had made in 2018. If a hacker could alter that ledger, the hacker could profit from wreaking havoc on others records. But what if every consumer in Kootenai County had an identical copy of that ledger on his own device or computer? What if the past transactions could not be changed, and the future transactions would be invalid, if a hack was identified? The sheer difficulty of hacking into all of those devices, and altering all of those ledgers, at the same moment, undetected, is what makes blockchain so superior to legacy systems, Jank said.

The processing power required to forge a transaction on the network is the sum of all the processing power, all the computers, all the internet connections, and all the infrastructure needed to do the hack, he explained. The cost of that is massive. The only entities that could pull off a hack like that, Sowell said, and get away undetected are nation-states.

The most powerful governments will have the most powerful blockchains, he said.

Thats why 86 percent of all blockchain-related research and development is being funded by governments and companies worth more than $3 billion. Another 8 percent is being funded by companies worth between $1 billion to $3 billion. Only 6 percent is being funded by small players in the market, Sowell said.

So far governments are playing catch-up with the quickly-evolving world of blockchain and cryptocurrencies.

Its been like the Wild West, said Jank, which isnt necessarily good for the technologys growth. People and companies dont feel comfortable adopting the technology.

Regulation needs to be drafted with close communication and work with those that are fundamental in the blockchain and cryptocurrency space, he said.

But because blockchain solves problems of security, reliability, and trust with all forms of electronic communication, Jank explained that blockchain will revolutionize technology in the way that the internet protocol suite TCP/IP did. Blockchain will be adopted by existing companies and integrated with existing technologies to provide cost savings, and to increase performance and security.

For example, banks and governments will adopt blockchain to replace their legacy systems, Jank said. Once that happens, its not going to change the dollar bills or credit cards you carry around, but the blockchain technology will lead to cost savings, mitigate fraud, theft, and counterfeiting, he said.

Krambus founders had been involved in blockchain long before last years bitcoin hype, and they want to one day become what IBM, Microsoft, and Apple have been to the world of personal computing. Thats because they dont just make stuff to speculate on bitcoin or to take advantage of thirsty investors. Like Steve Jobs, theyre out to make the worlds best blockchain technology beautifully.

Krambu builds hardware for enterprise-level companies. Everything they build, they design and build from scratch right here in Coeur dAlene. Krambus staff comes up with solutions, writes patents, builds prototypes, and does integration, testing, and assembly here at its R&D lab on Government Way. Once the hardware is internally validated, its shipped to the Krambu data center in Newport, Wash., for additional field testing, Sowell said.

Were one of the first companies in the blockchain space. We build it first and make sure it works before shipping it out to customers, Jank said. Most other blockchain hardware companies dont do that, he said.

Jank distinguished between companies that focus on cryptocurrency, and those that deal with blockchain.

Blockchain companies are few and far between, he said, though noting that in the aftermath of the 2017-18 bitcoin surge, many cryptocurrency companies rebranded themselves as blockchain companies. Theres a difference between traders trying to turn a quick buck and innovators engineering real blockchain technology, he said. Sowell and Jank hope that energy consumption issues can be addressed with regional power companies, many of whom dont know the needs and benefits of blockchain.

The Krambu staff works on designing and building the technology that blockchain will need 10 years from now.

Our mission is to do tough stuff, Jank said. Its motivating to look at a problem and solve it.

The Krambu team wants to build up Coeur dAlene as a high-tech hotspot where innovators can live, work, and change the tech world.

It was my dream to stay here. I worked so hard and took odd jobs just to survive, to stay here near friends and family, and be close to the outdoors, Jank said.

We believe in the technology. Our hearts and minds are in the right place. This isnt for getting rich quick. This is to enable blockchain for the masses.

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Scoop: Forbes is trying out the blockchain

Forbes, the century-old business publisher, is joining forces with Civil, a journalism blockchain network, to become the first major media company to …

The big picture: Forbes is experimenting with publishing a sample of its content to the Civil Network. Eventually, the broad goal is to one day migrate all of its published content over to the blockchain.

“We have an opportunity to participate in the development of this ecosystem and help shape it around our unique business model.”
— Salah Zalatimo, Senior Vice President of Product & Technology at Forbes

How it works: Forbes will plug in Civil’s software to its proprietary content management system called “Bertie.”

  • Once plugged in, Forbes journalists will be able to upload their metadata to the Civil network early next year, while simultaneously publishing to Forbes.com.
  • The company will begin uploading cryptocurrency content first — an editorial focus they’ve increased investment in lately. If the experiment works well, other topics will follow.

Between the lines: Civil has previously brokered a photo partnership with the AP using its blockchain technology for photos, but it’s the first media company to strike this type of a partnership around actual stories.

What’s next: Forbes specifically sees opportunities for it to expand the footprint of its extensive contributor network.

  • The company is exploring the use of “smart contracts” for their contributors to be able to upload content through Forbes’ CMS that can then be published to various outlets across the web, like Medium or LinkedIn, and to Forbes and Civil.
  • Through the tech that makes those contracts possible, contributors can time when content is published to various outlets, giving some outlets windows of exclusivity.
  • All transactions between Forbes and its contributors will be conducted on through Forbes’ CMS and are made possible though Civil’s software integration.

Between the lines: There’s been a lot of confusion about how Civil works and what exactly the benefits are for media publishers.

  • In short, Civil (the non-profit media company) is a decentralized, cloud-based ledger (think Google Sheets) that records when things are published and who published them. Civil Media Company doesn’t make any money, but the participants in the decentralized network, called the “Civil Network,” do.
  • Yes, but: There’s been some confusion around who has actually bought Civil tokens. Civil says it’s planning to publish a transparency report on Wednesday that aims to answer who has tokens and how many, so that people can visualize the Civil token ecosystem.

The bottom line: Forbes is in a better position if they get ahead of this new technology than if they wait for what they believe is inevitable.

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Architecting a Blockchain solution for the enterprise

In this article, JAX London speaker Vinita Rathi explores why Blockchain and distributed ledger technology platforms deserve our attention.

Cryptocurrency was a massive buzzword across all sectors of technology and finance last year, but since then the whole cryptocurrency hype has seen a downfall. While the future of cryptocurrencies is still unknown for the most part, its dominance in real economy is yet to be understood. However, I would like to discuss here is the underlying technology that cryptocurrencies are based on, specifically Blockchain and various distributed ledger technology platforms such as Hyperledger, Ethereum, NEM, and more.

Choosing between different blockchain solutions

Recently, I was approached by a firm that is in the process of digitizing medical records of citizens of an African nation. They wanted to not only control access to the medical records via biometric recognition and authentication, but also put technology in place to ensure that the medical records were immutable once they were in the system. The key points for consideration were:

  • Permission based access
  • Scalability and latency
  • Immutability and data integrity

While we looked at several private blockchain solutions like Waves, NEM, or Corda, we noticed that Hyperledger Fabric stood out amongst all of them time and time again for both this use case as well as others we had been working on.

The key decisions that ruled in favor of Hyperledger Fabric were:

  • Permissioned Framework
  • Ability to run complex queries
  • Scalability and cost of hosting/maintenance
  • Maturity (in comparison to other solutions)
  • Golang

Most of the promising solutions that I come across lack the maturity needed for such a big implementation. There are hardly a few systems that are being used in large scale enterprise production environments.

SEE ALSO: The ultimate guide to Blockchain programming for new developers

Challenges in utilizing blockchain

One of the challenges worth pointing out is the concurrency challenge we have had around using Hyperledger, especially in our use case. We needed to provide a provision in the system to allow write and read multiple operations on the same object concurrently.

In this situation, the use case is:

  • A patient visits a clinic
  • Patient’s identity is confirmed
  • Object access is granted to the clinic
  • Object can be updated
  • Record which user altered the object.

Even though the chances of same object being written simultaneously was rare, we still had to account for a situation where the write request for the object was pending while read access was requested. This could potentially invalidate the state of the read.

SEE ALSO: How can blockchain help boost cybersecurity?

This is how the first version of architecture looked like:

blockchain

Figure 1: Our architecture.

The second challenge we faced was the deployment. Hyperledger focuses heavily on Docker. Luckily, our DevOps team at Systango was accustomed to using it in pretty much in every project we undertake.

SEE ALSO: How cryptographic algorithms and hashing keep blockchain secure

While we have deployed the system in production, its usage is still in a very early stage. It’s hard to comment on the system’s scalability as of yet. However, in the sandbox environment we tested it with 1,500 concurrent transactions and it performed fairly well.

For an in-depth review of the architecture, deployment challenges and key learnings of other projects, please join me at my session this October at JAX London. I’ll be going over all this and more there.

Vinita Rathi will be delivering a talk at JAX London 2018 on Tuesday, October 9 that goes over what blockchain is, functional blockchain solution designs, and the five pillars of an enterprise blockchain solution design.

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Gov’t of South Korea is Endorsing Crypto and Blockchain Like No Other Region

The Blockchain Urban Plan will also witness the implementation of blockchain in Seoul’s 14 public services in five areas. Park confirmed that they …

South Korea is leading an example of being the world’s most hospitable regions for crypto and blockchain entrepreneurs.

The world’s eleventh-largest economy has committed a $100 million fund to develop its capital Seoul as a center of blockchain innovation. Park Won-soon, the third-time governor of Seoul, during his visit to Switzerland’s Zug last week, revealed that their government would launch a Blockchain Urban Plan for 2018-2022. The plan will begin with the construction of two business complexes in Seoul’s western and southeastern districts to accommodate 200 crypto and blockchain companies. The specialized blockchain zone will also feature two training centers that will nurture 730 experts in the field.

Solid Roadmap of Blockchain Development

The Blockchain Urban Plan will also witness the implementation of blockchain in Seoul’s 14 public services in five areas. Park confirmed that they would begin by innovating labor welfare, vehicle history management, certification issuance, donation management, and elections voting.

The mayor explained, for instance, those part-time workers who don’t have work insurance or labor contracts will be able to register themselves via a blockchain application. Other participants in the labor management, including welfare organizations and insurance companies, will participate as running nodes on the ledger. They will efficiently utilize the workers’ information for sharing over their distributed network, as well as for deciding on insurance schemes.

“There’s no doubt blockchain is the core technology of the fourth industrial revolution, which will shape the future IT industry. I will make efforts to help Seoul become the center of a blockchain industry ecosystem,” Park added.

Regulatory Hibernation in Other Regions

Park’s recent trip to Switzerland’s crypto valley Zug also marks his efforts to import offshore blockchain startups to Seoul. It is visible that the government and regulators in South Korea are putting in collective efforts to make their capital a global blockchain hub. Especially in times when crypto startups in the world’s largest economies are facing regulatory hibernation.

The US, for instance, is looking at a potential mass exodus of the local blockchain industry in absent of unclear crypto regulations and mounting crackdowns by the Securities and Exchange Commission (SEC). In September, more than 50 stakeholders from crypto and finance industry met lawmakers in Washington to discuss the similar issues.

India, the world’s sixth largest economy, has also pushed the local crypto industry into a court battle with their central bank following a bank ban. The South Asian country, which has launched ambitious startup schemes under the leadership of Prime Minister Narendra Modi, has ironically gone mum over crypto, an industry featuring some of the most promising startups. As a result, many local companies are moving outside India looking for better places to launch their blockchain services.

South Korea’s Financial Services Agency, on the other hand, has shown a mature metamorphosis from a concerned financial regulator to a liberal financial regulator. The watchdog launched a dedicated Financial Innovation Bureau to oversee and nurture the crypto sector as part of their fourth industrial revolution. The efforts are now evident with their politicians’ visits to other crypto hubs and dedicating taxpayer money to built similar facilities in Seoul.

The government of South Korea – with support from the country’s financial regulator – is endorsing crypto and blockchain like no other region, indeed.

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