Long-term Benefits of Blockchain - How can it be used and why is it important?

Posted by Kelvin Chandran on 10/28/18 8:00 PM
Kelvin Chandran
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Long-term Benefits of Blockchain - How can it be used and why is it important?

When looking at the early history of blockchain, controversy has loomed at times. This is especially evident with issues surrounding cryptocurrency. ICO fraud, failed blockchain projects, and the so-called bitcoin bubble of 2018 have all acted as major obstacles to the adoption of blockchain technology itself.

In this article, we’ll explain how blockchain and cryptocurrencies can be used for far more than just short-term gains. We'll dive into how blockchain can serve as a foundational technology for real-world use cases in the long-term.

How Can Blockchain Be Used?

Currently, one of the most prominent use cases for blockchain is its ability to serve as a secure, efficient solution for sending and receiving digital currencies (a.k.a. cryptocurrencies). Since Bitcoin’s launch in 2009, all sorts of coins and tokens have entered the cryptocurrency market. There are several major companies, both online and brick-and-mortar, that accept cryptocurrencies. Even though this might be the most obvious example of how blockchain can be used, it is just one of many different use cases.

A variety of specific technical features of blockchains have already begun to gain widespread adoption. For instance, the fact that blockchains can store immutable records is an innovative solution that could help improve any system where secure data storage is needed. Another good example is smart contracts, which are self-executing contracts that utilise computer code to carry out agreed-upon terms and conditions set by two parties. This technology can ultimately replace older technical solutions like escrow accounts, and even serve as the go-to legal contract of the future.

Several projects within the Centrality ecosystem present excellent examples of what blockchain can achieve in the real-world. For instance, Sylo offers an end-to-end encrypted communication network, so that any conversation using this platform is only accessible by you and the person you’re talking to. This gives people more freedom to communicate freely online. Blockchain can also be used for applications like shipping and trade. Trackback is a project that provides an automated SaaS solution for supply chain logistics. This project utilises active sensor technology and smart contracts to ensure that assets are easier to track and manage.

Blockchain can also be used for other existing real-world applications in supply chain management, voting systems, healthcare, agriculture, cloud computing, regulatory compliance, and other industries. Perhaps even more noteworthy is the possibility that blockchain could empower the emergence of new technologies and industries in the coming years.

Blockchain for Identity Management

Identity management is one major area where blockchain can offer a lot of advantages over existing systems. Throughout the past few decades, identity has been increasingly difficult to prove and maintain, leading to the potential for fraud. Businesses want to offer legitimate consumers easy access to loans, mortgages, and credit-based services.

Still, businesses that utilise older identity management systems that are inefficient, could be at an increased risk of enabling money laundering, terrorist funding, or other criminal activities. At the same time, having too many approval steps and long approval wait times often dissuades potential customers that do abide by the laws and regulations from becoming actual customers.

Blockchain for identity management is an optimal market solution because of this technology’s ability to verify or reject the veracity of claims with greater security and accuracy than older technologies all while reducing costs of providing such services. Furthermore, blockchain enables end users to have a future where self-sovereign identity can move from a theoretical concept to an easily-attainable reality. Businesses that utilise centralised databases require that users trust them with data management. In contrast, blockchain creates the possibility of a platform where, by default mode, businesses don’t have access to sensitive user data. Ultimately, users will be able to easily control which parties can and can’t access their information via a single platform.

Blockchain can be implemented to allow users to have a more secure way to login to dApps and websites, complete KYC and AML checks, assess consumer risk, and more. These applications not only create a better future for cryptocurrency and ICO investing but also can reduce the prevalence of all sorts of fraud-related crimes.

Examining the State of Blockchain Security

Security is a top priority for driving long-term blockchain adoption forward. Encryption provides users of blockchain-based technologies with a much more secure method of sending and receiving communication data than traditional technologies. The implementation of public key cryptography, for example, is one of the most important technical components of blockchain. We’ve seen a lot of progress in this area thanks to improvements like Ethereum’s implementation of the Elliptic Curve Digital Signature Algorithm (ECDSA). In the coming years, we’ll likely see even more innovative encryption techniques and technologies move from concepts to real-world implementation.

Yes, some blockchains have had major security issues. Issues like 51% attacks have plagued some PoW consensus algorithms. We also continue to see issues like cryptocurrency exchange hacks that result is massive losses in the funds of users.

In 2018, blockchain security isn’t perfect. Nonetheless, it’s essential to consider that it is being improved continuously thanks to research teams from around the globe. For tech consumers, it’s also important to look at the security of blockchain in context with other technologies. Blockchain and web3 are relatively new when compared to older technologies. It can be easy to look at these more unfamiliar concepts with heightened skepticism. However, when we look at the stats related to database hacks, it’s easier to put the state of blockchain security into perspective.

What we do know is that there are some differences that distinguish a secure blockchain from one that is insecure. One major aspect is centralisation vs. decentralisation. Blockchains that utilise decentralised databases and cryptocurrencies that have decentralised token/coin supplies are widely regarded as being far more secure.

Blockchain security isn’t just about protecting users from outside hacks. It’s also about establishing new business models that emphasise other security concerns. For instance, blockchains that are censorship-proof and protect user privacy are also better prepared for long-term adoption. Established blockchain principles demonstrate why blockchain companies can be better than traditional tech companies which rely upon centralised databases, or conduct profit-driven data mining that sacrifice user privacy.

SingleSource: Building Long-term Use Cases for Blockchain

SingleSource is committed to building a protocol that demonstrates the long-term viability and real-world use cases of blockchain. While some people might think of blockchain as a phase or only focus on its short-term potential, our project team is constantly thinking about how to provide an innovative, future-proof market solution.

Our aim is to solve several of today’s challenges related to identity management: fraud detection, regulatory compliance, risk assessment, and more. To find out how blockchain is specifically improving the future of identity management, click here to read our in-depth guide.

Read the blockchain ID guide here

Topics: Blockchain technology, Digital identity

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