The system behind cryptocurrencies like Bitcoin, known as blockchain, is now being explored for other potential applications. It’s so powerful that big banks like Bank of America are taking out patents on the blockchain technology to study it further to see how it can leverage its power. Now others are investigating other uses for blockchain.
What is Blockchain?
A blog post in the Wall Street Journal offered a detailed explanation of blockchain:
A blockchain is a data structure that makes it possible to create a digital ledger of transactions and share it among a distributed network of computers. It uses cryptography to allow each participant on the network to manipulate the ledger in a secure way without the need for a central authority.
While there many different configurations for blockchain based on the size of the network, the overall process remains the same to help track cryptocurrency transactions within a decentralized system. It’s this network that authenticates each transaction and ensures that they are recorded in the ledger rather than relying on a centralized system controlled by a financial institution. Sophisticated algorithms are used to verify the transactions within the blockchain.
Anyone who wants to participate in the blockchain can and trade in this currency as long as they follow the network protocol that governs the ledger. This new system cuts out the middleman in financial transactions that were always represented by a centralized banking system. The result is transactions that become anonymous and work outside of the traditional processes that have been in place for years to guide the payment for goods and services.
Alternative Uses for Blockchain
With such revolutionary changes brought about by blockchain technology, now others are examining how it might be used for other industries and applications. As a hot topic among many business forums and cryptocurrency discussion groups, some of the alternative methods for blockchain have included:
- A blog on Bytecoin noted numerous alternative uses for blockchain, starting with Namecoin’s pioneering application of distributed DNA in which its goal is to allow registering standard DNS records, performing updates on them, and gaining access to these records. Others like Datacoin and Storj have suggested that blockchain could be used for cloud storage (peer to peer file sharing networks) or Satoshi Nakamoto’s suggestion that it could serve as a “distributed timestamp server” to protect data from being changed or deleted. Bitmessage and Twister both suggest that blockchain might be useful for communication platforms.
- Startups like MyPowers is using blockchain technology as the basis to create a marketplace for digital content or any digital asset that can be traded online. It is pushing for the idea that the mass consumer audience can enjoy a decentralized marketplace for all types of products, merchandise, subscriptions and even influencers’ time.
- Since blockchain has been used to authenticate transactions, an interesting application is to extend this to other applications like voting or any situation that needs authorization, such as for political parties or even proxy voting used by shareholders.
- Identity management is another application in which tamper-proof digital identities can be created like those being developed by Onename. This is similar to Bitnation’s creation of digital identities both of which are now viewed as a potential replacement for the use of usernames and passwords in the online environment.
- Records for businesses can be kept in a much more organized and succinct fashion through the use of blockchain technology, according to companies like Factom. At the same time, it addresses security and compliance issues based on the precedent set by blockchain’s original financial-based use.
- An infographic created by Let’s Talk Payments offers these applications and other alternatives for blockchain technology. These other options include smart contracts, reviews and endorsements, real estate, precious metals and diamonds, Internet of Things (IoT) applications, app development, patient medical records, network infrastructure, gaming, ride sharing and numerous financial uses.
While many businesses and consumers are still trying to grasp the basics of how blockchain is used to frame and manage cryptocurrencies like Bitcoin, other thought leaders are working well into the future to develop new applications based on this incredible technology. Blockchain clearly has so much more to offer beyond its original financial application, potentially touching dozens of industries and business segments to disrupt and change how we work and live.