Even though value creation was its purpose, blockchain tech started with much of wrongdoing. As fraudulent activities were the goal of many, their intensity shaded the immense efforts made to create proper use cases.
Almost every day, cryptocurrency hacks take place. Also, we were witnessing even a suspicious death of QuadrigaFX founder. The later case of taking to grave millions of dollars in crypto did irreversible damage to the trust of the community.
For this reason, it is essential to realize that bitcoin and cryptocurrencies are nothing more than use cases for blockchain tech. In a plethora of possibilities that this improved cryptography brings, the idea of making a profit was, obviously, the most popular.
Asymmetric to the volatility of overall cryptocurrencies, well-built business models are emerging. Moreover, as these are B2B (business to business) models, they tend to be profitable.
Hopefully, success and profits would be a motivator for new models to utilize this revolutionary technology.
Nowadays, many associate the blockchain tech with the very beginnings of the internet. However, the main similarity is the possibility to change the world by blockchain tech innovative concept.
Fundamentally, blockchain is a decentralized ledger. Not opposite from the idea of centralizing information that the internet did, it imposes the removal of the third party.
This way, blockchain is decentralized in terms of decision making and individual ability to make a change to the records. These records are so-called blocks, and they are constitutional parts of the blockchain.
Besides blocks, these five aspects are shaping this technology:
A blockchain record may be born when one party makes a payment or assigns a digital token to some item. And when the change of the ownership or a defined action happens, it is all recorded in the blockchain. In this case, cryptography places data in the blockchain and gives an output in the form of a hash.
This hash usually has 64 characters. Seemingly, it would take an eternity to a computer to break this code. It is because each blockchain consists of all previous blocks, symbolizing transactions.
Also, this allows tracking the collection of data. As possibilities are limitless, one of the common ones is an immutable audit trail.
A permissionless blockchain is the one that anyone can join. It is more of a public record with a hidden identity of its members. Seemingly, this privacy quality motivates many to flock to it.
On the other hand, for permission-only blockchain, there is a need for permission to enter the transaction. Even though it is much faster, a flaw in this model is in fewer copies of the transaction.
Besides privacy, the essential quality of permissionless blockchain is its security. It is because of the more ledgers that are confirming the transaction.
Finally, this part gained most of the attention since crucial in creating cryptocurrencies. Removing the third-party from the payment process meant fewer or no fees. Nowadays, the banking system is still skimming profit from each value exchange. Yet, not for long if you ask crypto supporters.
Consequently, this aspect is part of the Bitcoin, by now the most important use of blockchain. Undoubtedly, Bitcoin has its share of value creation as a pioneer in creating a cryptocurrency market. Regardless of their future expansion or demise, the impact of this type of thinking already influenced the world.
In the case of blockchain, the meaning of consensus is that multiple parties (two minimum) are agreeing on the state of the data. Of course, blockchain is the means for synchronizing the data. By doing so, each copy of the decentralized ledger would hold the same data.
This aspect of blockchain tech removes the third parties. It is not hard to conclude that banks were first on the line. As this model provided cheaper transactions go, it made an everlasting selling point.
However, the value creation is in the overall insights of the transactions. Compare fewer fees to the higher possibility of digital theft. Logically, being cheaper holds less value.
Another vital product of blockchain tech are smart contracts. As self-enforcing agreements, smart contracts feature a set of predefined rules. These rules come from a mutual understanding from all sides.
As soon as agreed conditions take place, the agreement is valid and takes place. The beauty of this is that most of the business requirements can fit in the few lines of the code. Moreover, once enabled, these contracts are making a trustless commitment.
The next logical idea would be to replace traditional contracts with smart ones.
Besides this, what other types of value creation can take place by utilizing blockchain?
Cryptocurrencies became the disruption for the finance. However, it is disputable if they contributed to any value creation. Some of their acknowledged adversaries refer to them as a “bubble.” Finally, after years of hard work, many industries are facing a similar disruption.
Maybe the most altruistic benefit comes from various models of tracing the source of the goods. World Health Organization reported that 420.000 people die each year from foodborne diseases. What is more striking is that the third of this number are children.
Thus, solving the issue of foodborne diseases is of the highest priority. These numbers demand this from any tech. But the abovementioned aspects can help to address this issue.
Due to the superb traceability, any aspect of the supply chain is transparent. As an immutable and tamperproof record, blockchain can point to possible misuse. At least, the idea that the fraudulent activity is traceable will help. Simple spreading the word can stop many of them from happening.
Hopefully, one success will lead to another. As it is evident, the success that deals with enterprises will gain the most attraction.
Thereby, any case of value creation for an enterprise will skyrocket the development of blockchain tech. Today, many companies are already reshaping the future world by utilizing blockchain. If most of these make a profit, the possibility of future value creation by blockchain is inevitable.
One of these companies is notorious Kodak. This case is compelling as the Kodak bankruptcy is the most debated failure connected with not adopting the new technology.
Would the ultimate blockchain tech solutions have more early adopters than before? Well, it is hard to tell. However, each step toward value creation is making this claim more viable.