Blockchain is an innovative technology, so innovative that many media and experts have called it one of the 21st Century’s most innovative applications. It is a structure that produces a digital ledger of transactions and can be publicly viewed among an extensive network of computers. This structure is based on cryptography that allows players to make transactions without centralised supervision. In other words, it is a chain of transactions for which contributors of the network participate by adding blocks of value to the ledger.
Even if the technology is complex, it has an almost endless potential to disrupt various sectors of our global society and economy. Starting with its first application, the creation of Bitcoin in 2008, the blockchain technology has gradually revolutionised the look and shape of so many activities and industries that it is difficult to think of them all. The process of adoption of the blockchain technology should be steadily increasing, triggering key technological and institutional changes.
How can we approach the various disruptions happening? Here is a potential classification highlighting the pros and cons of the various applications that can be developed based on the blockchain technology.
Blockchain applications can be thought of as:
1. …Occasional Alternatives
These occasional alternatives apply to old applications that do not require many users to operate: two are enough to establish an exchange. Let’s take the example of the first application of blockchain: Bitcoin. It offered immediate value to the few people who used it in the early-stage of its creation. Like emails which replaced expensive, slow, and non-efficient channels of communications such as phone calls, faxes and letters sent by post for single-use, Bitcoin was simply back at the time an alternative payment method.
Other applications can be found in the blockchain as an occasional alternative: when customers want to do instant payments or to exchange foreign currencies. In this sense, blockchain enables to go further as it allows customers to execute financial transactions more simply and more quickly than with the current limited financial system.
2. …Targeted Replacements
Blockchain innovations can also create local private networks used to connect multiple stakeholders such as companies. Small networks or firms can use blockchain to develop networks only used by their employees and within which processes and transactions can be executed. Here, blockchain serves specific purposes localised at a network level.
The sector which uses the most blockchain technology is certainly the financial services industry. Multiple organisations can be connected through a distributed ledger and exchange private information to this particular network. For example, the Bank of Canada tested a digital currency for interbank transfers using blockchain.
3. …Broader Substitution
Beyond applications that are localised, and which only applied to small networks, you can think of blockchain innovations as methods to substitute more significant systems, even ones established for a long time. As such, you can imagine the challenges that the implementation of such systems may raise in terms of new processes and general coordination. The prime example of this kind of innovation is the creation of new cryptocurrencies.
However, the prerequisite to these innovations is to have a high number of users and their real implication to use the new system. When the Bitcoin system emerged, one condition of its success was that every party played the game and embraced it to be able to trade. There were and there are still many obstacles to this adoption partly due to the historical management of fiat currency by financial institutions and governments. To institute such an important change is possible with blockchain even if it comprises significant challenges of the ecosystems in place.
4. …Complete Transformations
Blockchain innovations can be thought lastly as a method to deeply transform systems as we know it, changing the very nature of economic, social and political systems. To achieve such complete transformation, all players of the change must agree on standards and processes. The most complete change we can think of currently is the creation of smart contracts.
Smart contracts are a technology that enables different parties to exchange anything of value (money, property, shares, etc.) without the need for a trustworthy third-party such as a lawyer or a notary. They define an agreement in the same ways as traditional contracts, establishing rules and penalties and they automatically enforce its obligations. But the difference is in their nature which is a small computer program stored inside of a blockchain, making it immutable and distributed.
All these applications look fantastic and induce significant transformation of multiple systems. However, one of the biggest challenges to the blockchain adoption underlying is educational as it will certainly take time to educate people and for them to get used to this disruptive technology and its endless applications. Amotion Labs can help you understand in a simple and efficient way the peculiarities of the blockchain, so don’t hesitate to contact us today.
About Amotion Labs
Amotion Labs is a fintech company specialised in blockchain consulting and cryptocurrencies consulting. We understand the broad variety of customers’ needs, which allows us to develop state-of-the-art cryptocurrencies exchanges. Create and launch the best white label platform that can accommodate all types of coins, from ERC20 ETH, Bitcoin, Stellar or Quora to Customised Token.