What is Blockchain?
In simple terms, blockchain is a network of users that allows them to post information, which is then verified by other members of the network. If that particular information is changed, all the members of the network are notified about it and the information is updated accordingly.
Suppose Wafa wants to sell a house in Karachi. She posts all the information of that house on a particular network governed by blockchain technology. That information is then checked by a group of members (often called miners) on the network, verifying each and every detail in the process. Suppose Jack purchases that house from Wafa and posts the details of his ownership on the block. These details are available to each and every member of the blockchain and then verified by the users who then update the information.
Even though the term “blockchain” has widely come into existence in the last year or so due to the exponential rise in the price of Bitcoin, it has been used in its simple form for quite some time now. Take the example of pirated movie sites that have been in existence for quite some time now. Anonymous users would upload a movie on the website that would then be viewed and verified by other users on the network. If the file uploaded by the user turns out to be something other than the movie, users would not verify it and ask others not to download it.
Benefits of Blockchain
The basic elements of a blockchain system include:
- A decentralized database – As mentioned, blockchain is completely decentralized; that is, there is no single authority that has the power of approving or rejecting any transactions or uploading any information. So, for example, a bank has complete authority over customers’ accounts. They can freeze their accounts at their own will, but with a blockchain no single entity has complete control over other users in the network
- Safe System of Transactions – Imagine in our earlier example, Wafa tries to commit a fraud by posting that the house is still available for sale and not bought by anyone as yet. Since, Jack has already posted the details of his ownership and they are already available to each and every user on the network and verified by some of them, Wafa’s attempt to commit this fraud will be discarded by the users on the network.
- Unchangeable Data – No matter what, you cannot change blockchain data. This is perhaps the most important feature that differentiates it from rest of the transaction systems. There is no possibility of duplication and once the records are created, they cannot be altered.
Future of Blockchain
Blockchain technology promises to bring about a revolution in the way things are done. So far, this technology has only affected the financial sector, with cryptocurrency its most prominent innovation. However, there are several other sectors where this technology is currently being tested:
- Medicine – doctors can post a specific procedure on a particular blockchain network. This procedure can then be verified by other experts on the network and if anyone tries to manipulate the information, it will be discarded
- Elections – rumors are circulating that the US might use blockchain network during the next election in two years’ time. Although it might be too soon to call, blockchain would completely remove any sort of data manipulation when it comes to voting for a particular candidate. As soon as you vote for a candidate, your vote would be seen by all the members on the network. Independent users would then count the number of votes and conclude whoever wins the election
- Education – afraid of others finding out your grade? Blockchain would allow for this possibility. Do not worry! Due to the anonymous nature of this technology, your name will not be stated on the network. However, a private secure key will allow you to checkout your grades in the near future
- Signing contracts in real time – Ethereum (for more information check out the article on Ethereum) has designed a feature called “smart contract” which basically follows a “if this-then that” sort of a format. If Wafa wants to sell the house to Jack in return for 10,000 pieces of a particular cryptocurrency and writes this particular criteria in the contract, then Jack will only be able to sign the contract once he transfers the amount to Wafa’s account. Also see our blog on Ethereum
Resistance to Blockchain
- Anonymity can lead to fraud – governments all over the world are discussing about the possibility of levying sanctions on crytocurrencies. The main reason being that the anonymous nature of blockchain prevents authorities from understanding who is sending cryptos and to whom? Critics of cryptos claim that this particular asset can be used by people who would want to evade taxes or convert black money into white
- Processing information would take longer – as blockchain gains more prominence and more users start using the network, the size of the entire network would grow exponentially and thus it would take more people to verify transactions. Thus, processing so much information would require higher computing speed, faster software and better incentives to individuals to verify the data
- Resistance from middle-men – one of the main advantages of blockchain is its ability to bypass middle-men or intermediaries. For example, Jack can simply transfer 10,000 cryptos to Wafa through blockchain at minimal cost without having to go a bank. This is already a worrying sign for the banks since it would take away a significant proportion of their cross-border fee. Most of these banks are powerful organizations both economically and politically and would most likely oppose the use of blockchain or mold this technology so as to maintain their income.
Blockchain Technology in Pakistan
The awareness about blockchain is on a rise in Pakistan. More people are now interested in learning, understanding and investing in cryptocurrencies. The “Bitcoin Association of Pakistan” has been launched and built as a network of people interested in blockchain technology.
Moreover, a number of start-ups dealing in digital currencies have also been launched. Urdubit is first trading platform for cryptocurrencies in Pakistan. Certify.pk is another start-up providing academic authentication for blockchain in Pakistan. On the other hand, we do believe that this technology will take few years to really bear fruits. This technology is still in its infancy and due to the legal complications, it might take several years before we actually see it fully developed in this country.
It is without doubt that Blockchain is one of the most innovative technologies of the last year to make a significant impact in the business world. Every large organization in the world is at the very least exploring the idea about using it to improve its business. Despite its advantages businesses are wary about potential costs associated with it. Just like every other technology it has the potential to disrupt existing industries and create new ones. However, it remains to be seen how effectively we can actually use it to make our lives simpler and better!