Blockchain, invented by Stuart Haber and Scott Stornetta in 1991, is a means of assuring integrity in digital records. Haber and Stornetta launched the world’s first commercial blockchain, Surety, in 1995.
A Blockchain is a method of storing a list of entries which cannot be changed easily after they are created.
This is done by using concepts from cryptography and in most cases, a blockchain is managed by a peer-to-peer network. All peers use a common protocol that specifies how they should communicate with each other how a new “block” is created and validated. Once recorded, the data in any given block cannot be changed easily. Changing the block means all the blocks after it need to be changed as well. Depending on the protocol, this will require a majority of the peers, or even all the peers, to agree.1
In 2008, Satoshi Nakamoto included as references in Bitcoin: A Peer to Peer Electronic Cash System,2 two papers by Haber and Stornetta to defining the public transaction ledger of the cryptocurrency bitcoin.
Blockchain technology can be integrated into multiple areas. The familiar application of blockchain today is known as the distributed ledger for cryptocurrencies, most notably bitcoin.
Cryptocurrencies Most cryptocurrencies use blockchain technology to record transactions. For example, the bitcoin network and Ethereum network are blockchain-based. On May 8, 2018 Facebook confirmed that it is opening a new blockchain group which will be headed by David Marcus who previously was in charge of Messenger.3
Smart contracts Blockchain-based smart contracts could be partially or fully executed or enforced without human interaction. One of the main objectives of a smart contract is automated escrow. But “no viable smart contract systems have yet emerged.” Due to the lack of widespread use their legal status is unclear.4
Banks Major portions of the financial industry are implementing distributed ledgers for use in banking, and according to a September 2016 IBM study, this is occurring faster than expected.5 Banks are interested in this technology because it has potential to speed up back office settlement systems. Banks such as UBS are opening new research labs dedicated to blockchain technology in order to explore how blockchain can be used in financial services to increase efficiency and reduce costs.6
Berenberg, a German bank, believes that blockchain is an “overhyped technology” that has had a large number of “proofs of concept”, but still has major challenges, and very few success stories.7
Video Games Some video games are already based on blockchain technology. The first such game, Huntercoin, was released in February, 2014, and another notable game is CryptoKitties, launched in November 2017.89 CryptoKitties made headlines in December 2017 when a cryptokitty character – an-in game virtual pet – was sold for US$100,000. CryptoKitties demonstrated how blockchains can be used to catalog game assets but also illustrated scalability problems for games on Ethereum when it created significant congestion on the Ethereum network with about 30% of all Ethereum transactions being for the game.
Within the video game industry, while blockchain use is seen as part of a marketplace mechanism, blockchain is also postulated as a way to share video game assets between various games. The Blockchain Game Alliance was formed in September 2018 to explore alternative uses of blockchains in video gaming with support of Ubisoft and Fig, among others.10
Music Blockchain technology can be used to create a permanent, public, transparent ledger system for compiling data on sales, tracking digital use and payments to content creators, artists, and musicians.11 In 2017, IBM partnered with ASCAP and PRS for Music to adopt blockchain technology in music distribution.12 Imogen Heap’s Mycelia service has also been proposed as blockchain-based alternative that gives artists more control over how their songs and associated data circulate among fans and other musicians. Everledger is one of the initial clients of IBM’s blockchain-based tracking service.
What Links Here
- Simple Wiki: Blockchain↩︎
- Bitcoin PDF↩︎
- Recode: Facebook Reorg↩︎
- IMF Report↩︎
- Reuters: US Tech Blockchain and IBM↩︎
- Reuters: US Tech Blockchain and UBS↩︎
- Reuters: Top Banks and R3 Build Blockchain Based Payments Systems↩︎
- Huntercoin Worlds First Peer to Peer MMO Crypto Gam↩︎
- Internet Firms Try Luck at Blockchain Games↩︎
- Bitcoin Magazine: Leading Blockchain and Gaming Companies form Blockchain Game Alliance↩︎
- Blockchain Music Distribution↩︎
- Music Business Worldwide: ASCAP PRS SACEM Join Forces in Blockchain Copyright System↩︎