Simply, the blockchain is an immutable public record of data secured by a network of peer-to-peer participants. Once an entry is made, it cannot be removed or edited by anyone. Bitcoin the currency is an application on this platform.
As it turns out, more applications besides the currency can be developed to harness the technology. The following are five of the blockchain ideas that are in the work in progress stage.
1. Distributed cloud storage
This offers a way to store data on a peer -to -peer network against having to rely on a central cloud storage service such as Dropbox, Amazon, and Google drive.
In the later, you trust a single party to keep your data for retrieval at a later date safely. However, with the former, the data is secured by multiple parties. This is similar to how torrents are stored.
Anyone on the internet can store your data at a pre-agreed price. Hashing and having the data in multiple locations are the keys to securing it.
2. Distributed asset ledger
As an immutable public ledger, it can be used to track ownership real world assets through attached pieces of data, which is accessible via private keys held by the owner. The holders of the private keys can exchange assets while viewing the transfers on a transparent ledger in real time.
The control of any digitized asset will lie with the owner of a private key. When this key is transferred, so is the title to an asset. Such keys could access a house, car, financial assets, land titles and virtualized assets.
This will significantly lower the cost as well as ease the process of moving assets compared to centralized solutions.
3. Decentralized notary
One interesting feature of the blockchain is its timestamp feature. The whole network essentially validates the state of wrapped piece of data (called a hash) at a certain specific time. As a trustless decentralized network, it essentially confirms the existence of [something] at a stated time that is further provable in a court of law. Until now, only centralized notary services could serve this purpose.
Say, for example, you have an original written piece of work. To get started, simply have it in digital form, and then compress it into a hash and relay it as a transaction on the blockchain. After the whole network has seen it, it enters a block, and a timestamp effectively confirms you had it first. Later, it can be retrieved to prove you had the original idea at the time of hashing.
Proof of existence is already offering this service.
4. Smart contracts
These are legally binding programmable digitized contracts entered on the blockchain. They are smart because they are automated and can self-execute. What developers do is to implement legal contracts as variables and statements that can release of funds using the bitcoin network as a ‘3rd party executor’, rather than trusting a single central authority.
For example, if two people want to exchange $100 at a specific time in future when a set of preconditions are met, the conditions, payout and parties’ details would be programmed into a smart contract. Once the defined conditions are met, funds would be released and sent to the appropriate party as per terms.
5. Decentralized exchanges
Traditionally, exchanges require an intermediary such as a broker/clearing housing to match buyers and sellers. With the blockchain, the need for this 3rd party arbiter is scraped. Orders to buy and sell are matched and executed using an escrow system while the network acts as a validator.
Counterparty, for instance, runs a decentralized exchange that lets users create their own digital assets that can then be exchanged. On the marketplace, orders are public, matching ask and bids to execute without an intermediary. A system of escrows and malt signature features combined to release funds and assets when buyer and seller come to an agreement.
As mentioned above, most of these applications are still under development under what is called Bitcoin 2.0 projects. The future potential of the blockchain is still unraveling, and it might be a while before we see some of these applications become mainstream.