In the normal money transfer from one account to another, a process that involves the existence of several levels of processing the received information is initiated, where each link of the chain checks the validity of the data, which means it may take quite a long time and can raise fees charged on the commission. With digital blockchain money, this process is automated and checking is done without the need for a human factor to participate. Here we come to an interesting situation when the expectations of system users are in the interest of cash flow to be as quick and cheaper as possible, and the interests of banks where money transfer is one of their sources of income. It is indicative that banks and institutions are the first to react to this technology.
Two years ago, the famous US bank Goldman Sachs, together with IDG Capital Partners, invested $ 50 million in the launch of Circle Internet Financial. Giants in the banking and finance sector, such as JPMorgan, Bank of America Merrill Lynch, Credit Suisse, Deutsche Bank or BNP Paribas have been experimenting with blockchain for some time in order to reduce the costs that arise as a result of a money transaction. It will be interesting to observe how banks will try to survive in a market game with new rules. Individuals claim that blockchain is the beginning of their end, but it is still hardly imaginable as long as there is capitalism.
What other companies did
Bankers aren’t the only ones that realized the great potential of the new technology. A company named Everledger uses blockchain to provide data (over forty characteristics) about each individual diamond and they in this database already have data for over one million precious stones. IBM has implemented a blockchain-based system for its own needs to make money circulation cheaper and simple.
The Guartime company from Estonia created a database called Keyless Signature Infrastructure, whose function is to provide protection of information about citizens held by public authorities because citizens use one thousand of electronic services. Sweden is implementing the establishment of a database with cadastral information, while Greece has announced that it will do the same thing.
One of the leaders in the practical application of this new technology is the city of Dubai, which plans to transfer the entire infrastructure related to registration and licensing in the sphere of business to the blockchain. This will shorten the time that is normally needed to go from just an idea to the whole business project to a large extent. It remains to be hoped that other states as well will soon implement experiences from Dubai in their own field.
The potential was also seen by the United Nations, which are implementing a project to divide humanitarian aid to refugees in Jordan, which is based on new technology. They also launched a project called Building Blocks, aimed at reducing the money transfer costs of the WFP (World Food Program).
Blockchain far outstrips the technology on which crypto-based devices are based. A term that very few people understand, it can be increasingly seen not only in the tech media but also in the mainstream. Probably the main reason for this lies in the vigorous rise in the value of the crypts, but also the growth of their number. Conceptually, crypts are somewhere between mathematics, sociology, economics, law, and politics.
By understanding the problems blockchain solves and the main concepts on which it is based, it becomes clear why this technology is so significant. The basic concepts were developed in the original Satoshi Nakamoto document from 2008 under the title Bitcoin: A Peer-to-Peer Electronic Cash System. With his work, Satoshi laid the foundation of Bitcoin.
How does it work?
This database is completely decentralized meaning it isn’t stored anywhere. There is only one ledger that is owned by everybody and is public. Every transaction is precisely recorded and timed by all participants of the system. Why can no one cheat? Because if I were to cheat I would not be synchronized with other system participants and transaction records. The rules are defined at the beginning and implemented through the code. In this way, Satoshi first proved that the problem of double spending in digital goods can be solved without a third party or an intermediary in which both parties trust.
Digital good, in this case, functions like a physical asset – it can not be in two places at the same time. Two people or organizations can completely safely, anonymously and without knowledge of each other electronically perform the exchange of values (money or digital well) without intermediaries. This is possible because the entire history of all transactions that have ever been done within the network is preserved by each network participant and must match each of the devices on which it is stored. Also, a certain number of network participants must validate the transaction whenever it occurs within the network, after which it is permanently cryptographically locked and impossible to change.
Blocks and mining
Anna sends Jake 100 dollars from her bank account. In today’s financial system, the bank is the one who guarantees that from one account that money has been deleted and that the other one has received 100 dollars. The same 100 dollars must not be in two different places. Anna and Jake may not believe each other, but they trust the bank as an intermediary.
The principle is the same for ownership of assets or the conduct of any book-keeping transactions. The problem is solved by the broker providing the guarantees. At Bitcoin, this problem is solved by a mathematical algorithm that cannot be influenced. The book pages in the blockchain case are blocks. Network members who keep track of transactions in a block verify and lock it. For this work, the network rewards them with part of a bitcoin and this process is called cryptocurrency mining.
Often, we can hear words like Bitcoin and Blockchain, whose true meaning is insufficiently clear to us. Nevertheless, these “magical” words attract us primarily because there is the possibility of fast and big profit of Bitcoin trade.
For Bitcoin, it is usually said that this is a new type of currency or money. Is that right? Each currency has a central bank that emits a currency and monitors the monetary policy, so it determines how much money will be broadcast and determines the exchange rate of its own currency in relation to other currencies. Bitcoin doesn’t have its central bank so what determines its exchange rate? Many economists claim that Bitcoin is actually a commodity rather than money, but let’s suppose that it is a currency.
Ownership of Bitcoins
The next question is if I buy Bitcoin where is it stored and how do I know it belongs to me? Bitcoin is nothing more than an electronic record that is on the computer and doesn’t exist in physical form, so there are no coins or printed Bitcoin banknotes. An electronic record contains a unique code that defines Bitcoin or its part that we have purchased and which is ours. Of course, we do not have to buy one Bitcoin but we can buy and own one part of it. The unique code that describes Bitcoin can be compared with the serial number of the printed banknote. Let’s imagine that it is enough to know the serial number of the banknote and that it is not necessary to have the banknote itself, as is the case with Bitcoin.
How to know that the purchased amount of Bitcoins is ours? The Bitcoin property record is also an electronic record somewhere on the computer. However, in order to make sure that one of the owners of Bitcoins did not change the amount he owns, this record is located in several places at the same time. A system that ensures that the electronic record of our ownership of Bitcoin is reliable and that no one can challenge it is called Blockchain. The blockchain is a system whit which the ownership information over Bitcoin is located in multiple places at the same time. Should there be a deliberate or accidental change of ownership information in one place only, Blockchain would immediately see this disagreement and declare the amended record invalid.
Why Is Bitcoin Called Cryptocurrency and what are those?
We mentioned the code by which Bitcoin is identified and on the basis of which we know reliably that this Bitcoin exists and belongs to us. His code is obtained by complex mathematical calculations using cryptographic mechanisms. Cryptography is an area that deals with encryption and decryption of data, and one of its special parts is used to calculate the Bitcoin code.
All currencies using cryptographic mechanisms are called crypto currencies. Currently, there are more than 1,300 different crypto currencies, of which Bitkoin is certainly the most widely spread and most famous.
The blockchain is undoubtedly a transformative technology of the 21st century that will redefine various aspects of the organization of society. It is not then strange why its application is currently not only explored by banks or technology companies, but by all industries and governments of various countries.
The reason is that in addition to these basic functions blockchain has the ability to execute programs that lead us to its application and potential business logic. Blockchain offers solutions that far outweigh the basic logic and application of Bitcoin – a transaction. The essence of the blockchain network is in a distributed book containing the records of all transactions that occurred within the network. The main idea of the blockchain is decentralization. However, blockchain can be public and private.
Private is somewhat counterintuitive because the main purpose of this technology is the distribution of power in the system. Whatever the system of proof is at work, no group can control or change the rules arbitrarily. In this way, decentralized crypto-applications and applications have developed a checks and balances system against any operation of the opposite system. This is nothing more than a new way of maintaining an agreement, with a big difference that these arrangements are not guaranteed by any central authority.
We can say that if several different banks make a blockchain, it is not actually a blockchain, but a base. Only if banks, regulators, shareholders, and customers of the bank have access to a blockchain and participate simultaneously, opposing the power of one another, this is a blockchain. The test and balance system is the essence of this technology. That’s why a real blockchain system must be open-source, non-exclusive and decentralized.
Blockchain vs. classic database
If the blockchain is described in this way why would an organization decide to develop it against the usual database? The blockchain is an attractive solution if there is an intention or need for a database to be decentralized. A company or organization may want to achieve a greater data security.
The current databases in business networks are inefficient (each member keeps separate records – overlaps), expensive (central databases are not cost-efficient) and vulnerable to attack (it is possible to hack or enter false information). By using a blockchain, the system becomes more robust and has no single-point of failure. The distributed network cannot be hacked, manipulated, or vulnerable to attacks such as traditional databases. Centralized databases have defined user access to the system. A specific individual, organization, computer, or operating unit directly manages the system.
Because of its decentralized nature and the absence of one authority that manages the system, trust is of paramount importance in one such system. Due to the fact that it is a decentralized and distributed system, the information entered on the blockchain must be unchangeable, ie, they must not be changed subsequently. It is necessary that all who participate in the maintenance of the network (that is, validate) agree before entering the data.
Given that we expect the next move in health to represent the acquisition of digital technologies – either to improve the patient’s condition, or to improve the efficiency of health care tasks – it is important that we focus the current challenges on the exchange and accessibility of data so as not to become an obstacle to progress. In this context, data blocks can be the main savior of this industry.
There are 26 different medical recording systems used in Boston (USA), each system having its own language for presentation and data sharing. Key information is therefore scattered across multiple objects and sometimes, when you need it most, is inaccessible – this is a situation that plays an important role in the US every day, which means high costs, and sometimes even the life of a patient.
How it can help hospitals?
Similarly, as John Halamaka, a co-editor of information in the Beth Israel Deaconess Medical Center in Boston, says that the problem is solvable with customized data blocks, he agrees that his visit is recorded in the data block system – i.e. a decentralized digital book that resembles the one on which the Bitcoin originated. Instead of paying, these data blocks would record important health data in a virtual cryptographic database that would be maintained by a network of computers that are accessible to anyone who runs the software. Any indicator that the physician would put into the data blocks would become part of the patient’s record, regardless of which electronic system the doctor would use – so it could be used by all health professionals without any compatibility problems.
Healthcare professionals can obtain the most from the acquisition of data block technologies. To begin with, “Blockchain” enables the installation of all forms of data. This means that it can include not only prescriptions of medicines prescribed by the doctor and records of treatment, but also information on diet, exercise and records of domestic measurements (eg blood pressure in patients with arterial hypertension) brought in by patients. The presence of such longitudinal patient data in the time of healthcare professionals will enable a better interpretation of the disease symptoms and a regulation of effective treatment adapted to the patient.
How can it help the patient?
Currently, doctors rely on treatment data from different patients when prescribing medicines. The likelihood of success of such medicines is 50%. In many cases, doctors are waiting for the patient’s response when changing the drug. With the availability of longitudinal patient data, doctors would know in advance which treatment is more appropriate for the patient according to his medical history.
If it were to be implemented on a larger scale, data blocks could significantly reduce the cost of healthcare in the world. In addition, it can allow multiple participants to selectively access patient data, thus avoiding the risk of this information. IBM’s research report highlights the following areas of nursing care that can benefit from data blocks: clinical research records, patient records, regulatory compliance, medical device data integration, treatment records, billing and claims, asset management and contract management.