What Is the Blockchain?
I am sure most of our readers know by now what the Blockchain is and how it works. To those who don’t, it can be very confusing. That’s why I am going to give you a very brief summary in Layman’s Terms, so I hopefully make you understand what it is and how it works.
Blockchains are becoming more and more popular thanks to of their transparency, security and instant transactions. The blockchain itself separated from Bitcoin is popping up everywhere, now that businesses are learning how much money they can save by using it.
There are many different types of blockchains, so here is a list of the three main classifications.
Bitcoin is the star example of a public blockchain made for the people, by the people, of the people. It is an open ledger for anyone who wants to participate. At any time anybody can check the transactions on the blockchain ledger. It is known as the Public Distributed Ledger, and it is a transparent, decentralized, P2P open source ledger. Anyone can audit, create a transaction or mine on a public blockchain.
A Private Blockchain is the type which belongs to an entity which holds absolute control. This type of blockchain is Private Property and is run by an authorized person or an organization. The authorized personnel in charge decides who can and who can’t mine, as well as make transactions. They also control all the information going on the blockchain.
Nobody can do any transactions on this blockchain without approval. It’s also centralized, which means that only a few authorized individual(s) are permissioned to control it.
This blockchain basically defeats the purpose of the original Bitcoin project. Bitcoin blockchain was created for the public, specifically for its transparency, and decentralization to take control away from third parties. Here’s yet another instance to imply the idea of control: those who run these blockchain may also design them with a closed source.
One example of a closed source blockchain is the crypto to crypto exchange ShapeShift.
3. Federated or Consortium Blockchain
Federated Blockchain is made up of members and is similar to the Private Blockchain. An example is Blockstream’s Liquid sidechain, which is controlled by the participant exchanges which share voting power in regards to decision-making.
Consortium Blockchain is when a group of people or an organization control the blockchain. Consortium does not allow just one person to control the blockchain. In this system, members can make transactions and mine as well. Only members are allowed, and nobody else. Under these considerations, we automatically imply a greater amount of decentralization, as opposed to the public and open blockchains.
How does it all work?
POW and POS are a couple of examples.
POW (Proof of Work) is what the Bitcoin blockchain uses to solve very difficult mathematical algorithms, in order to secure the network with hashing power and mint more coins according to the block-producing schedule. Decentralized consensus mechanisms make all the decisions configuring blocks. Once an algorithm is solved and verified the miner(s) are rewarded in Bitcoin, the high degree of decentralization allows the to go on the chain and make is public. Blocks are time-stamped and configured, then put on the chain. The chain is the public ledger, hence the name Blockchain. While the miners are running the client to solve complex mathematical problems, they also help create more bitcoins.
POS (Proof of Stake) is when the user mines the coins by investing in the coin and holding it in his or her wallet. There is a schedule of when they will be rewarded, thus gaining free coins for holding. Most of the time you just download the corresponding wallet, buy a required number of coins, and hold them in your wallet online as scheduled. On schedule, the user (miner) is awarded a mining fee in coins, or sometimes just pieces of a coin, it just for a certain amount of time. Your rewards usually vary on the amount of coins you’re holding. However, payout systems vary from coin to coin.
Just What is IoT Internet of Things
The IoT Internet of Things is just that; something physical that has a unique identifier (UID) that correlates with the Internet. It operates without human to human interaction in order to transfer shared and collected data over the network.
At this moment, there are already more than 12 billion devices that have the capability of connecting to the internet, researchers claim. Also, it is estimated that by the year 2020 there will be more than 20 billion devices that are capable of connecting to the internet.
Right now, there are devices on the IoT that nobody would have ever imagined. An example is the Smart Refrigerator, which is really able to save you money. After shopping, you get home and begin putting your groceries away. Everything you put in the fridge get scanned, and all expiration dates on packaged food products get stored and processed. Now, the refrigerator is smart enough to let you know on your phone when something is close to expiring. In the long run, that is going to save you money on groceries and bring your food waste close to zero.
You can put just about anything physical on the IoT, and I mean anything and everything. People will find out soon enough that they can use advanced features for everything from their medications to their children. My point is, if it is anything physical that can be controlled and connected to the internet, then it can be added to the IoT.
As the blockchain and IoT continue to merge, they will become a match made in Heaven. The blockchain will be able to secure the IoT from hacker cyberattacks. Both of them doubling up creates endless possibilities, as anything can be put on the blockchain beyond one’s imagination.
There are smart cities popping up all over many different areas and regions waiting to connect to the IoT. These smart cities will be able to track their entire city while having real-time information about the ecosystem. Everything originating in the city will go on the IoT including smart cars, smart houses, and even water systems.
Some Pros and Cons of the Match Made In Heaven
Poor Security is one of the main issues with the IoT. Initially, items placed on the IoT only had a 26% success rate, due mainly to the lack of security programming. This is where the blockchain comes in, by adding the extra layers of security which make the systems less likely to be hit with cyber attacks. As the pair moves forward continuously improving, security gets tighter.
Another concern is how many people will be replaced and lose their jobs due to the merging of the two; the IoT and the blockchain cut out many of the middlemen, as they will no longer be needed. In this case, many businesses will save huge amounts of money, and increase their revenue by cutting out third-party employees.
As an example of this, about 300 Wendys Restaurants have already installed Kiosks to take customer orders, as a way to reduce the high labor cost. If you run into one of those Wendys you will place your order manually by using the device. This Kiosk will process your order, send it to the cooks, and also take your money for payment. This is just one example of employers that are already replacing employees with autonomous machines to cut cost.
Yet given these innovations, one can’t help but ask what the future holds in regards to job security. If you think about it, a lot of people can be replaced with the blockchain, IoT, and AI (Artificial Intelligence). But that’s a whole other debate that we should save for another article.
On a good note, when the IoT is running well and without problems, it will be able to cut the cost of wasted food. IoT plans to solve this problem by predicting when food expires. They are going to place access points at every section of the supply chain. This IoT plan is just another way to save businesses a lot of money.
Back to the Future
There are going to be a lot of revolutionary changes made throughout the future that the entire world will need to adapt to. Eventually, who knows? Maybe that at some point in time, one of these years, the blockchain and IoT could possibly have the majority of items in the world on the IoT. One might find this almost inevitable. Technology is evolving at lightning speed, and there is no harnessing it. The world we know will disappear as we step into the abyss and our physical things will go on the IoT, and we will continue to evolve as we slowly emerge into a new Digital World.
Combine AI, IOT, Big Data, and the Blockchain and we will see the dawning of the Fourth Industrial Revolution.