Many people believe that blockchain is a totally useless technology that has no real world uses.
In reality, they just got annoyed by all the crypto bros with their monkey NFTs.
But whether those people want to believe it or not, there are many real world uses for blockchain.
Blockchain has a chance to really revolutionize, not just the financial system, but many different industries that have nothing to do with finance.
Let’s look at a few blockchain applications and real world uses.
Brief Overview of Blockchain
Blockchain is groups of transactions securely connected to each other.
If you send someone cryptocurrency, the transaction is recorded in a block. When the block fills up with transactions, it needs to be validated, or mined. In Bitcoin’s case, miners race each other to be the first to correctly guess a code called a hash. It takes a lot of energy to guess the hash, but this is what connects two blocks securely together and validates all of the transactions. Each block contains the previous block’s hash connecting them all the way until the very first block.
Blockchain is decentralized, which means that no single entity has control over it. The blockchain is held and updated by the miners on the network, which means that there are thousands of people with the exact same copy of transactions. No one can change the transactions because everyone else can look at their copies and know that it doesn’t match. That’s why cryptocurrencies are unhackable.
Everyone can see the transactions on the blockchain because it is a public ledger. You can easily find any transaction in the history of the blockchain, and because you can’t alter the blockchain, you know that transaction really exists.
You can learn more about
how blockchain works.
So, what can we use blockchain for? Well, lots of things.
Sending Money
The most obvious real world application of cryptocurrencies is to easily send money to someone else. That is the main idea behind Bitcoin. It’s a peer-to-peer digital currency meant to be sent directly to someone else with no middleman. There are many other digital currencies used for payment, but Bitcoin is easily the most popular.
The thing about the bank is that they are slow and inefficient. A transfer between bank accounts can take up to 3 days for some reason. Depending on the transfer it can also be costly to send money to someone else.
Crypto transactions are usually done in minutes, if not seconds, and fees are usually non-existent. Algorand, for example, charges around 0.001 ALGO per transaction. That's about $0.0003. So you could make 100 near-instantaneous ALGO transactions for just a penny.
There are also no borders with crypto. Anyone in the world can receive your crypto within minutes for that same transaction cost. And there is no one to stop the transaction. I had to send money to someone in another country, and it kept getting declined through the bank. It would take three days each time for them to tell me that they wouldn’t allow the payment to go through. I could have easily sent this person some Bitcoin instead and all would have been taken care of in seconds. This is good for people who send remittances to their families.
Decentralized Finance
Unless you have a rich grandmother or something, normally if you want a loan you have to go to the bank. With blockchain, a bank is not needed because of decentralized finance (DeFi).
Blockchain can be used by lenders by issuing loans through a smart contract. Smart contracts are built on the blockchain, and automatically execute when certain conditions are met. A smart contract can be set to send a borrowed money once the borrower has put some sort of collateral in.
For example, an exchange can use a smart contract to send you $25,000 in cash if you let them hold on to 1 Bitcoin. You can then use the $25,000 to do whatever you want. If you want your Bitcoin back, you have to pay back the $25,000 loan. Once the loan is paid in full, the smart contract will automatically release the Bitcoin to you. Collateral can be anything including NFTs.
Smart contracts allow two people to do business without trusting each other because they trust the contract and blockchain instead. We all know the blockchain cannot be tampered with, and the transactions can be transparent for both parties.
Smart contracts and DeFi will help make the financial system faster, more efficient, cheaper, more secure, and no longer in the hands of one entity.
There are also decentralized exchanges (DeX) popping up all over. In contrast to centralized exchanges, which are controlled by a company, these DeXs are open-sourced and operated automatically by the nodes on the blockchain’s network. These are marketplaces where trades occur directly between the users.
With centralized exchanges, if the company goes under you will lose your assets and your money. We have already seen this several times during the 2022 bear market. The biggest being Celsius. They froze trades out of their exchange and didn’t allow users to sell or access their crypto. Those people will probably never see their crypto or money again.
A decentralized exchange would never be able to freeze your assets or take your crypto from you because your crypto is stored in your own wallet. A DeX is also not shadily investing your money on the side because it’s not controlled by anyone.
Verifying Information
Blockchain is unhackable and it is not possible to change any of the past transactions. That means that you can easily and securely verify the transaction and all the information associated with it, and know it’s true because you know it could not have been changed. Blockchain can be used to securely verify information.
Real estate is one area that can be improved by blockchain. Financial information can be verified easily without any annoying, time-consuming paperwork. Afterwards, the deed can easily be transferred to the buyer because that too, is on the blockchain. The transaction on the blockchain that shows the deed was transferred can be easily accessed at any time. Purchasing real estate is a long process that can be sped up and made easier by blockchain technology.
This can be true for cars, or any other large purchases that require financial information to be verified and deeds of ownership to be transferred. It’s possible that real life assets will soon be tied to NFTs, which will be the deeds, or proof of ownership. The NFT of your car title or house deed will sit in your digital wallet.
Other information that blockchain can be used to verify is your digital identity. Your digital identity will be your personal information, but you will only be known as a long string of characters known as a wallet. Using this, governments can easily verify the identity of someone applying for a benefits program like social security, welfare programs, and health insurance. Speaking of health insurance, medical information can easily be verified between hospitals, doctors, or pharmacists.
Digital identities can also be used online when surfing the web. Websites would no longer have to verify any information because your digital identity already does it for you. If the future of the internet goes towards Web 3.0 and the metaverse, you will be able to choose what information you share with the companies, rather than them farming your personal data.
Blockchain’s security will help prevent a lot of fraud in the future of humanity.
Voting
Blockchain can help us with this election fraud nonsense and improve our voting system.
Everyone will be able to cast one vote. You will not be able to cast any more than one vote because the validators on the network will see if an ID is used twice.
Your voting token could also be tied to your digital identity, which means that it can be verified that a real citizen was the one who cast the vote. Digital identities also make it possible that only those who are allowed to vote can vote.
Every vote in the system will be a transaction, which is trackable and easily countable. These transactions will be public for anyone to look at. No one will know who voted for who because everyone will be known as a long string of characters. And these votes cannot be tampered with because transactions on blockchain are impossible to change.
Voting will also be easier than ever before. You don’t have to go to any polling booth or wait in line forever for basically no reason. It will be as easy as opening a government app on your phone and casting your vote for whoever you want. The government will also save tons of money on poll workers, and tons of discrepancy.
No more election fraud nonsense.
Securing Data
As you know by now, blockchain is secure. You cannot, no matter how hard you try, change the transactions on the blockchain. Each transaction can hold some information and that information will be as secure as the blockchain.
Data can be stored with decentralization giving it even more security. Remember, blockchains are held by many people instead of just one entity. It eliminates a single point of failure. If Google is down, so is your data in the cloud.
Imagine you are storing a photo on a blockchain. The transaction (storing the photo) gets recorded on the copy of the blockchain and hundreds of other people will see this transaction. However, they cannot see the information (photo) inside. The only person who can access that photo is the person who holds the secret key (you) that is associated with that transaction.
It is impossible for anyone without the correct secret key to view the data on a transaction.
The Internet of Things (IoT) will also benefit from secure data storage. The Internet of Things are all the physical objects that can exchange data online through the internet. Think your home cameras, smart TV, smart refrigerator, smart toilet, you name it, if it connects to the internet it's part of the IoT.
These objects can be hacked easily to access data or even take control of the object. Blockchain will make these objects more secure by only allowing the secret key to access its network. Passwords can also be stored on the blockchain.
Yeah, blockchain is pretty secure.
Summary
Blockchain is a bunch of transactions linked together with a secure code. Blockchain is decentralized, unhackable, and public to everyone.
Cryptocurrencies can be used to easily, quickly, and cheaply send money to someone else anywhere in the world without the involvement or cost of the bank.
Blockchain is bringing decentralization to finance. Users can securely lend money through smart contracts, and exchange crypto tokens directly with each other on decentralized exchanges.
Information can easily be verified using the blockchain. Things like deeds, titles, financial information, medical records, and more can be on the blockchain to be securely verified. Digital identities will also be on the blockchain, so personal information can be verified.
Blockchain will help improve the voting system by making it impossible to commit any kind of voter fraud. It will also make it easier to vote, and simplify the system for the government.
Lastly, blockchain can be used to securely store data. Since blockchain cannot be tampered with, your data cannot be hacked, and it can only be accessed by the secret key from the original transaction.
Now that you know a few blockchain applications and real world uses, you can learn about
blockchain layers.
