Digital assets, innovative technologies, channels and systems are creating new paradigms in various industries. Blockchain, for example, is causing massive disruption in many industries with Bitcoin and other cryptocurrencies reshaping the traditional model of operations. In fact, studies indicate that, as of January 2018, the combined market value of all cryptocurrencies is $804 billion, which represents a level of value creation on the order of Silicon Valley success stories.
Although Bitcoin remains the dominant cryptocurrency in terms of market capitalization, other cryptocurrencies are increasingly cutting into Bitcoin’s historically dominant market capitialization, which accounted for 72% as of March 2017. Ether (ETH), the native cryptocurrency of the Ethereum network, has established itself as the second-largest cryptocurrency. The combined “other cryptocurrency” category has doubled its share of the total market capitalization from 3% in 2015 to 6% in 2017.
Today, there are hundreds of cryptocurrencies with market value that are being traded, and thousands of cryptocurrencies that have existed at some point. There are various reasons for the wide adoption of cryptocurrencies and some of them include:
· The cryptocurrency industry has both global and local borderless exchange operations as well as geographically clustered mining activity
· The industry is becoming more fluid as the lines between exchanges and wallets become increasingly ‘blurred’ and a multitude of cryptocurrencies, not just Bitcoin, are now supported by a growing ecosystem, fulfilling an array of functions.
But the bottom line is that these different cryptocurrency systems share common elements — the public ledger (blockchain technology) which is shared between network participants and the use of native tokens which incentivizes participants for running the network in the absence of a central authority.
The Blockchain Technology
Blockchain is a shared, distributed ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible — a house, a car, land — or intangible like intellectual property, such as patents, copyrights, or branding. Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.
Here are features that are common among blockchains:
· A blockchain is digitally distributed across numerous computers in almost real-time — this means that blockchain is decentralized, and a copy of the entire record is available to all users and participants of a peer-to-peer network. This eliminates the need for central authorities, such as banks, as well as trusted intermediaries, such as brokerage firms.
· A blockchain uses many participants in the network to reach consensus- That is, the participants use their computers to authenticate and verify each new block. For example, to ensure that the same transaction does not occur more than once. New blocks are only adopted by the network once a majority of participants agree that they are valid.
· A blockchain uses cryptography and digital signatures to prove identity- this means that transactions can be traced back to cryptographic identities, which are theoretically anonymous, but can be tied back to real-life identities with some reverse engineering.
· A blockchain has mechanisms to make it hard but not impossible to change historical records — That is, even though all data can be read and new data can be written, data that exists earlier in a blockchain cannot in theory be altered except where the rules embedded within the protocol allow such changes — for instance, by requiring more than 50 per cent of the network to agree on a change.
· A blockchain is time-stamped — transactions on the blockchain are time-stamped, making it useful for tracking and verifying information.
· A blockchain is programmable — this means that instructions embedded within blocks, such as “if” this “then” do that “else” do this, allow transactions or other actions to be carried out only if certain conditions are met, and can be accomplished by additional digital data.
Blockchain technology is surely set to revolutionize traditional business networks. With traditional methods for recording transactions and tracking assets, participants on a network keep their own ledgers and other records. This traditional method can be expensive, partially because it involves intermediaries that charge fees for their services. It’s clearly inefficient due to delays in executing agreements and the duplication of effort required to maintain numerous ledgers. It’s also vulnerable because if a central system (for example, a bank) is compromised, due to fraud, cyberattack, or a simple mistake, the entire business network is affected.
But with the blockchain technology, the participants are given the ability to share a ledger that is updated, through peer-to-peer replication, every time a transaction occurs. Peer-to-peer replication means that each participant (node) in the network acts as both a publisher and a subscriber. Each node can receive or send transactions to other nodes, and the data is synchronised across the network as it is transferred. The blockchain network is economical and efficient, because it eliminates duplication of effort and reduces the need for intermediaries. It is also less vulnerable because it uses consensus models to validate information. Transactions are secure, authenticated, and verifiable.
Blockchain technology has been gaining greater application and adoption as various companies have raced to the space to build straightforward and unique systems for users. One example of a viable system that is hitting the mainstream is LUNYR.
Introducing Lunyr
Lunyr is an Ethereum-based decentralized world knowledge base (think a decentralised wiki) which rewards users with app tokens for peer-reviewing and contributing information. The system aims to be the starting point of the internet for finding reliable, accurate information. Lunyr’s long-term vision is to develop a knowledge base API that developers can use to create next generation decentralized applications in Artificial intelligence, Virtual Reality, Augmented Reality, and more.
Mainstream Acceptance
Many projects and companies have emerged to provide products and services that facilitate the use of cryptocurrency for mainstream users and build the infrastructure for applications running on top of public blockchains. The existence of these services adds significant value to cryptocurrencies as they provide the means for public blockchains and their native currencies to be used beyond in the broader economy. This means that we should stop viewing blockchain simply as a fad but more as the transparent public ledger technology it is. We must view the technology within the context of its use.