When Bitcoin
first emerged, the cryptography community was instantly enthusiastic
about it. Created by an anonymous figure known as Satoshi Nakamoto, it
represented the culmination of years of research and work carried out
within the field. The aim was to create a digital currency that would be
beyond the reach and control of a central authority. To power Bitcoin,
Nakamoto used a fully functional blockchain
and over the years, as more cryptocurrencies have emerged under the
same open source principles, the world is looking to their underlying
technology to solve its most pressing problems. As all this is going on,
understanding what the technology actually does and how it aims to
solve these issues can be confusing.


A
blockchain is a unique data structure made up of records known as
blocks. Each block is linked in a chain, using advanced cryptography and
is considered one of the most secure data storage structures. Every
block on a blockchain is considered tamper-proof because it contains a
unique number known as a cryptographic hash, as well as a timestamp. Any
attempt to manipulate the data will cause the hash to change.

Blockchains are mostly distributed
peer-based structures, allowing various computers to interact and verify
transactions within its network. Because there is a wide distribution
of peers on the network, it is difficult to become biased towards any
other user. This makes the system almost completely trustless.  Most
blockchains are designed to be open to anyone, transparent, efficient,
and verifiable. In fact, blockchains have been adopted in many different
industries due to these benefits.

Due to how innovative it is, as well
as the amount of buzz it is generating among people and corporations in
different industries, blockchain has been compared to the internet. When
the internet first emerged, there were many problematic aspects of it,
such as how to secure it from malicious actors. Although these problems
were apparent, the internet has proven to be one of the most useful and
permanent technological innovations.

Blockchain is currently facing some
of those problems, but it’s clear that it holds the potential to
revolutionize the world, much like the internet has. For this reason, it
is referred to as “Internet 2.0” in many circles.

How it Works

Although blockchain is usually
discussed in its most common form, it's important to note that there
isn't only one type of blockchain. So when factors such as
decentralization, security, transparency, and privacy are discussed,
they apply differently to every type. The different types of blockchains
are public, private, and consortium blockchains.

Public Blockchain

As its name suggests, a public
blockchain is meant for public use. It can be accessed by anyone and is
meant to hold anyone’s transactions. It is fully decentralized and does
not have any special conditions that users must meet before accessing
it. Public blockchains emerged as the default form of the technology and
are present in most cryptocurrency networks to date.

This type of blockchain is not owned
by a central authority and can be read and even audited by any member of
the public. As a result, mining, which secures the network, can be
carried out by anyone. It is less restrictive than other blockchain
types and since it isn’t controlled by any single person, it can be
accessed from any location around the world.

Public blockchains embody the
qualities of transparency, decentralization, privacy, security, and
scalability, which are often advertised as the main benefits of any
blockchain. But if a blockchain is open to just about anyone, then how
can anyone trust that it’s truly secure? The answer is that these
networks are trustless and count on a special mechanism known as
consensus to keep them functioning.

Consensus Mechanism

Simply put, a consensus mechanism is a
protocol that ensures that all devices connected within a blockchain
system (also called nodes) jointly agree on the validity of
transactions.

As a quick example, if there are ten
strangers in a room, and one of them gives $5 to another person in that
room, the only people who can validate that small transaction, are the
remaining 8 people there. If all eight of them are in sync and jointly
agree that person A did indeed give person B $5, then that transaction
can be recorded as a valid one.

However, when dealing with thousands
to millions of people, and none of them are in the same room, there have
to be unique principles set up to create a truly trustless system in
which transactions are easily validated. That's where consensus
mechanisms come in. These mechanisms exist to make sure that everyone
has the same version of the blockchain: the accurate and comprehensive
one. This, in turn, ensures that the single accurate blockchain cannot
be manipulated secretly and can be audited easily.

There are many different types of consensus mechanisms, and the most popular ones are:

• Proof of Work (PoW): This is the first consensus mechanism to exist for blockchain applications and is still used by the Bitcoin network. It involves a group of nodes known as miners, continuously vying for the chance to add new blocks to a
  blockchain. To do this, they solve complex puzzles and are rewarded by
  the network. Unfortunately, this mechanism leads to centralization,
  since it is expensive to carry out.

• Proof of Stake (PoS): This consensus mechanism requires nodes to stake a certain amount of the given currency to be able to validate transactions. Validating nodes are discouraged from trying to manipulate the network since they are at
  risk of losing their stake.

• Delegated Proof of Stake (DPoS): Unlike a regular PoS system, DPoS delegates the duty of transaction validation to certain nodes, usually based on a vote carried out by network users. The selected nodes are required to either perform well or give up their
  positions as delegates. This mechanism is currently used by EOS and Steemit.

• Proof of Activity (PoA): this is a combination of Proof of Work and Proof of Stake consensus mechanisms.

• Byzantine fault-tolerant (BFT): Stemming from the centuries-old tale of the Byzantine generals, BFT involves selecting nodes to be in charge of specific chains. Each of these nodes is responsible for validating the chain they are responsible for and
  coordinating with other chains. Hyperledger fabric uses a similar
  system.

• Proof of Elapsed Time (PoET): First described by Intel in 2016, the PoET mechanism assigns "rest” periods to nodes on the network. The first node to finish its rest period wins the right to validate a block. It is still used on the Hyperledger Sawtooth
  platform.

• Proof of Authority: This aims to secure the network and keep it decentralized by staking the authority and reputation of the nodes on a network.

A private blockchain is usually
created by a single user or organization for personal use. Unlike a
public blockchain, it is fully centralized and all operations are
controlled by a single authority (the same one that owns it). The owner
can also restrict access to certain parties and no transactions here are
anonymous. Security and transaction validation nodes are selected by
the central authority, and there is no transparency since it cannot be
accessed without permission. The point of having a blockchain like this
is that people or organizations can store and transfer data secured with
cryptographic functions. However, there is still widespread debate on
whether a private blockchain is really a "blockchain" since it goes
against everything that the original creation of the technology stands
for. One example of a private blockchain is Bankchain.

Similar to private
blockchains, consortium or federation blockchains are centralized. The
difference is that they are shared by a group of individuals or
organizations that control the flow of transactions on the network.
Consortium blockchains are mainly used in enterprise networks or supply
chains that involve several organizations. They are not open to external
users and all transactions are private to some extent.

Like public blockchains, consortium
blockchains require consensus among its users, in order to validate
events on the network. This means that all consortium members must agree
on various decisions that affect the network. For example, if the Big
10 tech companies or a group of tech startups decide to form a
consortium, they can privately vote and have a fair and trustworthy way
to store and validate voting data. Since there isn't a single authority
in charge, there are multiple points of failure, making it almost
impossible to infiltrate the network. An example of a consortium
blockchain is the Energy Web foundation (EWF).


To
deduce what the future of blockchain technology and its potential
effects on the world could be like, it’s important to look at how it is
currently being applied, and just how useful those applications are.

Finance

By default, the first major use case
for blockchain technology was solely financial. Bitcoin was created as a
fast, easy, and secure way to store assets and transfer them from one
point to another. Later, other platforms refined this financial
application, focusing on specific issues within the sector such as
remittance.

According to the World Bank,
“annual remittance flows to low- and middle-income countries reached
$529 billion in 2018.” This is a 9.6% increase from remittance flows of
$483 billion in 2017. Total global remittances, including flows to
high-income countries, was approximately $689 billion in 2018, an
increase from $633 billion in 2017. This shows that remittances are
growing every year, despite the issues that people face while trying to
send money to other countries.

One major issue is the time taken for
cross-border bank transactions to go through. Another issue is the
number of third parties involved in the process, which play a role in
the significant amount of bank charges that senders and recipients
incur. Platforms like Ripple  (XRP) and Stellar (XLM)
are tackling these issues directly. For Ripple, the main focus is
aiding banks to simplify the remittance process using xCurrent and
xRapid, their main products. Stellar, on the other hand, is focusing
more on low-income problems with worse banking issues.

Other applications include:

• Supply chain management in the food industry and the shipping industry.
• Art
• Real Estate
• Entertainment

Blockchain technology has
quickly become more significant than it was when the world first heard
of Bitcoin. Development within the space is progressing quickly, as new
projects and applications emerge. Smaller niches around blockchain are
also developing quickly, such as blockchain education.
Research centers such as the one built in Turkey, university bursaries
such as the one set up in Malta, and blockchain courses such as the one
taught at Stanford are no longer anything new.

The job market is also exploding,
signaling the need for the acquisition of blockchain-related skills in
software development, management, design, and marketing.

This in turn is motivating more
education providers to create a more comprehensive courses. People are
diversifying their skill sets to prepare for changes in their
industries. For example, real estate agents may have to diversify to
meet the needs of investors who would rather carry out their
transactions using smart contracts. This pressing need to diversify
gives a glimpse into just how much of a world power blockchain could be
in the future.

The internet as we know it today was
formed from the ideas and contributions of great minds, such as Nikola
Tesla who played around with the idea of a "world wireless system" in
the 1900s, Paul Otlet and Vannevar Bush, who created media storage
systems in the 1930s, and MIT's J.C.R. Licklider, who toyed with the
idea of an "Intergalactic Network" of connected computers in the 1960s.
Until Tim Berners-Lee invented the World Wide Web, these notions didn't
seem feasible to the average person. When the internet finally emerged
in full force, Silicon Valley witnessed one of the worst bubble bursts
ever.

The years of research and work put
into the development of blockchain technology mirror those of the
internet. Looking at the market capitalization of various
blockchain-powered currencies, it's clear that technology is gearing up
for big things in the future. For this reason, it's important to look at
its possible future growth and the industries that may be disrupted.

From an economic viewpoint,
blockchain has shown significant growth over the years due to the number
of investments flowing into the field. Evidently, from the number of
patents they've filed so far, large corporations such as Facebook,
Amazon, IBM, Walmart, and Mastercard have been searching for ways to
integrate blockchain technology with their regular operations. IBM alone
has applied for more than 100 patents in the past 6 months and has invested hundreds of staff and more than $200 million in Blockchain.

In 2017, Venture Capitals funded blockchain startups to the tune of $1 billion. Global investment in initial Coin Offerings has hit $5 billion since the first ICO was held.

According to a World Economic Forum survey,
up to 10% of the global GDP could be stored on a blockchain by 2027.
Governments around the world have also published research and invested
in staff training as well as blockchain infrastructure.

Cryptocurrency and blockchain
have gone from something abstractly spoken of to a powerful investment
engine that is constantly rising in valuation. At press time Bitcoin,
the largest digital currency, has a market capitalization of
approximately $137 billion, priced at more than $7,000 per unit.

Other digital currencies are
following closely behind, and with more than 1,600 to analyze, it can be
difficult deducing what prices may be like in the future. Fortunately,
some experts have come up with their own predictions which may show a
clearer picture of what the future holds. Some of these predictions are:

• According to David Drake, founder of LDJ Capital, Bitcoin could be worth $30,000 per unit. His statement to Bloomberg:
  “I’d say this year is a cryptocurrency Wall Street time and … we think cryptocurrency on the Bitcoin will be worth $30,000 at the year-end—it
  is limited.”

• Bobby Lee, head of The Bitcoin Foundation, tweeted that Bitcoin could surpass $60,000. The tweet reads:
  “When #Bitcoin passes the USD $60,000 price level in the coming years, it’ll reach a total circulation value of $1 Trillion. That will be a huge
  #milestone for $BTC, and it’ll lead to more price stability, higher
  global liquidity, and even faster adoption worldwide. #VirtuousCycle”
  
• Apparently, Tim Draper sees Bitcoin skyrocketing to $250,000 by 2022. His statement to TheStreet:
  “This is going to be so big so if you see a dip, jump in. Maybe it will dip further but boy, I made that prediction and I’m sticking to it. $250,000
  by 2022 for Bitcoin.”
  
• According to Cameron Winklevoss, one half of the Winklevoss twins, founders of the Gemini exchange, Bitcoin could hit $320,000 in about 10 - 20 years. His statement for CNBC:
  “So,
  if you look at a $100 billion market cap today, now last week it might
  have been more like 200, so it’s actually a buying opportunity, we think
  that there’s a potential appreciation of 30 to 40 times because you
  look at the gold market today, it’s a $7 trillion market. And so, a lot
  of people are starting to see that, they recognize the store of value
  properties. So, we think regardless of the price moves in the last few
  weeks, it’s still a very underappreciated asset.”
  
• Unlike the Bitcoin bulls, Bill Gates doesn’t see Bitcoin going up. He made this clear in the following statement for CNBC:
  “As an asset class, you’re not producing anything and so you shouldn’t expect it to go up. It’s kind of a pure ‘greater fool theory’ type of
  investment… I agree I would short it if there was an easy way to do it.” – Bill Gates
  
• Joe Davis, head of Vanguard’s Investment Strategy Group, predicts that BTC will fall to Zero.
  “As for Bitcoin the currency? I see a decent probability that its price goes to zero.”
  

Since most major digital currencies
move with the price of Bitcoin, it's safe to say that many blockchain
projects will be affected by its price movement. Any of these
predictions could be correct, yet all of them could be wrong. If the
experts have taken the time to put out these predictions, then there
just might be some atom of truth to them. If anything, these predictions
show that by looking at price alone, the future of blockchain
technology is uncertain.

Several reports showing the
expected growth rate of blockchain technology have been published by
different government and private research teams.

• A report published by Research and Markets, a data research organization on the 25th of March shows that by 2025, blockchain spending in the United States would have risen from $3.1 million to $41.1 million. The report
  called the "United States Blockchain Business Opportunities and Outlook
  Databook Series (2016-2025)" also shows a compound annual growth rate
  (CAGR) of 44.5%. According to the research data collected from 11
  industries, blockchain spending in the U.S. saw a 110% increase to $1.6
  billion.
  
• During the same month, another report, dubbed "Worldwide Semiannual Blockchain Spending Guide" and released by market research firm International Data Corporation (IDC) predicts that global blockchain spending will see a five-year CAGR of 76%, reaching
  to $12.4 billion in 2022. In the past, IDC has predicted that global
  blockchain spending would reach $9.7 in 2021 and $11.7 billion in 2022.
  However, the United States will take the largest share, with blockchain
  spending reaching $1.1 billion. Western Europe and China, will record
  blockchain spending figures of $674 million and $319 million
  respectively.

Blockchain
has been shaped by many different events that not only show a rich past
but hint at a better-developed future. This is a brief timeline of
blockchain events, culled from Hobbes' version of events.


1991-2007

• 1997- Nick Szabo released the first plan for smart contracts, titled  "Smart Contracts: Building Blocks for Digital Markets."
• 26 November 1999 - Nick Szabo introduced plans for Bit Gold, a conceptual virtual currency, titled "Secure Property Titles with Owner Authority, the first use of "bit gold."
• Wei Dai introduced b-money, a protocol for financial exchange between anonymous parties.
• 20 September 1999 - Markus Jakobsson and Ari Juels introduced the concepts of Proof of Work and Bread Pudding.
• 15 August 2004 - Hal Finney introduced the concept of Reusable Proofs of Work (RPOW) on the cypherpunks mailing list.
• 23 September 2004 - Ryann Fugger registered and founded RipplePay.

2008

• August 18th - The bitcoin.org domain name was registered for the first time.
• October 31st - The concept of Bitcoin, a virtual currency that runs on blockchain was first introduced by anonymous figure, Satoshi Nakamoto. The whitepaper titled "Bitcoin: A Peer-to-Peer Electronic Cash System" was
  sent to the Silk Road, a Cryptography mailing list.

2009

• January 3rd - Bitcoin Market established itself as the first bitcoin exchange in an era when Bitcoin and blockchain technology remained unpopular.
• January 12th - Hal Finney and Satoshi Nakamoto initiated the first bitcoin transaction, marking the beginning of cryptocurrency use.

2010

• May 22nd - The famous pizza day on which 10,000 Bitcoins were used to purchase two pizzas. Today, those Bitcoins worth $25 at the time, are worth approximately $80 million.

2011

• January 28th - 1/4 of all bitcoins that will ever be in existence had been generated. After this date, mining became more popular. This was a major event in the evolution of blockchain technology.  
• February 9th - The price of Bitcoin caught up with that of the US dollar for the first time.
• April 23rd - The price of Bitcoin caught up with that of the Euro and pound for the first time.
• June 8th - BTCChina, China's first bitcoin exchange was established.
• June 19th - MtGox accounts were compromised.
• June 24th - The mining difficulty of the Bitcoin blockchain exceeded 1,000,000.
• October 7th - Charlie Lee established Litecoin.

2012

• May - The first issue of Bitcoin Magazine was published under founders Vitalik Buterin and Mihai Alisie and published the first issue.
• September 27th - The Bitcoin Foundation was established.
• November 2nd - The First Bitcoin blockchain reward halving from 50BTC to 25BTC per block occurred.

2013

• March 12th - Miners encountered their first major blockchain problem when they mined a block running on version 0.8 of the Bitcoin software, using version 0.7 of the software. This resulted in a forked rollback.
• March 28th - The value of Bitcoin in circulation hit $1 billion.
• July 29th - Thailand banned all cryptocurrencies including Bitcoin.
• August 6th - U.S. Federal Court acknowledged Bitcoin and blockchain-backed currencies as a form of money.
• October 1st - The FBI cracked down on notorious illegal marketplace, Silk Road, and seized 26,000 BTC.
• The first Bitcoin ATM was commissioned in Canada.
• Vitalik Buterin released the white paper for a different type of blockchain platform titled "A Next-Generation Smart Contract and Decentralized Application Platform". This formed the basis of Ethereum and created a new use case for blockchain technology in many industries.

2014

• January 25th - The prospective launch of Ethereum was announced at the North American Bitcoin Conference.
• March 25th - The IRS released a guide for cryptocurrencies, stating that they would be treated as property for tax purposes.
• Gavin Wood released a second Ethereum Paper titled "Ethereum: A Secure Decentralized Generalised Transaction Ledger."
• June 27th - US venture capitalist Tim Draper adopted Bitcoin by purchasing the 30,000 BTC confiscated during the Silk Road crackdown and auctioned by the US Marshals Service.
• Overstock.com, Expedia, Microsoft, Dell, TigerDirect, and Newegg started accepting Cryptocurrency as a means of payment. This showed that mainstream adoption was progressing.

2015

• January 4th - Bitstamp was hacked and several wallets were compromised. The loss totaled over $5 million (19,000 BTC) at the time.
• January 26th - Coinbase, the first US-based cryptocurrency exchange was established.  
• September 15th - Nine financial institutions formed the R3 consortium.
• September 17tth - The U.S. Commodity Futures Trading Commission recognized digital currencies as commodities in a ruling against trading platform Coinflip, in a case of unregistered bitcoin options.
• September 22nd - The first Bitlicense was issued by NYDFS to Circle Internet Financial.

2016

• February 9th - The Linux Foundation announced the HyperLedger project with a total of 30 founding organizations
• March 14th - Homestead, the first Ethereum product, was released.
• April 30th - The launch and beginning of a 28-day crowdsale of The DAO(decentralized autonomous organization) which rose in valuation to $150 million in just one month, occurred.
• May 31st - The Chinese Financial Blockchain Shenzhen Consortium comprised of 31 members was established.
• June 17th - The attack on The DAO occurred due to an attacker recognizing and taking advantage of a bug in the system. This led to the loss of 3.6 million of the 11.5 million ETH in The DAO.
• July 20th - The Ethereum network was forked to reverse the DAO transaction and recover the funds. The original network was renamed Ethereum Classic.
• August 2nd - The Bitfinex exchange was hacked and 119,756 bitcoins worth approximately $70 million were lost.

2017

• January 2nd - Bitcoin surpassed $1,000 in value for the first time since 2014.
• January 16th - Seven European banks joined the Digital Trade Chain platform.
• February 28th - Enterprise Ethereum Alliance was established with 30 founding members.
• March 10th - U.S. Department of the Treasury established its FinTech Working Group.
• April 1st - Japan officially recognized and declared Bitcoin a currency.
• April 25th - Tencent released its TrustSQL blockchain platform.
• June 20th - The Bitcoin sign was added to Unicode at the U+20BF code point.
• August 1st -  The Bitcoin network underwent a hard fork to allow for more than 1MB of space in each block. The new branch was called Bitcoin Cash.
• October 19th - Dell stopped accepting BTC as payment for its products, signifying a possible regression in mainstream adoption.
• December 6th - The Lightning Network Protocol 1.0 was released.
• December 16th - Bitcoin broke the price point of $20,000. This led to widespread adoption of cryptocurrencies as investors began to recognize the potential of Bitcoin. Soon, blockchain was the main focus of several
  industries as more researchers looked into its many applications.
• December 21st - Long Island Iced Tea Corp. rebranded and was renamed Long Island Blockchain Corp. this led to a stock price increase of 200%.

2018

• January 9th - KODAK adopted blockchain technology for use on its content rights management platform, KODAKONE and its stock price increased by 60%.
• January 12th - Baidu launched Blockchain-as-a-Service (BaaS) platform.
• J.P. Morgan Chase, Capital One, Citigroup, and Bank of America stopped accepting Bitcoin purchases on their credit cards.

Eliminating Trusted Third Parties

The way industries are currently set
up, most processes cannot happen without trusted third parties.
Blockchain could potentially change this eliminating the need for a
trust-based system. By default, blockchain consensus mechanisms allow
transactions to be validated without the huge fees that accompany
third-party involvement.

Secure Internet

Blockchains are secured using more
reliable methods than many other systems currently use. As a result,
blockchain technology could be the key to internet security. It could
potentially protect users from malware and phishing scams and even offer
passwordless login systems. Because it is distributed, it is difficult
to dismantle so user data probably will not disappear.

Advertising

Digital advertising
on the internet comes with its own set of issues, such as the presence
of malicious bots, domain fraud, slow payment, and a general lack of
transparency, especially when influencers deal with large companies.
Blockchain will create transparency and facilitate agreements between
parties through the use of smart contracts which self-execute. So
instead of waiting for companies to wade through the accounting
paperwork, smart contracts payout whoever needs to be paid as long as
they fulfill the specified conditions.

Voting

There is also a lack of transparency
in existing voting systems., leading to controversy. Blockchain prevents
manipulation, the use of fake identities to cast votes, and external
influence on the election results. Using a blockchain, votes can be put
into blocks with their own unique numbers so that if votes have been
manipulated, it will show. This could be the future of elections all
over the world in a couple of years. There are already blockchain-based
voting platforms in operation, such as SecureVote, Polys, and Agora but
this form of voting may take some time to adopt.

The current and future
applications of blockchain technology are boundless. The projected
figures, coming from blockchain investment show that corporations and
individuals have a firm belief in these applications and are ready to
build them. The community of researchers, developers, scientists, and
investors who stand behind the technology as they stood behind the
internet in its early stages, also makes it difficult to envision
anything other than growth.

The conception of blockchain has been
compared to the creation of the internet and to some extent, there are
similarities. But there are some who may argue that blockchain may hold
even greater implications for the world. On the other hand, there’s
something that no one wants to consider: the possibility that blockchain
won’t reach its full potential. While there is overwhelming evidence
that it could explode into a vast billion-dollar industry, there may
also be a point when the bubble bursts.

It happened with the internet, and it
tends to happen whenever an emerging technology is causing a buzz
around the world. But the thing with bubbles is that when they burst,
people find a way to rebuild without all the previous noise. So there
may yet be hope for blockchain in that scenario. However, there may also
be no bubble and all that occurs is continuous growth until the world
gets it right. Either way, the world’s industries need a radical change
and time will tell whether blockchain will bring about that change in
the future.