New Institutional Economics: Blockchain Technology

Many have heard of blockchain tech and its promising results, but we need to explore it a little more. This will help you move closer toward building a safer system for communicating, trading, voting, storing documents, filing patents, etc.

The blockchain development process has become increasingly streamlined, and you can get started with building your solution today. But let’s start with the basics and how this technology has almost become a buzzword in the fourth industrial revolution.

Blockchain is a system or mechanism that ensures better security and safety levels for a variety of transactions. This concept has been around for quite some time, but it gained attention when Bitcoin was launched.

With the hype around the new cryptocurrency at that time, its underlying technology garnered much attention, particularly concerning how this mechanism works and could be used for other industries. Some commentators have gone as far as saying that the blockchain could reduce corruption of all kinds, and even erase poverty and save the Amazon jungle. Pun intended.

While we can’t say much about the distant future, we understand the concept, and we see its use spanning the length and breadth of data security like no other system, saving on resources like time and manpower. This is simply because the blockchain allows you to remove the ‘middleman,’ critical to traditional systems. This change gives rise to what Nobel economist Douglas North terms New Institutional Economics.

North referred to institutions such as a constitution applying formal rules that produces constraints to prevent bribery and other malpractices. These institutions or sets of rules that act as ball bearings for economic wheels to turn effectively. Evidence of this is seen throughout human history.

So, what does this have to do with blockchain technology?

“As humans we find ways to lower uncertainty about one another so that we can exchange value” Bettina Warburg.

Douglas North saw institutions as a means of mitigating uncertainty and increasing social and economic stability, enabling people to establish relationships and exchange value. We have already crossed the threshold of a radical evolution concerning interaction and trade. Elements like IoT and Blockchain tech are part of this threshold comprising the fourth industrial revolution.

Previously, we only used political and economic institutions to mitigate uncertainty. These include banks, corporations, and governments, but now we can solely rely on technology. This is why blockchain tech has become significant.

Since blockchain tech is at the core of more certainty, it’s worth taking a look at how it is structured.

Blockchain Database Concept – The Basics

Spreadsheet, database, and blockchain – what’s the difference?

The three scenarios we’re about to review, aptly demonstrate blockchain’s uniqueness.

Spreadsheet

This can be a simple MS Excel sheet that you use for tracking tasks.

Database

This allows you to enter and store retrievable data, and you can share it with multiple people easily. If you have massive amounts of data to host, you need powerful systems that are spread across multiple computers. Your Google spreadsheet also does the same for you, but you realize that there is an entity (Google) that makes that possible.

Blockchain

As the name implies, blocks of data are chained together chronologically. Each block has a certain capacity that is filled with data. Once filled, it is chained to the previous block, and its timestamp is marked. Making any changes to this block is impossible once chained. This is the core difference between a blockchain and a database.

Takeaway

By definition, Blockchain technology is a decentralized database that serves as a public registry of assets and transactions specifying who owns what and who transacts what, spanning a peer-to-peer network, secured via cryptography with time stamps for each part of an asset’s transaction history, locked in blocks of data, producing a chain of records that can’t be broken or forged.

The closest analogy to blockchain tech is Wikipedia, a record that can be viewed by every participant.

The blockchain forms a large, seamless, and continuous database due to blocks of data being added, thus forming a chain. Data from these blocks can be accessed for reading purposes only and cannot be changed or manipulated.

For example, when a transaction is entered, it is transmitted to a network of peer-to-peer computers (geographically separated), which run an algorithm that validates the transaction. This validation occurs at registered and verified nodes, which further account for reliability that is essentially a part of the DLT (Distributed Ledger Technologies).

Out Goes the Middleman

The blockchain concept is a major disruption to traditional processes, but it delivers value by removing the need for a third party (middleman) such as a financial institution that regulates financial exchanges.

With the blockchain, strangers can run their affairs without distrust or any third-party involvement. In this scenario, each blockchain user can view precisely what other users have, i.e., an identical copy of a given blockchain transaction. The process also involves ongoing record comparison so that each user is assured of having the exact information.

Moreover, a history of all transactions is stored and is irremovable. This helps determine who a transaction may be tied to. This is a significant advantage over traditional systems that tend to face obstacles when pinpointing who owns a particular asset, which explains why fraud incidence is higher in traditional systems.

The ability to pinpoint transactions has benefits for more than just financial transactions. Slowly and steadily, more institutions are adopting this technology, which shows tremendous promise when it comes to giving owners more control, removing unnecessary steps in any process, and reducing costs.

The global blockchain market size is projected to reach USD 3.0 billion by 2020 and USD 39.7 billion by 2025.

Entertainment

Blockchain removes the middlemen from the author-reader relationship. Similarly, the viewer-studio relationship also removed any third party from the equation. And it is the same when it comes to the listener-musician relationship.

Under blockchain tech, artists may act as independent publishers leveraging blockchain platforms. Under a blockchain setup, all concerned parties will need to fulfill payments that are fair to everybody.

Without the middleman, users can enjoy entertainment at a lower cost. To draw up a comparison with the existing traditional model, intermediary marketing groups and record labels retain more than 80% of artist earnings.

File Storage

Blockchain cloud storage will allow you to pay for private cloud storage directly.

Blockchain technology can compel participants to deliver on what they promise, or they won’t be able to operate (service provider) or use (end-user) a service. It will ensure fair pricing by doing away with the middleman. This will be in contrast to existing pricey cloud storage services.

Moreover, blockchain technology supports the storage of encrypted files that are all saved and updated continuously at various nodes and on private computers across the globe.

International Payments

People worldwide can benefit from cheaper, rapid, and secure international payments via blockchain tech that can ensure transactions are handled fairly. Without an intermediary, international payment costs can drop.

Traditional international payment processes comprise one or more entities that charge a fee for processing, slowing down transfers, making them more expensive, and often requiring rigorous authentication via some authority. Blockchain tech disrupts this while making the process safer and secure.

Voting

You can count votes in a secure manner and avoid malpractice.

Blockchain tech ensures a strict verification process for voter identification that enables an accurate voter count. Every vote cast becomes part of a long blockchain that can’t be erased or reversed.

Most countries have paper ballots and outdated mechanisms for counting votes prone to manipulation and electoral fraud. With an electoral system on the blockchain, people can cast their votes directly from any location and with complete security.

Verifying Identity

Blockchain tech offers an unprecedented solution for identity verification without the risk of identity theft.

Additionally, the authenticity level is elevated for each form of identification documents, such as credit cards, passports, and social security ID. With no intermediary, identity security is higher.

The current systems primarily use paper and plastic for identity cards, and there are numerous cases of fake IDs produced because of this. Under blockchain tech, IDs can’t be changed or accessed by scammers.

Internet of Things (IoT)

Blockchain tech has the potential for developing trust among IoT devices while doing away with an intermediary. You could call a ride and pay via your smartphone directly.

Right now, the middleman receives your request and then sends it to a driver. This middleman keeps a portion of the fee that would otherwise go to the driver. Blockchain tech can eliminate the need for this.

Property Ownership Records

You can establish an irreversible and indelible record system with blockchain tech used for property ownership statements. The same concept can be applied to ownership of products, such as automobiles.

Traditional systems that are still in place for property ownership records are massively susceptible to manipulation and fraud. In a great many cases, ownership records may not even exist. Also, ownership records that do exist are stored on insecure media like paper or old systems.

A blockchain solution could support and secure exchanges with handover conducted as soon as payment takes place.

Energy Trade

Individuals can easily trade energy through blockchain tech since they can produce their own electricity via solar panels.

Blockchain technology removes the need for an intermediary, which means that consumers will enjoy fair pricing for the energy they use. Consumers may even sell energy they don’t consume.

The current system has a handful of energy providers that compel you to pay a price they determine. Introducing blockchain tech means that the energy market can become more accessible and more competitive without a sole authority. This can create a broader range of choices, charges based on requirement/consumption, and the option for selling energy back to suppliers.

Blockchain technology allows total strangers to handle digital property in a secure manner without you needing to trust them. Moreover, this is achievable without a third party or intermediary bank. This means people have more control over their assets right up to the transaction stage.

What is DAPP (Distributed App) Builder Wizard?

With this promising technology available, many people and institutions aim to leverage it. They are exploring their options but may struggle, especially when turning to the right blockchain developers to help them transform their systems and modes of operations.

Fortunately, since the industry is growing proportionately to increasing demand, there are worthy operatives around and blockchain development services that can help you get started. In fact, there are mechanisms such as DAPP (Distributed App) Builder wizards that put you on the right path.

Below is a brief description of the steps and scenarios surrounding the DAPP (Distributed App) Builder wizard offered under Cubix, entitled Cubix Chain.

With DAPP (Distributed App) Builder wizard, enterprises hop on the blockchain bandwagon easily. Enterprises can create a Wallet that holds all digital addresses.

With digital asset ‘onloading,’ you can define assets by their own Unique-ID, as well as their Unique-Attributes. The file is stored in IPFS.

When it comes to operations, transfers are carried out on a digital asset or amid registered nodes on a run-time basis. Moreover, when it comes to smart contracts, the Smart Contracts Marketplace can list templates that programmers upload, and you can pick one from them.

Then there is the Drag & drop creator, which is part of the scenario, where you can edit or add rules to an existing contract by just dragging an asset and dropping it on the desired area via the visual composer in smart contracts. And finally, you will be able to see your transaction based on a transaction-ID explorer.

So, as you can see, Cubix Chain has a simple step-by-step process for implementing blockchain tech to meet your product and service challenges. The process has become straightforward, but you will need to contact a consultant to brainstorm and plan your particular brand needs.