Bitcoin? No, Blockchain.

Written by Bolun “Blake” Xia

The versatility of the blockchain technology is evident– it can be used to do everything from sending millions of dollars securely to another party to recording students’ performance in a first grade class.

Over the past year, the world experienced a frenzy over bitcoin. After trading for over $20,000 last December, bitcoin sparked an international debate. People were split over whether the price of bitcoin would continue to rise, or whether it was a bubble ready to burst. People in the latter camp proved to be right, with bitcoin falling to about $7,000 in April.  But after achieving this level of price stability, much of the hype around bitcoin pacified. However, many companies looked beyond the glamour of bitcoin and realized the power of the technology behind it. Blockchain is here, and it’s here to stay.

Blockchain is a publicly, distributed, synchronized and encrypted database that uses “blocks” on a “chain.” But what makes it so special is that it is decentralized and uses  distributed ledger technology. Every transaction and every move made on a blockchain is “witnessed” and recorded by every user on that chain. The days of information like credit scores being stored, managed, and controlled by centralized corporations like Equifax are numbered. Many argue that the day of money being issued by central banks are numbered as well.

Professor Huining “Henry” Cao, at the Cheung Kong Graduate School of Business, believes that blockchain’s decentralized nature “can vastly improve trust between transacting parties, which is critical in all forms of finance.”However, blockchain is much more than just finance. It is a solution to the long-standing problem of storing information on unreliable computers. On a blockchain, everyone is the witness to and protector of their own and everybody else’s information. Therefore, it is virtually impossible to tamper with any information once it is properly stored and recorded.

Even the Brazilian government is looking into blockchain for its voting body. In the Brazilian legislature, if a petition gets signatures from 1% of the electorate, then it must be heard in congress. But under Brazil’s tumultuous political and social climate, it’s extremely difficult to verify those signatures. This is “due to the absence of a platform that can securely collect the signatures of one percent of voters,” says Henrique Araújo Costa, a law professor at Universidade de Brasília. To resolve this issue, Brazilian legislators are turning to the Ethereum Blockchain to prove that the signatures collected for petitions actually exist.

A mobile app is being developed by the Brazilian congress to facilitate this process, whereby Brazilians can register and prove that they are actually Brazilian citizens. After registering, users have the choice of signing or submitting a petition. Every day, a list of supporters of all the petitions is added to an Ethereum transaction, which, in turn, is added to the Ethereum blockchain. Furthermore, because this process is one-way, users know they have been added to the petition, but cannot see the identities other supporters. This maintains a degree of anonymity and privacy without any loss to authenticity.

Blockchain has the potential to transform the credit system. Professor Cao introduced his concept for a new blockchain, Usechain, that incorporates real identities and verifiable information. Because accounts are linked to the real people, individuals are able to create their own tokens. Users can  put their coins onto the on-chain market, which acts as a promise to buy those coins back, creating a scientifically accurate estimate of their credibility. Artificial and scientifically unsound credit ratings like FICO scores would be rendered obsolete. This system pioneered by Professor Cao allows the “invisible hand” to replace arbitrary credit score systems.

The versatility of the blockchain technology is evident– it can be used to do everything from sending millions of dollars securely to another party to recording students’ performance in a first grade class.

The possibilities are endless with blockchain.