The Future of Blockchain

Photo by André François McKenzie on Unsplash

Imagine you are visiting a gift shop and find the perfect present for your mom’s upcoming birthday. You phone your three siblings (we’ll call them Siblings X, Y, and Z) asking for their input, and they all agree to purchase the gift. Now, each of your siblings owes you a quarter of the gift price. Because it is an expensive cost, they decide to send you the money through the popular cryptocurrency, Bitcoin. As of now, each of you has two Bitcoins in hand. Sibling X sends you one Bitcoin as their contribution to the gift, so they now have one Bitcoin left. This transaction, as well as the number of Bitcoins ALL of you currently own (you have three Bitcoins, Sibling X has one, Sibling Y has two, Sibling Z has two), is permanently marked in a record/block. From here, Siblings Y and Z proceed to send you their portions of the price (one Bitcoin each). Each of their transactions is recorded on a separate block as well. All three blocks from each sibling are then chained together because each block relies on the previous block for the number of Bitcoins each sibling owns. This chain of blocks, called a ledger, is shared with you and your three siblings and the transaction is complete.

The above process is an example of blockchain in use. In simple terms, a blockchain is a type of database that stores data in blocks that are then chained together. Many companies have started implementing blockchain into their technology because it is a solution to many common problems such as security and privacy. Because blockchain data is kept across thousands of devices (not just between you and your party), transactions need to be verified by every device, leaving little room for mistakes. This verification also makes it extremely difficult for data to be changed or attacked without notice. Even if a hacker were to get his hands on a copy of the blockchain, only that copy (out of thousands of other copies) would be changed, thus not impacting the security or availability of the network. Once a blockchain is confirmed, it is also nearly impossible to change or remove, making it a secure and stable way to store information. 

Although blockchain provides us with many new and improved ways to manage data efficiently, it also comes with a few setbacks. For example, when a user gains ownership over blockchain data, they receive a private key (similar to a password) composed of a cluster of characters. If the user loses their private key, they would permanently lose the data/money in their blockchain as well. Additionally, if one ledger from a blockchain is updated, each of the thousands of other copies of that blockchain would need to be updated separately too, greatly slowing down the transaction process. According to Investopedia, Bitcoin can process only 7 TPS (transactions per second), whereas brands like Visa can process 24,000 TPS. Furthermore, while blockchain’s storage structure has proven to be extremely useful, blockchain also requires a massive storage space. According to Statista, the Bitcoin blockchain requires over 327 GB of storage as of March 2021 and is expected to reach 1 TB by 2030.

Despite these drawbacks, blockchain technology holds great potential for the future, especially in voting, healthcare, and smart contracts. With blockchain’s secure network, elections would be nearly impossible to tamper with. Blockchain could eliminate the need for recounts and could provide almost instant results. Blockchain can also be of great use in storing patient data and medical records. Once a record is signed, it can be inputted into a block, ensuring that the data is safe and cannot be changed. Another use of blockchain that has been gaining popularity are smart contracts, a piece of code inside a blockchain that acts as a digital contract. When a smart contract reaches its deadline or is activated, it self-executes its assigned tasks. For example, a user can program a smart contract to release $100 at the beginning of every month. Banking, supply chain, currency, and marketing are also among the top areas that could have started or could potentially implement blockchain.

Blockchain has been in the public eye for a while now and is finally being explored in industries. While opinions on the area may vary, it is clear that blockchain has a bright future ahead of itself.