Tuesday, 22 May 2018

ebay louis vuitton handbags Blockchain technology and its applications

louis vuitton bandana Blockchain technology and its applications

1.1. BLOCKCHAIN: A DISTRIBUTED LEDGER TECHNOLOGY

The new era of technology has begun, and underlying it there are several technologies which have in many ways revolutionised the world as we once knew it. Many people, however, are overly sensitive to these new technologies and especially to how these new technologies will transform their routines. The new technologies seem to be growing more and more complex and this increased complexity presents a socio cultural problem. Most new technologies initially meet

In spite of the resistance which greets a seemingly complex new invention, most technologies are not as complex they appear. In fact, one of their main purposes nowadays is to make repetitive and mechanical processes easier. In addition, they may simplify complicated problems or aid in shortening the times involved in performing certain tasks.

One example of this would be the creation and introduction of digital currencies and the impact they have had on the financial and banking industries. Ever since the global financial crisis in 2008, in fact, states have been putting more and more effort into controlling financial and banking operations by introducing stricter regulations and policies. In many cases, these new changes have been met with controversy ‘as many people believe that policy makers should promote freedom and transparency by empowering the public to directly interfere and change the system for public interest’ [11].

The complexity of regulations, however, has not made the financial system an easier and safer place, and it remains controversial whether states should continue to implement and encourage policy makers or allow the free expansion of freedom and transparency with effective financial tools [12].

Here is where technology may alter the complexity of regulations and open up new opportunities to fix these problems. The use of digital currencies represents a perfect example. In fact, in a world where digital technology is increasingly making everything paperless, the creation and use of digital currencies can only be seen as an intuitive development. Bitcoin, as the first digital currency introduced into our market, was created by Satoshi Nakamoto [13] in 2009. It was the first conceptualisation of ‘blockchain’ technology and its impact has begun to be felt more widely.

Today the blockchain is used to simplify money transactions. Furthermore, financial institutes have also started to use this technology in order to enhance efficiency for example, smart contracts, smart assets, Clearing and Settlement, Payments and Digital Identity [14].

On one hand Bitcoin has become the most well known application of blockchain technology, and a growing number of people have started to understand it. On the other hand, blockchain technology itself is still new to most people. All this is despite the fact that it has been involved in modernising several other fields, such as property certification, intellectual property, social inequality and contracts [15].

So, what is blockchain and when was it born?

The first work on a cryptographically secured chain of blocks was done between 1991 and 1997, but it was only in 1998 that Nick Szabo introduced Bit Gold as a mechanism for a decentralised digital currency and smart contracts.

Subsequently, in the first year of the new millennium, Stefan Konst introduced a general cryptographic theory of secured chains, but the first real conceptualisation of the blockchain technology had to wait till the arrival of Bitcoin. This, however, was only the first generation of blockchain technology. In 2014 blockchain took another step forward with its

evolution, called Blockchain 2.0, and new applications of this technology were seen.

The reason for this faster16 evolution and the wider use of blockchain is due to its characteristics and simplicity; the mechanisms underpinning it are simpler than may be expected. This meant that for the first time technology allowed consumers and suppliers to connect directly and perform digital transactions without need of a third party.

Thus, a blockchain is nothing more than a database (or ledger) of virtually any type of recordable information, made up of ‘blocks,’ or stored data, and ‘chained’ together to form a cohesive, unbroken record of that information [20].

The arrival of blockchain formed the foundation for the revolution which involves any value transaction, whether those transactions are based on money, goods or property. But the importance is not only limited to this. Since every transaction is recorded and distributed on a public ledger, its potential uses may be almost limitless. In fact, once we believed the revolution was simply the cryptocurrencies based on the blockchain technology. This, however, was only the first step of the journey.

1.2. BLOCKCHAIN FROM 1.0 TO 3.0

When a discovery is made in the technological world, often it will have multiple applications, and this is certainly true of blockchain. Although blockchain was used for the first time to create a particular digital currency, namely Bitcoin, and others such as Litecoin21 and Dogecoin [22], the technology has started to be used for other purposes.

It is important to note,
ebay louis vuitton handbags Blockchain technology and its applications
however, that the terminology surrounding this phenomenon is not helpful and can be confusing. For example, the word ‘bitcoin’ is generally used to refer to three different concepts: the first one, is the underlying technology, the blockchain itself. The second one is the protocol, which is the software that transfers the money using the blockchain ledger. Finally, the last layer is Bitcoin, or rather the currency itself [23].

Blockchain is already the cash of internet, a digital payment system, but this is just its first application [24]. For that reason, it is frequently referred to as Blockchain 1.0. Furthermore, since a cryptocurrency can be a programmable open network for decentralised trading of all resources, the concept of Blockchain 1.0 has already been extended to Blockchain 2.0 [25]. This is seen ‘as a programmable distributed trust infrastructure.’26 As opposed to it being viewed as a process which permits only the decentralisation of money and payments, the new concept of Blockchain 2.0 increases the scope of the technology and enables the decentralisation of markets across different fields. More broadly, by providing registers for certificates, rights and obligations, Blockchain 2.0 transactions can involve other types of assets such as real estate, IPR, cars, works of art and so on [27].

Thus, the idea behind Blockchain 2.0 is to use the decentralised transaction ledger to register, confirm and transfer all the processes by which contracts are made and assets transferred, creating so called smart contracts.

Smart contracts are another application of decentralised public ledger technology. They can also be viewed as self executing transactions, or as ‘automated programs that transfer digital assets within the blockchain upon certain triggering conditions’ [28]. However, smart contracts are not a completely new concept [29] and they are defined as ‘computer protocols that embed the terms and conditions of a contract’ [30]. The blockchain technology, in fact, enables parties to enter into contracts and mitigates the risk of entering into a contract without the need for a third party. Trust is created and maintained by the simple fact that the blockchain technology is a database which cannot be tampered with and all transactions, once established, should be carried out with a minimum or no risk to either party, and therein lies its power.

In Harvard Business Review, Patrick Murck said, ‘The power of blockchain technology is that it can algorithmically enforce private agreements and community principles at a global scale by shifting the cost of trust and coordination to the network. This is what allows blockchains to create new markets where they couldn’t exist before, whether for political or for economic reasons. To do this, we have to be able to trust the blockchain, and to trust that no one controls it’ [31].

Thus, for the first time technology allows parties to connect directly to each other, eliminating the need for a third party, such as a subject, a state or ‘trust.’ Patrick Murck also said, ‘Blockchain networks tend to support principles, like open access and permissionless use, that should be familiar to proponents of the early internet. To protect this vision

from political pressure and regulatory interference, blockchain networks rely on a decentralised infrastructure that can’t be controlled by any one person or group. Unlike political regulation, blockchain governance is not emergent from the community. Rather, it is ex ante, encoded in the protocols and processes as an integral part of the original network

architecture. To be a part of a community supporting a blockchain is to accept the rules of the network as they were originally established’ [32]. Furthermore, in any blockchain transaction the parties don’t have to trust the counter party to achieve their duties, since the web guarantees this through automated, standardised processes.

So, we can finally define the blockchain based smart contracts by using the definition provided by Richard Genda Brown in ‘A simple model for smart contracts.’ He states that the smart contract is ‘a piece of code, deployed to the shared, replicated ledger, which can maintain its own state,
ebay louis vuitton handbags Blockchain technology and its applications
control its own assets and which responds to the arrival of external information or the receipt of assets’ [33].