The Evolution of Blockchain Development

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Introduction

Blockchain is a distributed peer-to-peer network without any central control points. It uses distributed unified operation to achieve a set of tamper-resistant and trusted database technical solutions. It also features decentralized storage and highly transparent information with superior security against data tampering. Simply put, Blockchain is a “large open ledger” that records the entire transaction information across a network using computer programs.

The Evolution of Blockchain

Blockchain as a technology has evolved rapidly in the past decade. Let us discuss a few major innovations that have revolutionized this field.

  • The second innovation was the realization of the potential of Blockchain for inter-organizational collaborations across regions. Currently, a considerable percentage of banks and financial institutions around the globe show exceptional commitment to research and investment on this technology.
  • Smart contract emerged as the third innovation of Blockchain. Smart contract allows the representation of financial instruments such as loans, bonds, etc. to be built within devices, such as a personal computer.
  • The next important innovation is ‘proof of stake systems’, expected to go live this year. In this system, the ‘miners’ are groups with maximum computing power and have the decision making authority for validation of transactions being carried out. They operate vast data centers to provide security in exchange for payments in the form of cryptocurrency.

Blockchain Alliance — A Year in Progress

Blockchain requires legal support to increase the pace of its development. A positive progress in this area, the introduction of “Legal Chain” took place on August 16, 2016. “Legal Chain” is the world’s first electronic certificate Blockchain Alliance, which is an evidence recording and storing system, built and run jointly by Onchain, Microsoft (China) and fadada.com among other organizations. It is an open Blockchain alliance that facilitates participation of multiple parties.

Blockchain — The Way Forward

Similar to its predecessors, Blockchain 3.0 still focuses on the application and norms in its derivative fields. The differentiating feature of Blockchain 3.0 is the introduction of a decentralized domain name system — Namecoin. A brief description of Namecoin and its features along with its challenges and applications is described below:

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  • Features of Namecoin
    In Namecoin, there are no authorities or agencies that can alter a domain name. For example, the US government controls the DNS provider of the .com domain, and is capable of censoring websites registered under this domain. Namecoin however corresponds to the .bit domain name, which is free from the control of any agencies. The domain is permanently written into Blockchain, ensuring free release of information on the website.
  • Operating Principle of Namecoin
    Namecoin shares DNS query table through a point-to-point network. The domain name is accessible as long as someone is running the Namecoin server application, and is not subject to anyone’s control.
  • Application Fields of Namecoin
    Since the .bit domain name can be used to bypass supervision and censorships, it is suitable for disseminating information freely and legally.

Conclusion

The financial services industry is expected to see many potential benefits of Blockchain. However, there would be various strategic and legal challenges which will increase complexity of its application. Despite all this, the future looks more secure and transparent with Blockchain. With its broad application, will Blockchain boost our digital innovations and habits? For that, we might have to wait a little bit longer to find out.

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