With more and more investment pouring into blockchain technology, it bears the question what is blockchain[1,7]? What makes blockchain so appealing? Blockchain is the supporting technology behind cryptocurrency and can be applied in other uses. It provides a trusted and secure way to complete transactions.
Blockchain, as the name suggests, consists of blocks that are chained together. Whenever a transaction is completed the data is placed into a block, verified, and then added to the chain [5]. Once the block is added to the chain the data cannot be erased [4]. This means that the information stored within the block is permanently part of the chain. It cannot easily be changed and it can never be removed.
Before a block can be added to the chain it must be verified. The verification of the block is based from a “set of rules and procedures” referred to as consensus mechanisms; this is a unique feature of blockchain because the block is not verified by a single source, the block must be verified by the majority of the network [4,5]. Blockchain is often defined as a distributed ledger technology because of how it records each transaction and because the information is not centralized by a single authority [3–5].
Blockchain’s most obvious use is in the financial sector. A key part of financial services is trust and blockchain’s ability to “create permanent and immutable records" of each transaction grants it a high level of trust for users [2,3]. This means that by using blockchain to perform transactions third parties can be removed [2,5]. The removal of third parties increases efficiency by speeding up transaction time.
This means that by using blockchain to perform transactions third parties can be removed.
Another use of blockchain is with smart contracts. A smart contract is a contract that is setup using “computer language with conditions” and once the “conditions are met, it will automatically trigger the execution” [2]. The consensus mechanisms of blockchain ensure that the smart contract must be verified before execution so incomplete or incorrect contracts will not be added into the chain. By using blockchain, it can replace the trusted parties “involved in contracts for asset deals depending on predefined aspects” [5]. This can “save labor review and billing costs” by automating tasks that would usually be manual work [2].
As blockchain technology matures, more and more information is being incorporated into the structure of the blockchain. This has led to problems with scalability. Blockchains have become increasingly demanding of storage, the time required to process transactions and add blocks to the chain has grown[6].
Thought AI’s unique approach to using blockchain overcomes this scaling issue. Thought AI uses the blockchain to store models and algorithm states, with the associated data maintained on the adaptive AI fabric. This decreases the amount of information that is being stored directly on the chain, allowing for greater scalability and decreased congestion. Thought AI’s approach provides the foundation for the future of information processing.
In conclusion, blockchain technology provides new ways to establish trust to complete transactions. It disrupts business practices by allowing for the removal of third party entities to complete transactions. This helps to reduce costs. While blockchain technology struggles with scalability, Thought AI’s approach overcomes that hurdle.
If you are curious to learn more about Thought AI’s approach to blockchain and how we are helping organizations world-wide develop next generation solutions contact us.
References:
1. Avan-Nomayo. 2021. VC funds bullish on crypto, increase investment in blockchain startups. Cointelegraph. Retrieved April 28, 2021 from https://cointelegraph.com/news/vc-funds-bullish-on-crypto-increase-investment-in-blockchain-startups
2. Victor Chang, Patricia Baudier, Hui Zhang, Qianwen Xu, Jingqi Zhang, and Mitra Arami. 2020. How Blockchain can impact financial services – The overview, challenges and recommendations from expert interviewees. Technological Forecasting and Social Change 158: 120166. https://doi.org/10.1016/j.techfore.2020.120166
3. Julie Frizzo-Barker, Peter Chow-White, Philippa Adams, Jennifer Mentanko, Vu T. Dung Ha, and Sandy Green jr. 2019. Blockchain as a disruptive technology for business: A systematic review. International Journal of Information Management 51. https://doi.org/10.1016/j.ijinfomgt.2019.10.014
4. Lucas Mearian. 2017. FAQ: What is blockchain and how can it help business? CSO Online. Retrieved April 12, 2021 from https://www.csoonline.com/article/3191619/faq-what-is-blockchain-and-how-can-it-help-business.html
5. Michael Nofer, Peter Gomber, Oliver Hinz, and Dirk Schiereck. 2017. Blockchain. Business & Information Systems Engineering 59, 3: 183–187. https://doi.org/10.1007/s12599-017-0467-3
6. Huaimin Wang, Zibin Zheng, Shaoan Xie, Hong-Ning Dai, and Xiangping Chen. 2018. Blockchain challenges and opportunities: a survey. International Journal of Web and Grid Services 14: 352–375. https://doi.org/10.1504/IJWGS.2018.10016848
7. Lawrence Wintermeyer. 2020. Bitcoin Rally Attracts Wave Of Private Investment As Leading Blockchain VC Raises New $120 Million Fund. Forbes. Retrieved April 28, 2021 from https://www.forbes.com/sites/lawrencewintermeyer/2020/12/23/bitcoin-rally-attracts-wave-of-private-investment-as-leading-blockchain-vc-raises-new-120-million-fund/
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