How the Blockchain Could Change Your Life

The blockchain could change the way you live and work.

The Blockchain Could Change Your Life

The blockchain - the decentralized technology that makes bitcoin work - isn't just for sending bitcoins anymore. A new family of online services are using the blockchain to provide other kinds of service where it makes sense to cut out the middleman. These are called cryptocurrency 2.0 apps, and we write about the concept here.

Here are five areas where cryptocurrency 2.0 could disrupt existing online services, and change the game.

Exchanges

When people want to trade one thing for another, they typically use an exchange. Exchanges exist for all kinds of assets, ranging from gold and silver, through to company stocks and complicated financial instruments such as futures contracts.

The exchange matches requests to buy and sell things with each other in what is called an ‘order book’. Exchanges also exist for people that want to buy and sell different cryptocurrencies.

Blockchain technology can be used to cut out the middleman and run a decentralized exchange. Instead of paying a cut to the exchange, this technology would let people run the exchange software on their own computers and would find others in the network to trade with. Decentralized exchange projects include NXT, Counterparty, and Viacoin.

Storage

Today, if you want to backup your music, photographs, or videos, you have to pay a single service provider for the privilege.

You upload your files to its computers, and then it handles them for you. But if that service provider suffers an outage, you lose access to your data. And if your government decides that you are suspicious, it might be able to look at those files without your permission.

Blockchain technology could be used to create a decentralized storage network, in which lots of people run the same software.

This software would be used to encrypt and carve up users’ files, storing pieces of them on different computers, and replicating them so that a version would always be available.

Storj and MaidSafe are two projects providing this kind of service.

Notarization

A notary’s job is to ensure that your legal files haven’t been tampered with. When you sign, say, an agreement to purchase a house, or a will, someone has to ensure that no one changed it after the fact. Instead of using a third party, you could use the decentralized blockchain algorithm to do this.

The document would be analyzed, and a cryptographic code known as a hash would be created representing it. That hash could then be written into the decentralized blockchain, to which everyone has access. If the document ever changed, then its hash would also change.

At any time, anyone with access to the document could rehash it and check the hash against the one in the blockchain. If they failed to match, then they would know that the document had been tampered with. That eliminates the need for a notary.

One of the best-known companies in this space is Factom.

Messaging

With government surveillance such a clear and present danger, many people might be forgiven for distrusting online messaging networks.

Even Skype, which is a decentralized, peer-to-peer messaging system, is now owned by Microsoft and was implicated in allegations of NSA spying. A decentralized blockchain-based network could be used to send encrypted messages without relying on proprietary, closed code that no one can analyze.

There are several messaging systems using the blockchain, including BitMessage, and CoinSpark. Another one, designed more for consumers, is GetGems.

Crowdsales

Cryptocurrency 2.0 applications thrive on the use of digital tokens. These tokens are used to ‘pay’ for the application’s services. In many cases, they can also be bought and sold on the open market, typically through cryptocurrency exchanges.

Online platforms are now evolving that enable these tokens to be ‘pre-sold’ before an application is actually launched.

This process, known as a ‘crowd sale’, is becoming a popular way to fund the initial development of these applications.

Crowdsale technology could be used to fund any of the types of application listed in this article. Indeed, several, such as Factom, have already been raising funds in this way.

These five areas are just a few of the emerging categories that could benefit from building new things on top of blockchain technology.