In 2017, due to Bitcoin’s increasing buzz and astonishing price surge, a lot of attention has been garnered by its underlying technology – Blockchain
Blockchain, at its core, is a very simple data structure to understand. But before we delve into the world of blockchain, let us understand what hash is. Hash is a digital signature of any type of data. You take a movie, you ‘hash’ it and a digital signature will be generated. For e.g suppose we have “ABC” as the data. If you hash it, a digital signature ‘1256AH’ shall be generated. If you make even a slight change – “AbC” you will have an entirely different digital signature – ‘23566H’. Hashing is performed on a coding language which belongs to a programming software and is automated once the code is executed.
Blockchain is a chain of blocks. Each block holds computer codes containing some information such as a contract, certificate of ownership or even a movie. These sets of information are chained to each other through hashes – the digital signatures on the network.
The digital signature of the current block depends on the digital signature of the previous block and the digital signature of the next block is based on the digital signature of the current block. Even the smallest meddling of data can break all the digital signatures and there will be a completely new set of digital signatures on the network which will signify that there has been data meddling. Everyone in the network would come to know where the change has taken place and can decide whether the change is valid or not.
Thus, blockchain, if executed, completely averts data tampering and data meddling and makes your database tamper proof. If you have distributed ledger on a network having 1000 computers connected and you have stored your data on that ledger and a person wants to hack and change your data, he will have to hack all the remaining 999 computers, all at the same time and change exactly the same piece of data.
The idea behind a distributed ledger is that we get rid of the middle man who eat up a lot of money and growth stake from the end consumers and the producers.
The examples below are only for explaining the application of blockchain business as I use the below-mentioned application and browser and I have not, in any way, been paid or asked to promote them. Here we look into the music and digital advertising industry.
Example of a blockchain based music industry business is VOISE –
VOISE is a blockchain powered anonymous decentralized platform with personalized token based on Ethereum’s smart contract ecosystem for transactions. VOISE is an innovative cryptocurrency powered solution for the music industry that allows artists to monetize their work in a collaborative Peer 2 Peer marketplace. They can set a price for their works, provide free sample tracks and seek support from music enthusiasts and users on the platform.
You can read more about VOISE – https://voise.com/whitepaper-voise.pdf
Example of a blockchain based browser BRAVE –
The ‘Brave Browser’ issues basic attention token to its users, publishers and advertisers (token and crypto coin are two different concepts).
The digital advertising industry is currently dominated by players like Google, Facebook, YouTube and Twitter. Users are abused as a user’s 50% mobile data/internet is consumed by the Ads and Trackers. Ads use up to 20% of the mobile battery. Publishers/the Content creators are currently losers in the digital industry as more than 70% revenue generated and 99% of all growth is taken away by digital ad-space owners like Google and Facebook. Over 600 million phones use Ad blocker apps, which after a while are of no use. We are constantly hit by fraud malvertising while surfing or downloading.
Brave Browser is an open source, fast and privacy focused browser and contains a ledger system (a digital Ad exchange and web page hosting platform) that anonymously captures user attention to accurately reward the publishers and restricts unauthorized and fraud malvertising. The reward is in the form of the Basic Attention Token. The Basic Attention token (BAT) issued can be used to obtain a variety of advertising and attention-based services on the Brave platform, as it is exchanged between publishers, advertisers, and users.
The token’s utility is derived from — or denominated by — user attention. Attention is really just focused mental engagement — on an advertisement, in this case.
The Brave browser knows where users spend their time, making it the perfect tool to calculate and reward publishers with BATs. This service creates a transparent and efficient Blockchain-based digital advertising market. Publishers receive more revenue because middlemen and fraud are reduced. Users, who opt in, receive fewer but better targeted ads that are less prone to malware. And advertisers get better data on their spending.
The BATs are received by publishers for the content and users for their attention by the advertisers directly. The users can even donate their BATs to the publishers for creating more or newer content.
In the above application of blockchain, better services with reduced usage of mobile data is provided to the users and the publishers and content creators get their fair share of revenue without losing even a dime.
Blockchain enabled businesses can completely eliminate middle men, create a faster business process eco-system which can sustain and requires no trust!
There are newer concepts to learn and understand when it comes to applying blockchain in your business.
First and foremost, people should understand the difference between crypto currencies like, Bitcoin, Litecoin, Ethereum and tokens like BAT and VOISE issued in the crypto market –
Coins like Bitcoin, Litecoin and Ethereum are blockchain based protocols which have a defined set of rules which are followed by their entire network.
Bitcoin uses peer-to-peer technology (Blockchain) to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system.
Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference. These apps run on a custom built blockchain, an enormously powerful shared global infrastructure that can move value around and represent the ownership of property.
Thus, though the above two coins are made based on blockchain, their protocols/rules differ and hence they perform different functions and provide users with different usages and services.
‘ERC’ stands for “Ethereum Request for Comments”. This is an official protocol for proposing improvements to the Ethereum network. ’20’ is the unique proposal ID number.
‘ERC20’ is actually a standard that tokens on the Ethereum network can meet, and tokens that check all the necessary boxes (tokens which are made as per the requirements of the Ethereum Network) are deemed ‘ERC20 Tokens’. These tokens are blockchain assets that have value, and can be sent and received, like Bitcoin, Litecoin, Ethereum, or any other cryptocurrency.
The difference between these tokens and a standalone currency like Bitcoin, Litecoin, etc is that ERC20 tokens piggyback on the Ethereum network, hosted by Ethereum addresses and sent by Ethereum transactions (Just like how we create website and it is hosted by web hosting service provider). Basically, these tokens are built on Ethereum network with all the necessary infrastructure of blockchain already in place Ethereum (VOISE and Basic Attention Tokens which were mentioned earlier are examples of ERC20 token).
Starting to set up the business – For creating a blockchain business, you need to develop a blockchain based protocol and define the set of rules that suit your business, create the security and engagement infrastructure and fulfill the requirement of your customers. But it is not easy for everyone. People who are already involved in the blockchain technology also find it difficult to create a robust and useful system on which to run the blockchain business. That is where Ethereum network comes into play.
Ethereum lets people from different backgrounds, different ideas use their network which already has the infrastructure in place, to create their own crypto currency token and develop a business. In Ethereum, each business is called a ‘smart contract’. These tokens can then be used to transact, send, receive over the network. Such tokens are listed on different token markets. The process of listing begins when an Initial Coin Offering (ICO) is initiated. Once the token is listed, the value of the token is determined by the number of usage the token has, its popularity in the market and it’s demand.
Creating a crypto token requires a person to learn a programming language called ‘Solidity’. It is almost similar to Java and Java Script programming language and can be learnt either on the www.ethereum.org website or on the many tutorials uploaded on YouTube.
Finally, we come down to how to start with your blockchain business –
1. You will have to have an idea which can be implemented on the blockchain network. For example, any business which has a lot of middle men can be implemented easily on the blockchain. Other businesses can also be dramatically improved if the concept of distributed ledger is applied on them. Identifying the market or creating a demand through innovation is something only you yourself can do.
2. Once you have an idea, make sure you do a feasibility check on it. Understand the concepts of blockchain and crypto currency transactions. Check whether your plan is a full-proof blockchain based plan.
3. Learn and understand the Solidity/Java language. Tutorials for the same are available on YouTube or you can attend some workshops or courses which teach you blockchain and businesses.
4. You should definitely have at least three programmers on board. One can be expert in creating the business design that you are looking for, one to help you with the execution of programming and data collation and management and one who can publish your application or website all over the network and integrate your app with the token/coin transacting. The more, the merrier.
But having a team you can trust is the most vital thing not only in blockchain business, but in any business, you will ever run.
5. Once you are done with your designing, you will need to decide the number of currency/token you would want to circulate in the market. For e.g There are only 21 million bitcoins. This is very important as this will determine your demand, demand estimates and your presence in the market.
6. When the number of tokens to be circulated is set, you can execute your coding on a software/ system which can run the program. For e.g Ethereum has the ‘Ethereum Wallet’ that can be downloaded on any computer/node and there itself you can execute your business and token which would be together called ‘smart contract’
7. Once the smart contract is executed, your team needs to create a road-map which would include the launch of your application/website, Marketing and promotions, ICO – the listing process and finally the actual execution of your business.
The explanation above is based on execution of business and creation of token on Ethereum Network. You can also have your own coin like Bitcoin, Ethereum, etc but you will have to create your own protocol, infrastructure and security for the entire network.
Creating a blockchain business is not that difficult. But what matters the most is having a business model that propagates the greatest value to the investors and end users of blockchain based products/services.
Industry experts and blockchain enthusiast business personnel are experimenting and exploring newer ways to adopt and implement Blockchain in the day to day business. One such application is the creation of Hyper Ledger Fabric v1 – https://www.youtube.com/watch?v=EKa5Gh9whgU
Blockchain is revolutionizing business. All you need to do is grab the opportunity and make unimaginable things happen!