Blockchain has been a real buzzword in recent years. The main reason being that blockchain-based digital currency Bitcoin surged in price from $1,000 to $20,000 dollars over the course of just a few months. As Blockchain thrives, we continue to see a growing interest from traditional companies researching the innovative technology.
Back in March of this year, Deloitte conducted a survey in which they asked 1000 respondents from global companies, that have a yearly revenue of at least 500 million dollars, what their thoughts are on blockchain technology. The results showed that 74% of the respondents see a compelling business case for blockchain technology. As a recent article in Forbes suggested, over 50 big corporations are already exploring the implementation of blockchain technology into their business operations. Last week VISA’s CEO Al Kelly even admitted VISA would support cryptocurrency as a form of payment, should it develop into an established payment solution.
Companies that can benefit from blockchain technology are active in the peer-to-peer lending industry, fintech, the supply chain sector, formal verification industry, the advertisement industry and countless other industries that use database structures in their business model.
The invention of blockchain technology
On the 31st of October this year, it was exactly 10 years after the mysterious Satoshi Nakamoto published their whitepaper called Bitcoin: A Peer-to-Peer Electronic Cash System.
Bitcoin is an innovative digital payment system that uses blockchain technology to confirm and process its transactions. Blockchain is a distributed ledger technology that maintains a record of balances.
The blockchain that is being utilized by Bitcoin and other cryptocurrencies has a somewhat mysterious creation stage.
As I see it a lot of industry professionals have helped create the blockchain technology that we know today. Credits go to Dr. David Chaum, Berkeley Alum and creator of Bitcoin’s predecessor eCash. Because of his extensive research, the groundwork for implementing private and public keys in blockchain technology have been laid down. HashCash creator, Adam Back, was mentioned in Satoshi’s whitepaper as the initiator of Proof-of-Work (PoW) consensus, which he proposed to use for Bitcoin as well. The National Institute of Standards and Technology (NIST), published a new cryptographic hash function in 2001 called SHA-256. Satoshi uses SHA-256 for his peer-to-peer electronic cash system. The Merkle tree structure that was invented by Ralph Merkle allows for secure and efficient content verification in large data structures. Merkle trees are used by Bitcoin, Ethereum and many other blockchain-based cryptocurrencies.
After Bitcoin’s first generation blockchain, Ethereum added smart contracts to it, opening itself up to a whole new world of decentralized applications (dApps) to be deployed on the network. Cryptographer Nick Szabo is the original creator of smart contracts. Because of its additional features Ethereum is also referred to as a 2nd generation blockchain.
While adding smart contracts to the blockchain was a groundbreaking move, which initiated an ICO gold rush in 2017, it also highlighted some of blockchain’s obstacles. Scalability, security and efficiency need to be adequate and in balance in order to move forward towards mainstream adoption. Currently 3rd generation blockchain platforms are in development. These blockchain solutions will become sufficient to resolve the current blockchain obstacles.
Blockchain features that can benefit large corporation
Businesses can improve the efficiency of their data and transaction workflows by implementing blockchain technology. In some industries blockchain will prove to be more efficient than others.
Corporations that want to implement blockchain technology can choose from three basic forms: private (permissioned), public (permissionless) or hybrid (private permissible) blockchains. Each type of blockchain will present its own opportunities as well as pose challenges for enterprise blockchain solutions.
The overall blockchain benefits outweigh the disadvantages at this time, but there is still room for improvement. Blockchain technology provides greater transparency, it enhances security, improves traceability, increases efficiency and transaction speed and it can be more cost efficient. As far as the challenges go, public blockchains aren’t scalable at the moment but various solutions are currently in the works, like: lightning network, sidechains, plasma and sharding.
Smart contracts: adding a smart contract to a transaction can improve the efficiency of financial institutions. The ability to add terms and conditions in a smart contract to a mortgage agreement or insurance contract will be more efficient, tamper-free and will eliminate third party interference.
Sidechain technology: sidechains are separate blockchains that are attached to their mainchain using a two-way peg. Sidechains are aligned in parallel with the main blockchain. Sidechain technology first appeared in 2014 when Dr. Adam Back published a research paper called: Enabling Blockchain Innovations with Pegged Sidechains. Sidechains will allow for digital assets from one blockchain to be used in a separate blockchain (the sidechain) and if needed they can be moved back to the original blockchain. Companies that use different databases that sometimes need to communicate with each other are suitable for sidechain technology. Sidechains also allow for the effective and specific scaling of a specific chain without the need for large adjustments to the whole ecosystem; in addition to this, reliability is also increased as the negative congestion impact from other blockchains is eliminated.
Parallel processing: parallel processing will enable high-throughput together with the Delegated Proof of Stake (DPoS) consensus algorithm.
Aelf is one of the blockchain projects that offers a highly scalable and secure enterprise blockchain solution.
Aelf
As a blockchain project that aims to provide a scalable blockchain solution through their own blockchain is Aelf. As a 3rd generation blockchain frontrunner, Aelf is comprised of sidechain technology as well as parallel processing, making it extremely suitable for large corporations. This new blockchain model is both highly scalable and fully customizable through the use of global parallel processing and one use case per sidechain. Aelf provides an extra layer on their blockchain that enables sidechains to run parallel to the main blockchain. Projects can easily adopt the Aelf blockchain by using its SDK, which enables dApps to be deployed on the platform.
Aelf’s testnet was announced back in the middle of 2018, with the baseline benchmarks sitting at 14,968 transactions per second (tps).
Concluding remarks
Like research states, large corporations have already started adopting blockchain technology. For instance, take the supply-chain industry. Supermarkets like Walmart from the U.S and Albert Heijn from the Netherlands are already adopting to a permissioned blockchain solution to further develop their supply chain. In September Komgo, announced its launch of a global blockchain-based trade financing platform. Komgo is comprised of 15 of the world’s largest banking and commodity companies like Shell, ABN AMRO, ING and Citi Group. This article posted earlier in the year lists over 200 other banks and financial institutes that are looking to incorporate blockchain technology into their current processes
All these companies see the potential of blockchain technology. As I see it, the list of large organizations adopting blockchain into their business operations in the near future will continue to advance at an exponential rate.
Disclaimer: This article is not intended as investment advice. It is just my personal opinion. You should always do your own research. Full disclosure: I own ELF tokens.
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LindaCrypto
