This is an authored article by Raam Baranidharan, Vice President, Infogain, that appeared in Digital Terminal on 3rd June 2022. Read the original news article here.
A proprietary eponym is a brand name that, because of its popularity or significance, can sometimes become a generic term for a general class of products or services. Kleenex is a brand of facial tissues, but the word is used today to refer to facial tissues in general. Similarly, Xerox is a brand that manufactures photocopy machines, among many other products, but the word "Xerox" is used to refer to any photocopy machine.
Why am I talking about Kleenex or Xerox? Because we face a similar issue with blockchain technology – blockchain, cryptocurrency or Bitcoin are all used synonymously. And Bitcoin has become an eponym of blockchain – but there is a world of difference between them.
Bitcoin is a specific use case of Blockchain technology that emerged in 2009 in a white paper by a pseudonymous person called Satoshi Nakamoto. Ever since Bitcoin's popularity surged, it became the face of blockchain, although blockchain as a technology has been around for much longer. In his 1982 dissertation, cryptographer David Chaum first proposed a blockchain-like protocol, "Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups."
Decoding the difference between blockchain and Bitcoin – what you need to know about blockchain
A blockchain is a decentralized, distributed digital ledger consisting of records called 'blocks,' used to record transactions so that any involved block cannot be altered retroactively without the alteration of all subsequent blocks.
A few intrinsic properties of blockchain are:
- Immutable: Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data (generally represented as a Merkle tree). It ensures that data, once recorded, cannot be altered unless the entire chain is altered – which is not computationally feasible.
- Distributed (Decentralized): The Blockchain represents a distributed network of nodes that share the ledger. Public blockchains are also decentralized, which means that anyone can host a node and join the blockchain network.
- Unanimous: All nodes in the blockchain network agree on a block before its recorded-on chain, ensuring a common view of data.
- Anonymous: The identity of the participants is anonymous or pseudonymous.
- Traceable: While identity is secure, all actions on blockchain are traceable.
There are four primary types of blockchain:
|Types of Blockchain
|A permissionless distributed ledger technology and anyone can join and perform transactions with just an internet connection.
|Bitcoin, Ethereum, Litecoin, and NEO
|A closed network permissioned blockchain that is under the control of an entity. This technology is usually applied at privately held companies or organizations that want to use it for internal use cases.
|Multichain, Hyperledger Fabric, Hyperledger Sawtooth, and Corda
|Known as “Federated Blockchains,” this imbibes the features of both public as well as private blockchain technology, holding a single consortium blockchain network managed by more than one organization.
|Marco Polo, Energy Web Foundation, and IBM Food Trust
|Also termed permissioned Blockchains, hybrid blockchains are private blockchains that allow special access for authorized individuals. These types of blockchains are adopted to get the best of both worlds.
|Dragonchain, XinFin's Hybrid Blockchain
What you need to know about Bitcoin:
Bitcoin is a cryptocurrency that made blockchain technology mainstream, leading to the misnomer that ‘Bitcoin is Blockchain.’
A cryptocurrency is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. Cryptocurrencies involve a blockchain on which it is created. For instance, Ether exists on Ethereum, ADA on Cardano, etc.
Blockchain and its many use cases:
Though bitcoin or cryptocurrencies tend to dominate conversations around blockchain, it's important to note that there is much more to blockchain than just cryptocurrencies. Enterprises worldwide are embracing blockchain for specific use cases.
What we need to remember is that "cryptocurrency" is one of the many use cases of blockchain, and the unique attributes of blockchain enable several other use cases, such as:
Supply Chain Industry: Blockchain can revolutionize the supply chain management and here's how:
- It can enhance supply chain transparency and improve traceability.
- It ensures security, immutability, and authenticity.
- It can reduce process complexity and improve operational efficiencies.
Gaming in Metaverses: The Metaverse is a seamless convergence of our physical and digital lives, creating a virtual community where we can work, play, relax, transact, and socialize. With blockchain-enabled decentralized applications it can-
- Enable an ownership-driven metaverse where users can own and sell user-owned crypto assets and data.
- Enable the transparent and equitable distribution of revenue generated on the platform.
Data Management: Healthcare, property management, and educational institutes will use blockchain extensively to:
- Enable tamper-proof, secure record management, where users can store their data on blockchain in a secure and anonymized manner.
- The users can share their data with specific entities as required.
- Data on-chain is secure and cannot be tampered with.
In conclusion, we can say that Bitcoin and the crypto industry made blockchain famous, but it is necessary to understand that blockchain is not only a cryptocurrency. In fact, with its many uses, blockchain is quite set to change the face of the enterprise world using technology.