Adoption of Blockchain Applications Part 5

Transparency vs Privacy. Financial Blockchains. Blockchains in other industries.

 

One of the features of public blockchain networks is their full transparency, not to be confused with full privacy. With Bitcoin, Ethereum and many other cryptocurrencies, it is possible to see all the transactions that have occurred on a blockchain network since its inception.

To do so, you would need to use a blockchain explorer for a specific blockchain network. Here, for instance, is an explorer for the Bitcoin blockchain: https://blockchain.info/ . This is Ethereum blockchain explorer: https://etherscan.io/ . This is Steem blockchain explorer: https://steemblockexplorer.com/  . If you are looking for an explorer for a different blockchain, the easiest way to find one is to type the name of the network + “blockchain explorer” into a search engine. For instance, for the Bitcoin network the search query is going to be “Bitcoin blockchain explorer.”

When a blockchain network is an open-source network, you can also download, view and use any or all parts of its software. Satoshi Nakamoto made the Bitcoin software available to everyone because he wanted people to be able to examine the software and make sure for themselves that it had no bugs, no hidden spy code, and no secret scripts. Most public blockchains today also make their software open source to follow in the steps on Nakamoto.

 

A note about transparency vs privacy

Many people do not fully understand what is happening on blockchain networks in regards to transparency and privacy. For this reason, you will often hear in the new that cryptocurrencies are a new tool for criminals and the only reason to use a cryptocurrency is to hide dirty money. Even Bill Gates said during his Ask Me Anything event on Reddit that cryptocurrencies contribute to deaths of people. While it is true that criminals may use cryptocurrencies, cryptocurrencies are just a tool and just like any tool they can serve a good purpose or they can serve a bad purpose.

It is true that the Bitcoin blockchain, the Ethereum blockchain and many other blockchains do not store any personal information on their blockchains. This means that you can create a new Bitcoin or Ethereum wallet on any computer anywhere in the world and you would not have to provide any government identification. It is also true that you can transact in cryptocurrencies with other people and organizations in a peer-to-peer manner, meaning that you can meet with someone in person, make a deal, be it for buying or selling products or services or doing some work, give them a cryptocurrency wallet address and receive the funds from them without anybody other than the party sending you money knowing that this is your address.

At the same time, most people in the Western countries buy their first crypto coins by wiring regular money from their accounts to an exchange such as Coinbase, and when this happens, banks, the government and the Internal Revenue Service know perfectly well what is happening and who is doing what.

All transparent cryptocurrency networks provide multiple ways for interested parties to try and figure out what is going on with wallets and transactions on the networks. For example, if a certain website has a Bitcoin address for donations listed on its pages, it is possible that the website will be not updating the address after each transaction. This means that it would be possible to see all the funds coming to the address. If a party A knows that party B is supposed to receive a payment for a transaction in Bitcoins, party A can monitor the Bitcoin blockchain for transactions to see when the transaction in a certain amount is going to come in. For all these reasons, it would be true to say that public cryptocurrency networks are pseudo anonymous but not fully anonymous.

 

Financial blockchain applications

Because the software code of the Bitcoin network is open source, it is not surprising that some of the first blockchain applications have appeared in the financial sector. Many of the software entrepreneurs have been closely watching the Bitcoin network and trying to figure out how they could improve on already existing and proven idea. Then, they would simply take the source code of Bitcoin and add to it to increase the functionality of the new network.

Just like Google was not the first search engine and Apple iPhone was not the first smartphone, it is likely that eventually some other cryptocurrency will surpass Bitcoin by market capitalization if it manages to solve the issues such as Bitcoin’s scalability issue.

Examples of networks in the financial space include ZCash that offers true anonymity, Ethereum with its Ethereum Virtual Machine and ability to execute computer code and build decentralized applications, and others. Many of the traditional payment providers, such as Visa and Mastercard, are also exploring blockchains and trying to figure out ways to use the technology to serve their customers better. Another example of a network in the financial sector is Ripple XRP, which is not a blockchain network in a true sense but a financial protocol that allows banks to transact faster and more efficiently.

In some cases, traditional businesses in the financial sector are implementing blockchain technology on the backend of their software so that the customers do not have to deal with complex systems and the creation of the pairs of private and public keys.

 

Beyond the financial industry

The applications of blockchain technology go far beyond the finance industry because essentially a blockchain network can record, store and track any kind of asset and information, be it a profile with personal information, records about the weather, flights, cargo, storage of files, or real estate deeds and transaction records. Projects in the space at this point include anything and everything from management of medical records to micropayments to tracking art to supply chain solutions.