NEWS

LLC NEWLAND technology / 27.12.2017

Blocking. Great Opportunities

While Bitcoin continues to beat its own records in value (above $ 14,000 per coin at the time of this writing), no less massive hype spins around the technology on which the cryptocurrency was created. Blockchain promises to be the cornerstone of the new world. Honest business, fair government, post-capitalist economy. The idea of an unconditional basic income even walks nearby - you know, when every person in the world receives a monthly sum of living without any conditions.


Did I miss something worthwhile? - thought those who brushed off the blockchain like from another fashionable catchword.


Do not panic. Now tell you what you need to know, not to be the black sheep in talking about the blockchain. Namely: what does this technology have to do with cryptocurrencies, what can it bring to other areas (with a live example from telecom), and which nevertheless cannot, despite the assigned expectations.

BLOCKCHARE AND BITCOIN: BASIC PRINCIPLES

For some, these terms sound like synonyms. Or, at least, as homogeneous words that need to be separated by commas. Approximately: blockchain, bitcoin, blah blah blah. But seriously, the differences are as fundamental as in the example with chicken and egg, god and word, Jack and groove. Moreover, the blockchain first appeared.

Blockchain is essentially a database. But not simple, but in the form of a chain of information blocks. Hence the name: block chain (English - "chain of blocks"). Blocks can contain any information. So, in the Bitcoin system or any other cryptocurrency systems, this is data about transactions between wallets. At the same time, each new block contains the information of the previous one, the reasons for the changes (for example, the transfer of currency from account to account) and the updated value.

Another feature of such a database is that it is distributed or decentralized - that is, it is simultaneously stored on many different computers and is constantly updated on each. Due to this, it is impossible to make changes to the blockchain if they are not accepted by more than 50% of the other participants. This is called reaching consensus and ensures the security of all agreements held in the database. This does not mean that thousands of people sit and personally check your updates. But if you want to change the information, for example, about the amount of your account in a big way, and the data about the incoming funds transfer to you in the system did not record at least 50% of computers - the blockchain will reject your operation.

In order for the blockchain to function, the system needs to solve mathematical problems that arise during the interaction of participants. Machines handle this. Theoretically, the power of the participants' computers can be used to solve problems. But in this case, everyone must be connected to the network constantly, otherwise it will not work. This format of system support is often compared with torrents: if there are no distributors, you will not be able to download the file. In the cryptocurrency systems, miners all help out - people who donate the power of their computers (and special farms) in order to receive rewards in virtual money.

Their projects can be created on the basis of various public systems (Bitcoin, Ethereum), which can be accessed by any user. And you can write a private blockchain with a limited number of participants and independently support it. But anyone can make a creator on this technology: at least startups, even telecom operators and banks, even the government.

BLOCKCHAIN WITHOUT BITKOIN: LOOKING WIDTH

So, we repeat: any information can be recorded and transferred to the blocks. The blockchain is always decentralized: the database is stored as multiple copies without a single supervisory authority. The data in the blockchain is encrypted, but the results of any actions in the system are open to all its participants and are performed only when they reach a consensus.

These are the main distinguishing features of technology, and their universality and revolutionism lie in them. That is why the blockchain is no longer just about cryptocurrencies. Since the blockchain idea was publicized, its version was repeatedly updated by writing the system code from scratch. New platforms added new features to the blockchain or developed existing ones to the user level. Consider the most interesting.

NEW ERA RECORDER

As a database format, the blockchain can be used to safely and securely store information for any system: from business to government. In this case, the blocks contain encrypted document data, confirmation of significant events or an identity card. Information that was once entered into such a database cannot be altered or tampered with.

For example, in the Pay-me service, the blockchain is used as a digital notary: when connected to a payment platform, businessmen are identified by adding document video demonstrations to the system. Another striking example is the company Bitnation, which provides notary (and not only) blockchain-based services at the state level.

SMART CONTRACTS

For the first time put into practice in the Ethereum platform. A smart contract is an electronic algorithm created on the blockchain and valid for two or more parties. A smart contract describes a set of conditions, the fulfillment of which is reflected in the blocks of the chain and entails the events set by the participants. If conditions are not met - events do not occur.

The advantage of smart contracts is that they exclude intermediaries and the risk of fraud in any transactions. Imagine existing contracts without banks, state seals and lawyers. At the same time, the blockchain ensures security (due to encryption), reliability (due to the creation of multiple copies of the contract between the parties) and performance guarantee (no chairs - no money).

The use of smart contracts is possible in many areas of society: trade, fintehe, art and others. In this case, you can transfer any assets to the blockchain and set any transaction conditions. Cryptocurrency is a financial instrument in smart contracts.

INTERACTION WITH IoT

If you connect the Internet of Things to the blockchain base, you can establish fast and efficient interaction between several economic agents: for example, the customer of the service, the supplier and the manufacturer. Together with the use of smart contracts, blockchain and IoT will make any interaction between companies transparent and effective. Otherwise, it will be suspended or burdened with fines.

The scope of application is wide as the imagination of developers. This may be industry, medicine, logistics, smart cities and so on. For example, in April 2017, Intel demonstrated the work of the blockchain platform for controlling the quality of seafood supply. They offered to use IoT sensors to identify the owner of the goods, as well as to record data on the conditions of storage and movement of products. All information in the project was submitted to the blockchain system and, thus, was available to end users.

ICO and DАО

ICO is a new crowdfunding format for startups. It stands for: initial coin offering or the initial offer of coins. As part of ICO, projects will present their ideas and organize the collection of money or more popular cryptocurrency through the sale of their own digital coupons - tokens. The company tokens are created on the blockchain and can be subsequently sold, bought and increased in price, like any other cryptocurrency. Then, with the successful commercial development of the project, users can exchange tokens for start-up services.

The creation of a DAO (decentralized autonomous organizations) is similar to an ICO, but occurs in a different legal form. In this case, users do not just buy air, but make micro-investments in various ideas. Everyone who invested money in the blockchain of the project at the start, secures a share in the company and, if it develops successfully, will receive a percentage of the profits and will be able to influence internal decisions.

“According to this principle, joint stock companies are organized,” explains Evgeny Boykachev, product manager at Eastwind. - Only in DAO, everything is much simpler: you can invest in dozens of projects on the blockchain around the world and wait for the “shot”. And all this without the participation of lawyers, notaries and without the option of fraud. In general, the blockchain opens up a real opportunity for ordinary people to support the development of new technologies, and for startups - to get a living. ”

BLOCKED BY TELECOM

Speaking of telecommunications, analysts adapt all of the above blockchain features to the specifics of telecom operators. Among cases you can find data protection against fraud, transfer of contracts with subscribers and payment of communication services to the base of smart contracts, reduction of the risk of information loss due to storage in distributed databases and so on. All this is still a theory. But we have a real example: the organization of crowdfunding in the blockchain project at the junction with the telecom.

Thus, Eastwind partners conducted ICO to launch TripAlly service. The platform offers tourists to travel to Asian countries without overpayments for roaming and without changing the SIM-card. At the start of the project, the company launched the sale of Ally's own tokens for cryptocurrency. Subsequently, tokens will be able to pay for the services of the service. In return, travelers will get access to unlimited Internet from local telecom operators. Also, there are already arrangements for accepting ALLY tokens from partners of a startup.

The project was completed by ICO in early December 2017. We asked TripAlly representatives how this method worked in practice, and why they chose it.

“The search for an investor for a startup, especially tech, is not a quick and simple affair,” said Sergey Zubkov, co-founder and technical director of TripAlly. “With the advent of the blockchain and opportunities for the production and sale of crypto tokens, new development options have opened up for everyone. For projects, this is a chance to get investment, and for ordinary people - a way to invest in promising projects.

The idea of ​​an ICO came up to us on all counts. After all, from the very beginning of the development of the concept we wanted to introduce the concept of domestic currency. And then there's crowdfunding in the kit. Therefore, we released ALLY crypto tokens based on the Ethereum blockchain and sold our currency for the broadcasting (ETH). The ICO is now complete. The collected funds went to the full development of the project. Next, we plan to conduct pre-investment. After that, our ALLY cryptotoxins will be placed on crypto-exchanges for free buying and selling. And after starting the service, it will be possible to pay them for TripAlly services.

In general, everything went well. The only thing we did not expect: the ICO ban and cryptocurrency in China, which occurred in early September 2017 and significantly affected the results of all market participants. In general, this year there was a kind of ICO boom. Not all projects have finally reached the real launch, so now users have become more skeptical about this type of crowdfunding startups.

I want to warn new projects about the competition, which is great in the information field - you need to lay a rather large budget for advertising. Dozens or even hundreds of thousands of dollars will have to be spent on promotion of ideas, technical implementation of ICO and media support. Since the beginning of 2017, the required budgets have grown almost 10 times. And you need to be ready for this, otherwise the ICO will fail, even if you have a great idea. ”

NET BALANCE

Summing up, we can say that the blockchain has really breathed the air of innovations even into the most musty areas. However, the problem is that even though there is a lot of talk, experiments here and there flare up, but technically the blockchain is still not ready to become an absolutely mass technology.

First, this is due to its limitations in scalability. A maximum of 15 transactions on Ethereum per second versus 60,000 on Visa is not serious. In addition, if the blockchain becomes really popular, the participants will certainly have a problem with storing transaction records (changes in the blocks) - few will agree to allocate an extra 100 Tb for this case on a home computer. Secondly, the question remains with the verification of the source data that the participants themselves load into the system one way or another.

Therefore, it is too early to talk about changing the economic foundations of the world. But to use the possibilities of the blockchain technology privately is just the right time. To optimize business processes, simplify legal issues and support new technologies.

“We, as an IT company, are continuously exploring ideas for entertainment and business services on the blockchain,” concluded Yevgeny Boykachev. - At the same time, we are not interested in utopian projects, but in improving the quality of life for people here and now. It is important to understand that the blockchain is not a pill for all problems, but just a tool. The task of the developers today is to find a worthy use for it.”