Overview of Blockchain technology and its application in 4.0 era
Blockchain technology is one of the 4.0 technologies that is expected to change the way businesses operate in this century. Blockchain application spans almost every industry. The World Economic Forum (WEF) predicts that up to 10% of global GDP will be stored on blockchain by 2025. The impact of predictable blockchain applications could be as large or even greater than the internet revolution (1990s) thanks to the rapid and powerful spread of today’s internet networks.
So what is Blockchain technology?
To answer the question what is Blockchain, Lina Network would like to provide the concept in the form of a technical and illustrative example.
From a technical perspective, blockchain is a decentralized chain storage technology with multiple servers (nodes), based on the consensus of nodes. Data will be stored in blocks, and linked with the previously created block, forming a chain. This blockchain has a solid bond based on a cryptographic hash function. It can be said that Blockchain is a public and distributed ledger of all transactions ever made on the platform.
Simply put, Blockchain is like the office workers using a Google Drive account to upload all the company data and store it on it. However, if Google Drive is stored on a single Google server at its headquarters, Blockchain data will be stored on all employees’ computers (node). And every time the data is uploaded, all employees must give consent for this data to be in the company database (consensus mechanism). At the same time, each uploaded file will have to lie after the previous file in chronological order and linked to the previous file using a solid algorithm that cannot be broken (cryptographic hash function). If there is any intervention in the file chains, the intervention’s change information will be in a new file that jumps out of the chain. This is the transparency and immutability of blockchain technology.
Blockchain platform classification
We just learned “what is Blockchain”, next will be Blockchain platforms. Blockchain platforms are divided into the following categories:
Public blockchain: Open platform allows anyone access to view and write data.
Private blockchain: This is a decentralized platform run and managed by an organization, allowing only those on the network to access and write data.
Consortium Blockchain: A form of Private blockchain but has many management organizations, this is a combination of Public and Private blockchain. Unlike public blockchains that allow anyone to confirm a transaction; or as a private blockchain, a single organization that designates the creators of the blocks, the consortium chain consists of a number of parties with equal rights in the validation of users and transactions. An example of this type of blockchain is the banks that work together to create blockchain systems to record interbank transactions.
Let’s take a look at the differences between blockchain types:
What is the consensus mechanism?
The consensus mechanism is a mechanism that helps transacting parties come up with a common agreement without having any problems about the interests and desires of influence of minorities. At the same time, this mechanism eliminates the risk of manipulating the entire network by a small group.
Currently, Blockchain has 2 outstanding consensus mechanisms:
- Proof of Work: It was the first consensus algorithm to emerge and remains the most used algorithm in blockchain. It was first introduced by Satoshi Nakamoto in 2008, the creator of the first cryptocurrency – Bitcoin. However, the technology itself was formed long before that. This mechanism is the credit of a “miner” to find the correct hash for adding a new block to the new chain, which is transaction confirmation.
- Proof of Stake: Another popular way to validate transactions. With the Proof of Stake, the creator of the next block will be decided based on a number of processes based on the number of coins (stake) held in the wallet. Accordingly, this mechanism believes holding many shares will give right decisions for the entire network.
Learn deeply about the Consensus Mechanism, the key to the transparency and immutability of Blockchain technology In Here
Key features of Blockchain
Blockchain technology creates the revolution of the storage platform, and is the evolution of the Internet. Because blockchain possesses the following outstanding features:
- Peer-to-peer (P2P): In a blockchain network, there will be many directly linked nodes (servers) with equal roles and positions. In a P2P peer-to-peer network, there is no difference between the server and the client, each machine is a node that acts as both a server and a client to another machine in the network.
- Security: The integration of encryption algorithms and consensus mechanisms makes this technology the most secure and secure today. Research shows that only quantum computers can perform hash decoding faster than system nodes and perform 51% attacks. In addition, the data on this platform can disappear only if and only if the Internet disappears globally.
- Immutable: Data in the blockchain is practically irreparable. Each transaction is encrypted in a different block and linked to the previous chain. When information in a transaction is modified, a new block that records that modified information is formed.When and only with a 51% attack, can the system be tampered with and modified. However, this is not feasible in practice.
- Transparent: All information on the Blockchain platform is recorded on the network, and stored at all servers of the nodes. When an information is changed, all other servers are notified to update or to refuse the update. Once the information is accepted on the chain, all users of the system can see this information.
Example of LINA token, when Mr. A transfers Mr. B 1 LINA from wallet abcd to wallet xyz, the chain of transactions just made on those two wallets will be saved as 1 transaction on the ERC-20 blockchain system. If Mr. B can access the information for xyz, or abcd in the Blockchain database system, Mr. B will see all the transactions that these two wallets have done with no one can intervene to modify the information.
In addition to the above outstanding features, with consensus mechanism and peer-to-peer network, blockchain technology also features high linkage, standardization and anytime, anywhere.
The first widely-known application of blockchain was first peer-to-peer cryptocurrency, Bitcoin. However, with the advent of Smart Contract, blockchain is currently being applied in many fields and industries. The use cases of blockchain technology can be mentioned as follows:
1. Supply Chain
Supply chain is a collection of processes of production, transportation, payment, etc., from raw materials to the time the product reaches the consumer. The current situation facing supply chains is related to transparency and complexity. To solve the above situation, blockchain technology is applied as a revolution in this industry. As a distributed ledger, blockchain makes sharing information between parties easy, fast and secure, thereby increasing the reliability and customer experience through completely transparent traceability.
▶ Read the article “Why should enterprises apply Blockchain to food traceability?”
▶ Read the article “Why will Blockchain become a global trend in the manufacturing market?“
The major banks in the world today such as JPMorgan, Goldman Sachs have all developed their own Blockchain system. By solving the problem of double spending, this technology allows for faster transaction confirmation with lower costs, eliminates intermediaries in transactions and creates a network of fast cross-border money transfers. faster than the normal SWIFT code method.
In addition, with its peer-to-peer feature as its distributed ledger, blockchain provides an electronic customer identification, eKYC system for all banks in the system. From there, eliminate the risks of credit fraud.
Blockchain is one of the most suitable e-government development platforms that receives a lot of attention from governments, thanks to transparency, trust and data security. Blockchain can improve the provision of online public services to citizens and businesses through outstanding features. This technology allows to store all interactions between people, businesses and state agencies on a distributed ledger system managed by that country’s government on a Private Blockchain platform . The highlight here is that data will be linked, stored by all system users, automatically updated when changes are made and is transparent to authorized parties.
Currently, a number of countries have started the process of researching and implementing their own e-government projects on blockchain platforms, including three successful countries: Estonia, Dubai and Laos. In particular, the e-government building project in Laos was deployed by Lina Network and has achieved initial success with the digitization of driver’s license using blockchain technology.
Find more about the Lina eGoverment solution.
There is no denying the benefits of Blockchain in the medical industry. The peer-to-peer, transparency and security features of this technology, when combined with Big Data analysis and AI technology, will revolutionize the industry completely in three areas.
- Electronic medical records: Decentralization and confidentiality allow the patient to be the owner of their records. From there, personal information security, eliminating “trafficking in medical information” and health insurance fraud. In parallel, blockchain allows the creation of networks connecting medical facilities with high standardization, saving time, manpower and costs for both patients and hospitals.
- Medical research: With blockchain technology, a global information sharing portal will be visually built. It serves as a “Joint Research Center” for sharing resources and data. When combined with other 4.0 technologies like AI, Big Data, v.v. research centers can also predict and prevent diseases on a global scale.
- Medical expenses: Instant payment; Set up future health budgets or trust or donate to loved ones. Creates a variety of convenience for both patients and medical regulators.
In addition to the three outstanding areas above, Blockchain can also solve problems with more than 50 other use cases, according to the Consensys report. Lina Network would like to share some outstanding applications as shown below.
Blockchain in digital transformation
In this digital age, digital transformation is no longer the choice of businesses, but a necessity for survival. With 4.0 technologies like blockchain technology, Big Data, AI and quantum computing, drastic and transformative changes can make in the way businesses operate over the next decade.
An IDC report on digital transformation made two notable predictions for 2021: “Industry outstanding value chains, enabled by blockchain technology, will expand the business digital foundation for the entire diverse ecosystem, thereby reducing transaction costs by 35% “and” about 30% of manufacturers and retailers globally will build consumer confidence through public applications. Blockchain technology enables more detailed supply chain linkage and product traceability. ”
How blockchain technology can speed up the enterprise digital transformation process:
- Standardization of digital conversion
- Comprehensive change in the enterprise supply chain
- Speed up business processes thanks to information transparency
- Build a connection and partner framework with peer-to-peer feature
- Building the foundation for Smart Contracts
- Increase transparency and accelerate operations related to finance with distributed ledgers
- Provide a core difference in competition
Case Study about digital transformation on blockchain platform
The technical development of through blockchain development periods with the introduction of Smart Contracts in Blockchain 2.0, or the Hyperledger open platform application, has helped many large enterprises to access this technology in many aspects of the digital transformation. There are a number of projects that successfully apply digital transformation on Blockchain platform: Walmart traceability project, Bumble Bee tuna traceability project, Estonian e-government, affiliate AgriDigital farmers, etc.
Walmart, America’s largest supermarket chain, is currently adopting the Linux Foundation’s Hyperledger Fabric platform with a 25-product traceability project. Starting with the mangoes sold throughout their stores across the United States. After completing the project, Walmart’s team evaluated that: “With Blockchain technology, the time required to trace a failure in the supply chain when a problem occurs is reduced from 7 days to 2.2 seconds”.
With the success after experimenting with mango products, Walmart has expanded to 25 other products. The company claims, in the near future, it will soon require all of its vegetable suppliers to adopt blockchain-based traceability systems to enhance internal transparency and credibility.
Please keep on track with Lina Network Blog to catch valuable blockchain articles and the other technology 4.0.