Due to its several definitions based on its applications and the wide range of things it is capable of, blockchain has grown to be an increasingly enigmatic term in modern times.
We will redefine the area in which blockchain genuinely operates in this post.
Blockchain defined in terms of the function it performs:
A set of technologies (asymmetric cryptography and hashing) that do away with the requirement for trust and ependability when transacting with things of value.
Because even the least liquid digital wallet's transaction data is permanently preserved in the blockchain, trust becomes futile. It is essentially a trustless system.
Challenges:
Then why does the world need to rely on a decentralized peer-to-peer connected network becomes a question. What's wrong with the centralized institutions we have today?
Comparatively: These centralized institutions may be,
- dishonest or corrupt,
- inadequate in managing,
- may be conned.
An effective system that is less susceptible to fraud and poor management is therefore required.
The question of which industries it can be a solution for now emerges; or, to put it another way, what is the arena of blockchain?
The 'FITS Model' is a model that we have for this.
The FITS Model
F - Fraud
Industries with a high concentration of fraud-prone
procedures.
For instance, Blockchain is currently being used in International Transactions and Remittances.
I - Intermediaries
Environments in which many intermediates are present. especially in situations where these middlemen don't add much value.
Estimates: In some areas, the time it takes for a transaction to settle can be reduced from two days to fifteen minutes. such as in the issuance of bonds, stock, and remittances.
E.g., the diamond industry in Surat
Around 500,000 people are employed by the $11 billion Surat diamond polishing sector. Promissory notes are used in this business. Due to the requirement that these pricey diamonds only be purchased from reputable
peers, there are numerous intermediaries (small diamond traders) involved in this situation. This business is susceptible to disruption starting with the process of mining and examining diamonds, by tagging them to a unique hash number and preserving the data about the rarity of the diamond using asymmetric cryptography on the blockchain.
T - Transactions
Industries where there is a trade-off or transaction of some kind. These transactions are recorded on the blockchain.
S - Stable data (Non - Volatile data)
Industries where there is a body of non-volatile, stable data that is not frequently updated. in order for it to be recorded on the blockchain.
Redefining the Blockchain Arena
All that blockchain can do is preserve transaction data historically in an immutable manner that individuals cannot dispute. The market (arena) of blockchain industry encompasses all the worthwhile use cases that may be derived from that particular transaction data history.
Final word
Printing Press filled the Knowledge gap. Powered engines filled the Power gap. The Internet did the same with the Distance gap.
Will the trust gap be closed by blockchain when it comes to dealing with things that have monetary value?
Analogically, humans do not rule by sheer force of will; rather, they do so by creating potent tools that are significantly more effective than they are.
Bibliography
By Bais Rudraksh Singh