Bitcoin: It is a digital currency, and a worldwide payment system, which works without the central bank or single administrator.
Blockchain: It is a public ledger, which records bitcoin transactions. In simple words, this ledger organizes into blocks, which has a certain size limitation. It has a maximum size of 1 MB (megabyte). That means blocks can record just seven transactions per second at the most.
Blockchain system is self-incentivizing and supported by non publicly disclosed groups based on their own independent interests. It’s decentralized for a reason. In a system with the premise of self-motivation, system maintainers need to ensure two things: the proper supply of benefits, and the system surplus summarized by the following equation.
Profit — Cost + Financing Subsidy > 0
Like Blockchain, building a company is also a self-motivated system. During its initial establishment, a company will define its main purpose and articles of association, solidify the shareholder’s investment in its personnel, resources, and funds, and improve its valuation and monitor the distribution of net profit generated from its operation.
The Decentralization of the traditional company
The emergence of Blockchain is essentially decentralization of its business in a traditional company, allowing for all companies to participate in fair and open competition within their respective markets. The company’s main business is written within the initial code of the system, mostly through the usage of smart contracts. The company’s charter — a governance issue — is determined through voting processes by its users or it’s share holders. Of course, if one is to look at Ethereum and Bitcoin forking events, the traditional perspective would be that some members of the companies disagreed with their leadership and decided to take the original company data with the business model to start a new company. While this does seem to be a significant issue, we will not discuss it here.
Bitcoin offered a solution to two major issues, namely storage of value and transfer of value. In a centralized world, the functions of a bank can be compared to that of Bitcoin. Now, let’s make a simple comparison. The bank’s costs consist mostly of labor and daily operating costs such as includes IT system maintenance costs, pricy rents for its properties, and extraordinary security among others. On the other hand, it generates profit from lending income and transfer fees amongst others.
On the contrary, the cost of the Bitcoin operational system is only a one-time investment in purchasing the production equipment, mining machine, and an ongoing cost of power consumption. Profit is generated from the handling fee for all transactions in the mining and packing processes, and the financing subsidy is Bitcoin that is rewarded by each Bitcoin block system.
Bitcoin system is defined as a financial subsidy, because similar to company stock offerings, it produces rewards every 10 minutes. The asset difference between companies creating more stock and Bitcoin issuance is that the generation of Bitcoin does not directly bring capital into the Blockchain system. Rather, it comes from Bitcoin’s value in a secondary market, which will not be directly impacted by the issuance, due to the small amounts generated each time. The value of the 10-minute Bitcoin generation is the current trading price and this value is distributed by the mining pool at this stage based on total workload from miners. The miners can cash out the rewarded Bitcoin by selling them to the secondary market for legal tender. Simply put, these rewards are financed from the secondary market, on the premise that the market value of Bitcoin is still growing.
In a centralized company, Bitcoin’s financing subsidies act like a public company paying workers through the issuance of shares of the company, though through Bitcoin these shares are paid without any restrictions on the secondary market and are free to circulate. As the company grows, the market value of the company will grow, which will in turn increase the value of each share and thereby increase rewards for its shareholders. An interesting point here is that the holders are usually not in a hurry to cash out, because most workers and holders believe that their company will grow further in the future and the secondary market has a very high degree of liquidity. Since every current Blockchain system in the market is still at its start-up phase, and as there are very few people who can understand its value, there will constantly be conversion of non-believers to believers. Naturally, all Blockchain systems at the moment are essentially rewarding its employee with their own tokens.
The significance and value of the token
Blockchain tokens and company stocks are not entirely analogous, but it is understandable that a brand new concept will face difficulties when being directly compared to a current monetary system which has existed for decades.
From the market point of view, the two are relatively similar. In both cases, the market value is determined by the product of the company and the current token exchange price. From the Bitcoin point of view, the token’s value as currency is due to the fact that the token has a price on the secondary market. This is mainly because Bitcoin is not a non-profit system and the miners work for transaction fees from mining. The price of a transaction has a market price and anyone who initiates a transaction can grant a transaction fee to the transaction. When there are a large number of unpackaged transactions, the miners give priority to the transaction with high transaction costs. This then uses user inputs as a balance, implementing a predictive engine (Oracle) that takes into account the secondary market price (in fiat money prices).
To make a simplified analogy, the cost of Bitcoin mining is significantly lower than the operating costs of all the banks in the world, which generates an overall more efficient system should Bitcoin develop into a decentralized banking system. Also, as an added bonus, because anyone is able to participate in mining, the miners who take advantage of renewable energy such as wind and water power will gain an edge in a fully competitive environment.
Blockchain and its relationship to the Tech industry
Blockchain is a birth-child of iterations of its original business model and its competition business models along its development phase. It is roughly predicted that only one Blockchain algorithm will remain that will eventually cater to all industries.
Blockchain Network Classification
Existing Blockchain projects fall broadly into two categories. The first category consists of projects focused on solving the problems of Blockchain infrastructure while the others are focused on the applications of Blockchain systems.
The same category exists in the database industry: one class specialized in building the databases such as Mysql, MariaDB, PostgreSQL, MongoDB and Redis and another in developing applications for databases such as Facebook, Youtube and Twitter. With the rapid improvement of blockchain for applications, more and more users can are beginning to understand the value of Blockchain networks. Such examples include Ripple — decentralized swift, Steemit — decentralized twitter, ethereum — decentralized google, aelf — decentralized cloud computing platform and Sia — a centralized cloud storage are being followed closely and highly anticipated by the community.
Future technical challenges
Although the Blockchain industry has existed for nearly 10 years, it is still on its nascent stages and does not possess the sufficient infrastructure necessary for commercial adoption. and there has not been much discussion about the technical details of a decentralized system, as it restricts the development of the network in various industries that are still being exposed to such options.
When it comes to distributed systems, we have to mention the principles of CAP. Due to the strong consistencies in Blockchain, both consistency partitioning and availability partitioning systems cannot exceed the efficiency of a centralized system. However, there is still a lot of room for optimization in terms of efficiency for the existing system.
Undeniably, a game changer- bitcoin has been buzzing since its release on 11th Nov 2017. Bitcoin has soon become one of the most talked subjects among people.
1. Blockchain Meets the Internet of Things (IoT)
According to the report of IDC (International Data Corporation), “By the year of 2019, 20% of all IoT deployments will have basic levels of blockchain services enabled”.
The Blockchain is a big deal now.
Since the distributed ledger technology, Blockchain is continually looked upon in an Internet of Things (IoT) context. The proof is here. We came across the statement, and the report says, “IoT data and blockchain can lead to intelligent automated insurance policy applications”.
Furthermore, “The blockchain is also becoming important in third generation security”, according to Dan Bieler, the Principal Analyst.
And, talking about the predictions, then how both technologies blockchain and IoT could fail to take place at the top! In order to improve business processes and day-to-day life, these technologies will surely continue to work together in the year of 2018 and beyond.
In order to use Blockchain for IoT data, it can offer the new ways to automate the process of the business among the partners. As long as the setting up the expensive and complicated centralized IT infrastructure is concerned, you don’t need to spend a fortune for it.
Furthermore, cryptocurrencies built on blockchains would prove the ideal one in order to automate micro-transactions between the machines.
In the prediction – Blockchain applications meet the IoT (Internet of Things), you will see breakthroughs in the year of 2018.
2. Blockchains Will Come Out With Its Own Asset-Tracking Tool.
You may be aware of the term “Tokenization” – a concept behind bitcoin technology.
Well, Tokenization serves the purpose of identification and accessibility of the platform.
If we talking about the Blockchain platform, it is powered by “tokens” or “coins”. Bitcoin is also considered as the token, which functions over a Blockchain technology.
According to the PCMag report, “There are still far too many blockchain systems, which seem to treat this amazing new technology as a nifty kind of distributed database service or digital notary”.
Therefore, using a token to represent an item ensures that it never appears to be in two locations at one time. Likewise, in traditional currencies, you can use tokens to represent assets. Therefore, this approach can offer all the advantages of blockchain based solutions without any exchange risk. You can check this video:
3. Bitcoin will Implement the Rule of Law
You may be aware of the term “Smart Contract” in bitcoin. It is a piece of code which is stored on every computer network. They all execute and get the same result. In addition, for automating business process operations, Smart Contract is recognized as powerful tools. They will become key productivity enablers for enterprises looking to control the blockchain.
Nevertheless, what if when parties to contract to get into a dispute? Well, all these subjects are usually settled by courts; however, they have no authority over blockchain networks. After analyzing the entire situation, Bitcoin is planning to implement the ‘rule of the law’.
4. The Utilization of ‘zero-knowledge’ proofs will grow.
You may agree with the statement that blockchain is a powerful platform for transactions between two parties or groups.
Before moving ahead, it is important to know the concept – ‘zero-knowledge proof’ as it states –
In general, the zero-knowledge proof is one, which reveals the truth of the certain statement, without revealing the additional information beyond what it is trying to prove.
Likewise, in the concept ‘zero-knowledge proof’ in the blockchain, other people only know that the valid transaction has taken place, but they will not know about the sender, recipient, and quantity.
Zero-knowledge is a mathematical operation and a cryptographic tool, which allows one group to prove to another, which is something verified without needing any additional information such as private key (an integral component of Bitcoin), in case of public key encryption (a cryptographic system, which uses two keys: Public Key and Private or Secret Key).
Furthermore, some experts predict that the large enterprises will build their own personal blockchain networks. According to the report of the enterprise project, “Suppliers and customers cannot and would not join the private blockchain for every one of their business partners. And, the long-term future of the blockchain relies on the ability of companies in order to conduct private business over a public.”
When it comes to the predictions of blockchain technology, the zero-knowledge proofs are merely starting to show the working models in the year of 2018. This concept also allows blockchains to have the key elements like security and privacy without abandoning redundancy and immutability, which comes from synchronizing the full transaction information throughout the network.
5. Proof-of-Stake (PoS) Will Be Continually Dominating The Blockchain Consensus Game.
Talking about the proof-of-stake (PoS), this is a consensus algorithm of Bitcoin., and one of the most alternatives of proof-of-work, which is another type of Bitcoin’s consensus algorithm.
In other words, PoS (Proof-of-Stake) is a type of algorithm by which a cryptocurrency blockchain network directs to achieve distributed consensus. In addition, the distributed consensus is a method in which the nodes in the blockchain synchronize their data, and reach the consensus, and the consensus is here ‘transaction is happening’. For instance, person ‘A’ received 2 bitcoins from person ‘B’. The majority of nodes must reach a consensus before updating the distributed ledger (a database).
The first idea of PoS was suggested in 2011 on bitcointalk forum – according to blockgeeks.
Hence, in order to reach the consensus, Blockchain solutions makes use of Proof-of-work, while Ethereum switched to proof-of-stake (PoS) over proof-of-work.
According to the data, “1 Bitcoin transaction is required the same amount of electricity as powering 1.57 American households in one day in the year of 2015”. And, it leads the constant downward pressure on the digital currency value.
Also, according to the recent report, “It is estimated that Bitcoin electric consumption will trend toward equivalent consumption of the country of Denmark by the year of 2020”.
Growth in The Bitcoin Wallets
According to the latest report of Blockchain.info, “The number of digital currency storage wallets has nearly doubled from the last year, while the lack of a selloff in other digital currencies indicates that the new money is flowing into bitcoin.”
In the below graph by Blockchain.info, you can see the number of wallets from the major wallet companies, which has nearly doubled to 17.5 million from about 9.2 million last year.”
Hence, it is a tremendous growth in the wallets.
Well, once you’ve bought the bitcoins, the following bitcoin wallet apps like Coinbase assure security, low cost, mobility, user-friendliness, and convenience. Check out some best crypto wallets, which can help users to manage virtual wealth:
- Bitcoin Core
What Would Be The Next Step?
Instead of aforementioned trends in blockchain development, 2018 will be the year where you will see tremendous growth in Blockchain. According to the partner at crypto-fund Placeholder Ventures, Chris Burniske, “A strong crypto bear marketplace in 2018 would sharpen all of us”. As far as cryptocurrency predictions of 2018 are concerned, you will continually see the hype, and it will grow for the next couple of decades, undoubtedly. 2018 is the repeat of 1994.
Therefore, if you are planning to develop a Bitcoin Wallet App, then you can hire blockchain developers from the best blockchain app development company. Also, keep these predictions in your mind before investing your valuable time in blockchain application development.
Blockchain jobs of the future
While blockchain adoption remains slow, industries including finance, manufacturing, and healthcare are exploring the developing technology's potential to create business advantages like reduced operational costs, faster transaction speeds, and more secure records.
1. Blockchain project manager
Companies are interested in developing blockchain solutions, and will need to communicate their needs to a blockchain development firm. Project managers will be required to manage and facilitate these projects, especially as companies take on more clients. The project manager will be responsible for translating the company's needs into technical language, and the blockchain developers' needs into plain English. They are also tasked with planning and supervising the execution of the lockchain project.
2. Blockchain developer
3. Blockchain quality engineer
A blockchain quality engineer is responsible for all areas of quality in the development environment, including automation frameworks and tests, manual testing, and dashboards. This professional is typically responsible for planning and delivery of complex blockchain projects, as well as developing, applying, and maintaining QA automated test standards.
4. Blockchain legal consultant/attorney
Many attorneys working in tech have reported getting more calls from potential clients seeking advice about how to structure and govern ICOs, the report found, as well as on the issues they may face as they launch blockchain and fintech projects. The need for legal professionals to guide these projects will only grow as the technology matures.
5. Blockchain designer
Companies will need designers to create websites that inform customers what they offer in the blockchain space, according to the report. For example, a recent job posting for a UI designer wanted a professional who could create a UI design with Sketch, PS, and Figma that would work in both mobile and web applications. These professionals should also have excellent communications skills, and be able to work with content, operations, and marketing teams.
6. Blockchain engineer
This year, there were 14 open jobs for every one blockchain developer or engineer, the report said. These professionals are responsible for creating and implementing digital solutions for companies using the blockchain. Engineers must study the blockchain tech needs of their company, and create the applications to meet those needs. They should be skilled in Java, Hyperledger Fabric, Ripple, Solidity, Python, Bitcoin, Oracle Identity, and access management solutions, the report said.
References: Internet Source