The “decentralized, distributed and public digital ledger” Breakdown

A blockchain by itself is just a data structure defining how the data is stored and logically put together. Every block in a chain can be considered as a separate page in a book, where every page has a content and meta-data. That content is stored in regulated way and can not be added, yet can be accessed and read.

Digital identity is critical to many business and social transactions. It enables ways to interact with billions of users in the digital world. However, traditional identity systems are costly, disjointed, fallible, and hindering innovation and greater customer experience. The distributed trust model is a new way of managing identities. Blockchain technology empowers consumers to control their own identity and share between trusted entities with their consent. Also, no single institution can compromise a consumer’s identity. Digital identity on the blockchain is a match made in heaven, keeping our personal information secure and private but shareable on a trusted network, and made available only to those that need to know.

A token is a digital asset that can be transferred almost instantaneously between two parties over the internet without involving a third party. However, not all tokens are the same. Tokens can serve as a replacement for traditional currency, such as Bitcoin, Ethereum, Litecoin, or iOlite. They can be designed to provide the right to a future good or service or even be used to set up and execute smart contracts. Alternatively, tokens can be backed by a particular type of asset, such as gold, silver, or other collateral. Through the ICO fundraising model, startups can raise capital by issuing crypto tokens on a blockchain — most commonly Ethereum — and distributing them to token buyers in exchange for making a financial contribution to the project.These tokens, which can be transferred across the network and traded on cryptocurrency exchanges, can serve a multitude of different functions, from granting holders access to a service to entitling them to company dividends. Depending on their function, crypto tokens may be classified as utility tokens or security tokens.

Therefore, a token can fulfill either one, or several of the following functions:

• A currency, used as a payment system between participants (Bitcoin)
• A digital asset (a digital right like land ownership)
• A means for accounting (number of API-calls, volume of torrent uploads)
• A share (stake) in a company
• A reward for contributors (i.e. Ethereum miners)
• Payment for using a system/product/service (iOlite coin iLT to Create Smart Contracts)

There are two distinctive classes of tokens:

• Utility token- they serve as a (future) access to a product or service and can be best compared to a gift card or software license.
• Security tokens — these tokens constitute an investment contract, where the main use-case, and the reason for the contributors to buy the tokens, is the anticipation of future profits in form of dividends, revenue share or (most commonly) price appreciation.

“Arguably the most significant development in information technology over the past few years, blockchain has the potential to change the way that the world approaches big data, with enhanced security and data quality just two of the benefits afforded to businesses using Satoshi Nakamoto’s landmark technology.”

As example, recently, a consortium of 47 Japanese banks signed up with a blockchain startup called Ripple to facilitate money transfers between bank accounts using blockchain. The main reason behind the move is to perform real-time transfers at a significantly low cost. One of the reasons traditional real-time transfers were expensive was because of the potential risk factors. Double-spending (which is a form of transaction failure where the same security token gets used twice) is a real problem with real-time transfers. With blockchain, that risk is largely avoided. Big data analytics makes it possible to identify patterns in consumer spending and identify risky transactions a lot more quickly than they can be done currently. This reduces the cost of real-time transactions.

• Regulatory compliance is a big business opportunity by for many blockchain developers.
• Faster Identity Checks Using Blockchain — Having the ability to quickly and inexpensively verify individuals identity would vastly improve the KYC process.
• The immutability, immediacy and transparency of information captured within a blockchain means that all necessary data can be recorded in shared ledgers and made available in near real time.
• Using blockchain will also allow the regulators to oversee the process since all the steps are easily traceable on the blockchain

Some in the industry are referring to this as a ‘Smart Contract’, when in fact it’s merely a ‘Smart Ledger’. The real transformation will happen when the Blockchain is leveraged to capture the ‘content’ and ‘context’ from actual legal contracts to execute any type of business transaction. Smart contracts help you exchange money, property, shares, or anything of value in a transparent, conflict-free way while avoiding the services of a middleman.

Here is the code for a basic smart contract that was written on Solidity

The contract verifies that account (it might externally owned account, controlled by private keys, or contract accounts, controlled by their contract code) is valid and has enough supplies. If the conditions are satisfied, money is transferred from one account to another.

Jerry Cuomo, vice president for blockchain technologies at IBM, believes smart contracts can be used all across the chain from financial services to healthcare to insurance.

With this in mind, there is just a limited amount of companies that make it possible for the traditional businesses and individuals to write smart contracts. iOlite, Hosho, Tezus, ContractRoom, and Modex are companies that allocate all their resources on Smart Contract development.

iOlite — a blockchain-based platform that simplifies the human-machine interface and also makes it easier to create smart contracts. The platform is developed by the iOlite Foundation, a non-profit that aims to make smart contracts adaptable in real world, by converting smart contracts written in other programming languages, such as JavaScript or C++, into smart contract languages such as Solidity. iOlite is also working on the conversion of input text in natural languages into smart contract code using its Fast Adaptation Engine (FAE). The FAE is intended to create a core language for each language that would define how language syntax would be converted to a smart contract language such as Solidity.

Hosho — is a Smart Contract Auditing firm. Hosho ensure that your code behaves as intended. From to A to Z, Hosho can assist you in the next topics: Verification — your contract will do exactly what you intend it to do and nothing else, Development — create your compliant and secure contracts from the ground up to your specifications, Network Prediction — how will your contract affect the network, including gas, Vulnerability Testing — Hosho run your code against a database of known attack vectors, and last but not least, Dynamic Analysis — they execute each contract to ensure the results match the purpose of the program.

Tezos — takes a fundamentally different approach by creating governance rules for stakeholders to approve of protocol upgrades that are then automatically deployed on the network. When a developer proposes a protocol upgrade, they can attach an invoice to be paid out to their address upon approval and inclusion of their upgrade. This approach provides a strong incentive for participation in the Tezos core development and further decentralizes the maintenance of the network. It compensates developers with tokens that have immediate value rather than forcing them to seek corporate sponsorships, foundation salaries, or work for Internet fame alone.

ContractRoom — enables organizations of all sizes to discover the power of data-driven negotiation and contracting. Built to foster verifiable collaboration, ContractRoom helps users streamline their planning, negotiation, contracting, and tracking to improve productivity, control and intelligence.

Modex — is a Smart Contract Marketplace and app ecosystem that allows for easy, user friendly access to crypto-currencies and smart contracts alike. Developers can leverage Modex to monetize their skills and offer Smart Contract solutions to end-customers and contributors. The real-world community can easily find Smart Contracts that meet real-world needs, are already audited and secure, without having to scout developers and manage one-off development projects. Modex makes deployment of Smart Contracts significantly easier, faster and more cost-effective, speeding up blockchain technology adoption.

Indeed, the blockchain revolution is under way in many sectors. And it’s only a matter of time before your industry is affected, if that hasn’t happened already. Still, while blockchain technology promises to enable seamless transactions for entrepreneurs, its adoption has been anything but. Blockchain technology is still in the elementary stage. That’s causing most of the problems behind its mass adoption by entrepreneurs and the general public. Give it some time, however, and increased popularity will change the public’s perception and reduce setup costs as more qualified experts emerge to handle the problems.

Originally published at medium.com on March 8, 2018.