Introduction to Blockchain, Smart Contracts, and Tokens
You’ve probably heard of the term Blockchain at least once everyday if you stay active around the ins and outs of technology. Most of us also have a gist about Blockchain, that it is an immutable ledger shared publicly that helps in recording transactions and tracking assets in a business. But how does the technology help create decentralized applications (dApps) by utilizing smart contracts? What are crypto tokens that reside on blockchain networks? If these questions constantly revolve around your mind, this blog will help you clear out numerous aspects related to blockchain execution and dApps. But prior to moving there, let’s try to revisit the basics.
What are Smart Contracts?
Smart Contracts form a set of programs that are stored on blockchain. The aim of having Smart Contracts is to automate the execution of those programs when predetermined conditions are met. As a result, the stakeholders involved can be assured of the results without facing any interruptions or loss of time. Each time the required conditions are met, the further actions are triggered.
What are Tokens?
In general, a token represents something that holds a value.
Cryptographic tokens are nothing but rules, encrypted in a smart contract. Every token has an associated blockchain address which is obviously unique. One can access these tokens through a dedicated wallet that basically communicates with the blockchain. Additionally, the wallet also manages the public-private key pair related to the blockchain address.
Blockchain Networks
A blockchain network depicts a technical infrastructure offering ledger and smart contract services to applications. The framework uses smart contracts to initiate transactions which are then dispersed to every subsequent peer node in the network. The transactions are immutably recorded on their copy of the ledger. If you are wondering who are the users of these applications – it can be end users accessing client applications or it can be blockchain network administrators.
Let’s now move further to some of the real-world applications of blockchain technology. The examples that we witness across different industries might show us the glimpse of the immense power of blockchain.
- Digital IDs
Did you know that over one billion people across the world do not have a formal identity proof?
Microsoft is solving this problem through blockchain with the aim of empowering poor people, refugees, and people affected by disasters. Having an ID would mainly help in connecting them with the formal financial sector.
Microsoft aims to accomplish this objective through its Authenticator app. The unique thing about the authenticator app is that it doesn’t just use a password.
The app uses an additional layer of protection that identifies a returning user or a device via a code or a token.
Microsoft has opted for an optimal way for common people to manage their digital identities.
- Healthcare
Patients should always have the right to accurate information in the healthcare ecosystem. After all, you must have access to matters that are related to your life. Your privacy and security of health data are of utmost priority.
Modern hospitals have moved forward from paper records, and now they leverage blockchain technology to store patient data, which is obviously maintained confidential.
How would the patient access these health records? They would be assigned a unique number key for looking at health records. Additionally, the user (patient) can also manage who can view their private data. Patient diagnoses are also stored, in order to keep a track of the patient’s health history.
- Digital voting
A completely flawless voting system was a myth. It won’t be anymore. Now, each vote would be really secure and can make all the difference all thanks to the immutability of blockchain. It will turn voting transparent and all the changes initiated in the network would be overlooked by regulators. Overall, we can be assured of one vote per person and each vote would be unchangeable.
A variety of new-age applications exist of blockchain technology like decentralized supply chain management, food safety, data sharing, copyright protection and many more. But, the more important question is how do we actually make things decentralized? How can such huge operations be executed without any controlling authority? The answer is – dApps (decentralized applications). Let’s move on to discuss more on dApps and how they are changing the world.
What are dApps?
Dapps or decentralized applications are similar to normal apps and offer the same features. However, there exists a major difference – dApps run on the blockchain which is peer to peer (P2P) network. What does that mean?
That essentially implies that no organization or an individual has the authoritative control of the network. A dApp typically follows these common features:
- It is an open-source entity and operates on its own without any organization or individual controlling it.
- It utilizes a cryptographic token to assist in keeping the network secure.
- Its data and records must be public. (Not private data, instead the data related to the network)
- Tokens are generated using an algorithm that encourages individual contribution by the members of the network.
What are Advantages of dApps over Conventional Apps?
We saw how dApps are disrupting technology by removing any middlemen involved in critical applications like digital ID, voting, healthcare data etc. Before we dive into the primary benefits of dApps, note that Dapps enhance whatever conventional apps do. Why do we claim this? Well, dApps are faster, far more affordable, and a super-efficient way to process big data.
Here are some of the most important advantages of Dapps over conventional apps:
#1 Security
As the name suggests – ‘decentralized’ apps are completely safe and the records in the network are unchangeable. Moreover, dApps are also sheltered from hacking, intervention and can avoid any other potential damage.
#2 Enhanced transparency
As dApps run on blockchain, transactions happening over there can always be verified easily. Subsequently, every user can access the record and check current and previous transactions details. The complete transparency also facilitates accurate verification of all the implemented amendments to the code.
#3 Speed
Decentralized applications help in processing transactions much faster due to absence of any middle parties and applications/gateways for the transfer of funds.
#4 Anonymity
One of the much-anticipated benefits of leveraging blockchain technology is that it offers anonymity. What does that mean for end users? Well, they won’t anymore need to do lengthy signups for each and every site they visit to access simple information.
Blockchain is going to disrupt how the digital world functions and the revolution has already started. Decentralized applications or dApps being the much needed technological innovation in critical privacy-related functionalities, have diverse scope ahead. In the second part of this blog, we will move our discussion forward towards the various aspects related to the deployment of dApps, the challenges faced and how to overcome them.
