Positive Technology Journal

In the last months, there has been a growing interest about blockchain technology, the open and distributed ledger that is at the heart of Bitcoin and other cryptocurrencies. This technology is based on a peer-to-peer network that allows storing any type of transaction in a verifiable and trustworthy way.

However, the most important feature of blockchain is that its distributed nature makes any type of centralized control authority superfluous: each transaction is monitored and approved by all the users within the ledger, which ensures the fairness of the process and also guarantees that the data cannot be traced back to an individual (anonymization).

The self-sustainability of this process is based on “mining”, a review process performed on each block of data in a blockchain that is rewarded by means of “tokens” or cryptocurrencies. In other words, the “miners” are incentivized to solve the complex computational problems required for validating the next block of transactions (hence the term “blockchain”) and keeping the system protected.

About a decade ago, blockchain technology was first outlined in a brilliant white paper written by Satoshi Nakamoto (which is a pseudonym for the author whose identity is currently unknown) as a way to exchange and store Bitcoins - the first cryptocurrency.

However, it was then soon realized that the potential of this distributed architecture could go far beyond the use of virtual money.

Actually, the decentralized mechanism allowed by blockchain can be applied in a number of different domains, to monitor all the online transactions – such as contracts, tasks, payments etc. - that have become ubiquitous in our everyday life.

As Iansiti and Lakhani explain in the Harvard Business Review:

Intermediaries like lawyers, brokers, and bankers might no longer be necessary. Individuals, organizations, machines, and algorithms would freely transact and interact with one another with little friction. This is the immense potential of blockchain

In the last few years, the number of applications and uses of blockchain has been growing rapidly, including the Internet of Things (IoT). The rapid adoption of IoT solutions by enterprises is generating increasing demands for protecting the complex ecosystem of connected devices from information attacks and physical tampering.

According to analyst firm Gartner, in two years from now more than 25% of identified enterprise attacks will involve IoT, though IoT will account for only 10% of IT security budgets.

Blockchain-based decentralized cryptographic processes can provide effective new and more scalable ways to ensure that the data is legitimate and that the process introducing it is well-defined. In this sense, it can be predicted that blockchain (and its derived technologies) could become soon the very blackbone of IoT.

For example, the IOTA project is a new-generation cryptographic token that has been specifically conceived to meet the needs of IoT. In contrast to existing virtual currencies, the IOTA introduces a new mathematical feature – the Tangle – that reduces the computational complexity of the process and so thus makes it more suitable for addressing the exponential scalability demands associated to the IoT; in addition, unlike existing cryptocurrencies, the IOTA uses quantum-resistant cryptographic algorithms, which are almost immune to brute-force attacks.

In November 2017, IOTA has partnered with some of the biggest global corporate names led by Microsoft, Volkswagen and Samsung Group to develop a secure marketplace for data, as Reuters reports. The raising interest of economic giants in blockchain technologies is no big surprise, since many analysts regard this technology as one of the few innovations with highest disruptive potential. For example, the World Economic Forum forecasts estimates that by 2025 activities based on distributed ledger technology will account for 10% of global GDP.

The transformative potential of blockchain has not been overlooked by governments and public institutions, too, which see in this technology also a possible mean to develop new solutions for public issues. For example, the European Union has recently launched a blockchain contest dubbed "Blockchains for Social Good", which seeks entries from those who can propose solutions for public issues, leveraging the technology to provide a mix of greater transparency and decentralization.