The strongest thing that enables human beings to survive, to establish strong bonds with their own species and to develop these bonds is the feeling of trust. Trust is a process that is ingrained in our genes, contains risks and can be developed at the same time. For centuries, people have dominated the earth with the relationships they have built on a sense of trust, they have established great empires throughout history and discovered new continents. Human beings, trusting each other, working for the same goal and collaborating, have set sail for new adventures that can go beyond our planet.
Of course, trust is a feeling that carries risks in itself. And throughout history, humankind has paid a lot of price on insecurity as well as gains made with trust. Indisputably, the feeling of trust has a very important place in the gains and losses of human beings. People have established organizations, established assemblies, and built structures such as institutions, organizations and the state in order to establish a sense of trust and maintain order.
Blockchain technology is the technological infrastructure that has been created to establish the trust of the new digital society order. In the new world order, all data, all records and all transactions that will take place are planned to be done digitally, so these transactions must be done securely. Blockchain claims that it can do this with a specially developed encryption method and mathematical infrastructure. This technology essentially aims to distribute or share power and trust among the network’s stakeholders (e.g. developers, miners, and consumers) rather than concentrated in a single person or organization (e.g. banks, governments, and financial institutions).
This technological infrastructure is the foundation of the new digital society. Everything on earth that produces data (people, machines, production sites, robots, transportation networks, healthcare institutions, etc.) and all records of transactions will be associated with blockchain technology. It is a kind of digital registry of the earth and the digital network where all the work done on earth will take place.
Blockchain Entered Our Lives With Bitcoin
We heard about this technology for the first time with Bitcoin. In 2008, a 9-page file was shared on the internet under the name Satoshi Nakamoto. In this article, titled “Peer-to-Peer Electronic Cash System”, it was shared how to send money from person to person in an encrypted and secure way without using any intermediary, and the working logic of the system.
After this development, bitcoin, which entered our lives as a digital currency, suddenly started to be talked about as a player that changed the financial sector. New digital currencies have emerged. Many articles have been published, studies have been carried out, and applications have been developed for digital currencies, which are called the payment infrastructure of the future. Bitcoin exchange was created. The value of 1 bitcoin, which sees the levels of 20,000 dollars, is traded at the level of 7,000 dollars as of April 2020. The Bitcoin digital currency, which started to be traded on some stock exchanges in America, was recognized by large organizations and some states, and initiatives were launched to develop infrastructures for this.
In the near future, we will experience a period in which digital currencies are traded with bitcoin, etherium or other names. Large companies (Google, Facebook, Alibaba etc.) can issue their own digital currencies, countries can produce their own digital currencies or transactions can be made through a single globally valid digital currency.
Blockchain is Built on 2 Fundamentals
- Distributed System
Blockchain consists of blocks and these blocks are interconnected in the form of a chain structure. The security of this connection is hidden in a specially developed encryption method. We need to understand two important concepts to ensure security between the person making the transaction and the person making the transaction. These are Digital Signature and Hash Function .
2 keys are used to process and confirm transactions on the blockchain. One of these keys is a private key and is confidential. It is known only to that person and is not seen in blockchain transactions. The second key is a public key that belongs to the individual and can be seen by everyone. This key is visible to everyone and it is known to whom it belongs.
A personal password or private key is used to encrypt the data (operation). The public key or public password is used to authenticate the transaction. A digital signature is personal, just like a manuscript. Transactions are encrypted with a personal password. Apart from that, a Hash Function is used to strengthen the encryption.
Hash functions are functions that produce values of the same length as output, regardless of the length of the entered data. A more secure hash algorithm works in blockchain technology. It’s called “Security Hash Algorithm 256”. SHA256 for short. The reason for using this algorithm is that huge amounts of computation time and resources are spent to solve the generated value.
Regardless of the value entered in the SHA256 function, a 256-bit, 64-character value is produced. In this algorithm, it is very easy to produce output from input, but it is difficult to operate in the opposite direction. This is proof that blockchain technology is a reliable system. In order to decrypt the encrypted 256-bit passwords in the opposite direction, very high computers must work for a long time.
The reliability of blockchain technology is provided by digital signature and SHA256 functions. A 64-character hash value is created by entering the hash function. This hash value together with the personal key creates the digitally signed data file, and this file is added as a new link to the blockchain chain.
This added file is tried to be verified with the help of the public key. This verification is done by miners with high computing power, as it requires decoding the reverse hash function. Miners work to decipher encrypted codes that are difficult to decipher. What encourages miners to solve these problems is Bitcoin.
Miners who help add a verified block to the blockchain earn bitcoin for that effort. Miners are very important for the system to work. Adding new blocks to the chain depends on miners verifying and solving complex math problems. With the inclusion of more miners in the system over time, the increase in competition and the difficulty of the passwords that need to be solved automatically increase. On the one hand, the miners make a profit, on the other hand, the reliability of the system is constantly ensured due to competition.
Finally, the verified blocks are added to the chain as the real record. This is verified by all stakeholders registered in the chain.
2- Distributed System
Blockchain technology has a reliable and distributed structure. Before explaining the distributed structure, it is useful to talk about centralized and decentralized structures. Most of today’s registration processes are centralized. For example, keeping bank records in a single bank or keeping records by central banks. Land registry records, identity information, and registration of citizens’ information by the state, which is a central authority, can be given as an example. When there is a problem in the central systems, everyone who is in communication with the center is affected and communication cannot be achieved.
In decentralized systems, on the other hand, authorized centers are connected to a system. In case any authorized center is damaged, communication can be continued by connecting to another authorized center. For the best example of this, let’s assume that we use the Turkish telecom infrastructure for the internet. In case of a problem in the infrastructure, internet access can be provided with a different service provider that offers internet service.
Blockchain technology, on the other hand, has a completely distributed structure. There is no center. All points can communicate with each other and make transactions over each other. Ledger database, where data records are kept, is recorded at all points at the same time. If there is a problem at any of these points, the system is not damaged and the recording and transactions continue.
It is this decentralized structure that makes blockchain technology powerful. Blockchain is a technology that threatens all central authorities.
The technology, which is claimed to be so powerful and safe, will radically change many sectors. It seems that it will change not only institutions and organizations, but also people’s behavior, the way they do business, and many unique features of societies. Let’s try to understand together how the existing sectors will be affected and what changes may occur.
Blockchain Technology Will Impact Many Sectors
1- Banking and Payments
In the last 10 years, Bitcoin has become one of the most important digital currencies affecting the banking industry. Many banks continue to set up bitcoin and virtual currency infrastructure. Studies are being carried out in many countries for digital currencies, which are thought to replace paper money in the coming years. Each country’s unique digital currencies began to be spoken and implemented.
In particular, the end of banks that earn serious income from money transfer transactions may be over. It is possible to transfer money to anywhere in the world via blockchain with very small commissions. Control of money is about to be taken away from central authorities and handed over to a decentralized technology. IBM predicted that 15% of banks will use blockchain technology by 2017. Organizations that have achieved their technological transformation, integrated with blockchain and investing in the future of virtual currencies can survive.
2- Cyber Security
Blockchain technology has a strong infrastructure in terms of security. While intermediary institutions are needed to ensure the security of systems in today’s world, blockchain claims that there is no need for intermediaries with its own technology.
In case of any attack on today’s central systems, serious damage can be seen in the system. Damage to the system can cause serious destruction, up to slowdown or even shutdown of the system. In decentralized blockchain technology, the point of attack does not affect the entire system. Instantly detected, the attack is eliminated by all points in the network.
3- Supply Chain Management
In today’s technology, a certain amount of supply chain can be controlled and monitored from the production stage to the sale of the products. It helps companies to determine their planning, production and sales policies. In blockchain technology, the entire chain will be under control.
From the crop produced in the field to the lactating cow, all the factors that produce data within the production factor can be included in the system. With the inclusion of all these data in the system, it is desired to minimize human errors and delays. In addition, it is ensured that the damage caused by production and consumption to the environment is understood and controlled.
One of the other areas that will change will be the areas associated with the forecast. These are areas such as consulting, research, analysis, stock market forecasts, elections. There are initiatives working in this area. Studies continue on how and with which methods global forecasts can be made in a decentralized system. There are several startups working to create new markets and integrate it with blockchain.
5- Network and Internet of Things
Samsung and IBM have launched a collaboration they call “Adept” for IoT devices using blockchain. The purpose here is to enable objects to communicate with each other and to meet their needs without being connected to any center.
Objects (machines, robots, vehicles, etc.) will be able to communicate with each other and perform software updates, repair or service calls without notifying any center. Of course, the fact that the objects are in communication with each other will maximize time and energy savings.
The insurance industry will also be integrated into blockchain technology. Blockchain-based insurance companies will be able to keep real-world records securely in the system with smart contracts. Oracle has already started integrating real-life information. Apart from this, “Eternity” Insurance company also develops projects for the insurance industry.
7- Private Transportation and Car Sharing
Blockchain technology, which emerged with the “Peer to Peer” infrastructure, will allow people to share their cars with each other without intermediaries. There are initiatives that aim to safely connect car owners and users. At the same time, initiatives began to be implemented on the automatic payment of parking, gasoline and road fees through the system.
8- Online Data Storage
In centralized structures, information is lost for many reasons, from human error to hacking, from physical damage to code errors. Blockchain allows data to be stored much more securely against attacks. The “Storj” initiative is an initiative that allows data to be stored securely in the cloud with blockchain technology.
9- Help and Donation
It is not known exactly how the aids made in the existing systems are used. Non-transparent institutions can use the incoming aid for their individual interests. In some cases, there are delays in the delivery of assistance. With Blockchain, it is ensured that the help is delivered to the place where it needs to go in the fastest and safest way. The initiative called “BitGive” works in this area and ensures that donations can be tracked and delivered transparently.
In many countries, it is claimed that elections are not transparent, especially in recent years. Central authorities are manipulating the elections and using technology to prevent the reliability of the elections. With Blockchain technology, the identities of the voters will be verified and the election process will be open to everyone. The votes that cannot be interfered with and that are recorded for everyone to see ensure that the elections are held in fair and democratic conditions. Initiatives called “Democracy Earth” and “Folow my Vote” working with governments in this field are working on blockchain-based voting systems.
Government systems of government are often slow, closed, and prone to corruption. In particular, the obstacles brought by the bureaucracy reduce the efficiency of state administrations. Government systems integrated into the new system will have a more transparent, reliable and efficient structure. Since blockchain is a technology that plans to replace centralized systems, we must also take into account that there will be no centralized structures such as the state in the future. Dubai is one of the countries that has adopted and stepped in the new system. This year, they aim to migrate all their official documents to the blockchain.
With Blockchain, the slowness, inefficiency and insecurity in the evaluation and distribution of benefits for the public benefit such as unemployment and health can be overcome. The British company called “Govcoin” aims to assist the government in the distribution of public aid.
The concept of universal basic income has also begun to enter our lives. This financial opportunity, which is discussed around the world, can be distributed to all people through blockchain technology in order for people who will be unemployed to survive in the near future. The company called “Circles” is working on this issue.
Hospitals and health institutions, which are central institutions, are constantly struggling with many dangers. Strong infrastructures may be needed especially for storing and sharing patient data. Hackers are constantly attacking hospitals and health institutions to access personal information.
Blockchain allows for the secure storage of health records. By building a bridge between the patient and authorized doctors, it will ensure information security, accurate diagnosis and fast treatment. “Gem” and “Tierion” are working on systems that will radically change the healthcare industry and can work integrated with blockchain technology.
14- Energy Management
Companies that have been producing in the energy sector for many years cannot reach the consumer directly. Energy services are generally provided by the state, or by different intermediaries and certain commissions. The initiative called “Transactive” is working on blockchain technology that will allow producers and consumers to trade directly.
15- Online Music
In the music industry, there are intermediaries for the songs to reach the masses. With blockchain technology, musicians will be able to communicate directly with their fans and receive their payments without intermediaries. There are many lawsuits arising from copyright and disputes in today’s world. Musicians can suffer financial and moral losses from these lawsuits.
In Blockchain technology, a definitive solution to copyrights is brought with smart contracts. It is almost impossible to publish and listen to the work in any network where this contract has not been verified. “Mycelia” and “Ujo” are startups that produce blockchain-based solutions.
The retail industry is a multi-billion dollar industry and is monopolized by intermediary companies. In the online environment, many intermediary companies such as Amazon and Alibaba survive with service fees or commissions. Since blockchain technology is an attempt to eliminate middlemen, it aims to bridge the gap between producers and consumers. Trust between producer and consumer; smart contracts, secure exchange, reputation management systems are provided. “Openbazaar” and “OB1” are startups that want to change the retail industry and work to integrate blockchain.
17- Real Estate Sector
In the real estate sector, there are many unproductive events such as bureaucracy, non-transparent transactions, fraud, brokerage commissions. The startup “UbitQuity” develops solutions for secure record keeping and fast and reliable payments. Apart from this, efforts are being made to facilitate the approval of the property owner and the appointment of the new owner.
Crowdfunding is a method used by entrepreneurs who want to bring a certain idea or project to life but do not have enough capital to create capital. There are transparent and reliable platforms in this regard, but the commission rates are quite high. Blockchain allows crowdfunding to be done in a reliable, transparent and intermediary way. With the online reputation system, smart contracts, entrepreneurs will be able to raise capital without intermediaries. In the near future, when blockchain technology penetrates more into our lives, we will start to see many new developments regarding crowdfunding.
19- Our Own Sectors
If we have a business where we transfer data or money, we will probably start working on systems integrated with blockchain technology in the near future. Blockchain is a technology that brings many new possibilities and opportunities. It can open new doors especially for entrepreneurs. Many sectors will be affected by the change and many new job opportunities will arise during this transition period. We should act and position ourselves accordingly, considering that the sectors and ways of doing business will change in the near future.
WILL BLOCKCHAIN CHANGE US AND SOCIETY?
Blockchain is one of the most disruptive technologies of our near future. It looks like it will radically change many industries. Changing sectors means changing and renewing human resources. Companies that can keep up with the developments will take their place in the new system. The use of new technologies and the emergence of new initiatives are inevitable. The way people work and their behavior habits will change radically.
This change will not be limited to humans. All living things moving on the earth, everything that produces data is wanted to be included in this system. Production areas, animals, machines, robots, all animate and inanimate beings that may be in the supply chain. In addition, transactions made and all relationships made are required to be recorded in the blockchain system.
What kind of system is it? A decentralized system that can maintain its own existence in a strong way. A system that is claimed to be transparent, reliable and efficient. So is it really so?
This technology has emerged with the control and funding of companies or families with trillion-dollar capital. Although it is touted as a decentralized and uncontrollable system, two very critical questions come to my mind.
QUESTION 1: Who Has the Power?
It is not impossible to make changes to the blockchain. It is argued that this is difficult to implement in practice, as its replacement requires large amounts of capital and processing power. How do we know that 21 million bitcoins will be produced and that the vast majority of bitcoins produced are not or will not be monopolized by a few companies or families?
“The world’s second largest economy is likely to have the biggest impact on the most popular cryptocurrency. In case of several major Chinese Miners shutdown, “HashRate” will likely drop sharply, making the network less secure” 13 Dec 2019 – Coindesk.com
QUESTION 2 – Is the Target Full Control?
It is also possible to integrate people’s instant vital data into blockchain technology. It is said that this integration can be done by taking chips or nanometric (on very small scales) particles to the human body. How and who will be under the control of the authority to interfere with all the vital functions of people? Will we be modern slaves who can be manipulated remotely, controlled by our free will?
Technology has always contributed greatly to the development of human beings. Technological developments should be made for the benefit of people and should bring solutions to today’s problems. Although we have seen the benefits of technology throughout human history, we have also seen its harms. We have experienced many times how the wrong people, institutions or states endanger human life. I am in favor of this technology being handled in this way. Blockchain technology brings many benefits. It has the potential to make our lives easier and build a safer and more transparent life. On the other hand, if the wrong person or institution has a structure that can be manipulated by the states or is likely to be; It has the potential to take away people’s right to life. We need to consider and question this technology not only from an economic point of view, but also from a sociological, psychological and social point of view. The better we understand, the better we can protect ourselves and find out how and in what way we should integrate it into our lives.