What are blockchains good for?

As the speculative frenzy over digital currencies begins to subside, attention is finally turning to the utility and potential use cases of blockchain.

In this article, I will cover the different types of blockchains, what they are suitable for, and how you can find out more about the legitimate legal use cases of this revolutionary technology.

Different types of blockchains

In 2009, Satoshi Nakamoto released Bitcoin. It is the world’s peer-to-peer electronic cash system on an infinitely scalable public proof-of-work blockchain. Bitcoin native tokens can move in this ledger between different wallets with time-stamped ledger entries that record every transaction.

Soon, different types of blockchains proliferated as loosely related companies and groups of developers mistakenly tried to “fix” Nakamoto’s original invention.

In general, blockchains fall into two categories: public and private, although many types of consensus mechanisms are associated with these two types.

The difference between a public and private blockchain is what it sounds like: anyone can write to and build on a public blockchain, whereas a private blockchain requires permission to access and use. Think of public blockchains as the internet and private blockchains as various intranets run by private companies, government agencies, etc. It’s not a perfect analogy, but it will work.

These two types of blockchains can have many different consensus mechanisms. The most famous are proof-of-work and proof-of-stake. I won’t go into the nitty-gritty in this article, but those interested can read more about the drawbacks of proof-of-stake blockchains here. Of course, there are other types of consensus mechanisms, such as historical evidence, authority proof, etc., but covering them is beyond the scope of this particular article.

What are the benefits of a scalable public blockchain?

To date, no public blockchain has come close to Satoshi Nakamoto’s original design in terms of security, scalability, and the ability to build and use it without permission.

What are the benefits of an infinitely scalable public blockchain?

First, it’s public, so anyone can do whatever they want, as long as it’s legal.

Second, it is infinitely scalable, so there are no transaction throughput limits, meaning a blockchain like BSV can process the amount of data required by the applications using the protocol.

What are some potential use cases of scalable public blockchains? Let’s discuss all three in more detail.

Micro payments – In the Bitcoin white paper, Satoshi Nakamoto tells us of the core problem Bitcoin was designed to solve: enabling small, regular payments on the internet.

Due to the additional fees associated with trusted third parties such as Visa or PayPal, transactions over a certain amount are not economically feasible. Nakamoto solved this by creating the world’s first peer-to-peer electronic cash system, which does not require a trusted intermediary and therefore has no associated additional costs. For the first time, almost free or less money transactions can be done online.

Many people who encounter micro and nano payments for the first time wonder why they are so important and what we can buy for a penny or less. BSV advocate Issac Morehouse put together an in-depth series exploring the potential of small payments in detail, but I’ll outline a few here.

With a small payment, a new generation of social media apps that don’t serve ads or collect data can be born. Instead, users can upload media they own, such as photos or videos, and receive micropayments for each like or share. Apps like La Mint have shown how this works.

Micropayments can also introduce new game modes. Instead of subscriptions, players can pay and earn in-game money, and new ideas like Instant Leaderboard Payouts could change the way games work forever. This has already happened in Haste Arcade.

Micro and nano payments can also change the way we consume content online. Instead of visiting a website and agreeing to collect our data when we encounter a barrage of annoying ads, we can pay a penny to access an article and leave a tip for the author if we like it.

Of course, these ideas only scratch the surface and have profound implications for how the Web2 Internet works today. As a result, an incumbent coalition of Big Tech companies created an organization called COPA to sue Bitcoin inventors in a vain attempt to maintain the status quo. More on that another time.

Data management – They say data is the new oil, and like oil, some big companies want to monopolize the flow, and a leak/spill could have disastrous consequences.

There are two main problems related to data that are solved by scalable public blockchains.

First, users who upload data to the web do not own it. Usually, these are owned by large companies like Meta and Twitter, which monetize them. Because they control the database, they control the rights and all the profits. They also have innumerable powers to cancel user accounts and delete data at will. Just read their Terms of Service agreement which outlines all this on this platform.

Second, data is stored in huge databases and silos, creating honeypots for hackers to break in and steal. This sort of thing jeopardizes privacy and creates a huge headache for companies that often have to pay huge monetary and reputational costs. Not to mention all the phishing attacks that users have to avoid after the platform’s database is compromised, giving hackers access to unreachable personal details.

But what if there is only one database? And what if it was public, so that anyone could write without permission, paying a small fee to do so? Furthermore, what if the data could be encrypted via hashing so that no one other than the key holder or those who are granted access could see it? What kind of implications will this have for the world?

For starters, cancel culture and censorship will be over soon. If a user is removed from one app, they can simply go to another, enter their key, and all their data will be there. Also, companies will not suffer the same type of data breach as there will be no big data silos to be hacked. Additionally, any access to or change to data will be time and date stamped, leading to a new era of data integrity with no possibility of corruption going undetected.

A public blockchain is much more than a support system like BTC has informed the public. They have revolutionary implications for the storage, management, and transfer of data and equally radical consequences for the monopoly that controls today’s storage and flow of data.

P2P Transactions – Have you ever thought about why the internet has developed the way it has? How did we end up with a network controlled by a few large corporations with all the data flowing through their servers?

There are several reasons, but one of the main ones is economics. Although electronic cash channels were being built for it when the internet first launched commercially in the 80s, there was no such thing as a scalable micropayment system in the early days of the web, so platform owners had to find new ways to generate revenue. Running data through large enterprise server pools to harvest users’ online behavior and monetize it with ads was one way to make it economically viable, and in the end, that’s what we got and we still have today.

However, scalable public blockchains combined with IPv6, which provides a nearly unlimited number of IP addresses, could change that. For the first time, sending data, whether text messages or photos, can be made directly from one person to another without going through the servers of companies such as Google (NASDAQ: GOOGL) or Meta (NASDAQ: META).

Of course, someone has to process the data in such communications, and that’s where miners/nodes come in. Bitcoin nodes are also data processors; they get paid to enter Bitcoin transactions into blocks and process them, getting block subsidies and micropayments in the form of transaction fees for doing so.

When I spoke with Dr. Craig Wright at the Dublin IoT conference in 2022, he told me that Bitcoin and IPv6 complement each other, working in a symbiotic way. Bitcoin payments could make IPv6 commercially viable, and IPv6 could help make Bitcoin the peer-to-peer network it was really designed for.

For the first time, a true peer-to-peer internet is possible. It’s all thanks to scalable public blockchains.

Learn more at the London Blockchain Conference

It doesn’t take much imagination to see how radically different the Bitcoin-powered world is.

It is here, thanks to unlimited scalability and true peer-to-peer transactions driven by micropayments, that true privacy and data sovereignty are returned to people.

It was one where the time logs of all data changes were publicly viewable by all parties, making hacks and breaches easier to detect and weakening them in the first place.

This is where content creators and entrepreneurs have a new alternative way to earn while retaining ownership of their creations.

To learn more about the use cases and implications of an infinitely scalable public blockchain, join us at the London Blockchain Conference between 31 May and 2 June.

Far from being a BSV conference, Blockchain London Conference welcomes anyone interested in legal and legitimate use cases for blockchain of any kind. We believe the free market will decide which blockchain wins, and we are interested in hearing diverse opinions and views on potential use cases, technology developments, and entrepreneurial endeavors using blockchain technology.

Come to the world’s largest blockchain conference and share your views. Secure your ticket or register as a speaker today!

Watch: London Blockchain Conference 2023 brings government companies into blockchain

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New to Bitcoins? Check out CoinGeek Bitcoins for Beginners section, the ultimate resource guide for learning more about Bitcoin—as Satoshi Nakamoto originally envisioned it—and the blockchain.