Cryptocurrency: Chain Joins Universities and Business Leaders Bringing Blockchain to Market
Chain, a San Francisco-based company that helps financial services design, build and deploy blockchain networks, has joined the Initiative for Cryptocurrencies & Contracts (IC3). According to InformationWeek, Chain accompanies a number of academic institutions as well as IBM and Digital Assets Holdings working to develop ubiquitous standards for blockchain technology — including more cryptocurrency applications.
How Blockchain Works
Blockchain is a distributed, decentralized database that records data as time-stamped blocks, with each block overlapping and connecting to the other blocks. It’s the backbone behind cryptocurrency like bitcoin, enabling people to conduct financial transactions without banks or other third parties.
According to The Wall Street Journal, blockchain financial transactions are recorded in a distributed digital ledger, which is stored on multiple computers. Cryptography enables each contributor to update the ledger in a secure manner, and each computer storing the ledger verifies every change to the ledger by running algorithms to evaluate and confirm the transaction.
Once blocks are created, they’re virtually impossible to remove. Because one block stores a link to other blocks with which it overlaps, it’s possible to rebuild chains even after losing individual blocks. Blockchain made it possible to build the bitcoin cryptocurrency network and process transactions without the involvement of governments, financial institutions or other middlemen.
More Than Just Cryptocurrency
According to a TEDx talk by Daniel Gasteiger, a Swiss fintech entrepreneur, blockchain can take out the middleman in more than just financial transactions. A blockchain-based application called La’Zooz connects drivers directly to people who need transportation, allowing individuals to bypass companies like Uber and Lyft. Meanwhile, Ujo provides artists a way to share and sell their music without giving cuts to record labels or distribution platforms like Apple Music or Spotify.
Gasteiger suggests a future for blockchain identities, which could not only eliminate passwords for authentication but also make it easy for governments to issue documents — like passports, driver’s licenses and birth certificates — in a secure, digital manner. He even suggests that voting could take place using blockchain, empowering people to vote from their own homes and eliminating fraud thanks to each vote’s distributed recording and verification.
What Chain and Other IC3 Organizations Want to Create
Using APIs to distribute products and services is just one way that more businesses are accessing more marketplaces for their goods. In an interview with TIME Magazine, Chain CEO Adam Ludwin sees blockchain as a distribution system not just for cryptocurrency, but for established currencies, securities, gift cards and loyalty points as well. He also envisions faster transactions without central clearinghouses and settlement processes. “When people say blockchain technology will change clearing and settlement, what that really means is that blockchain technology will make clearing and settlement redundant,” Ludwin said.
In 2015, IC3 earned $3 million in National Science Foundation funding, which Cornell University and University of Maryland have already used to construct Hawk, a joint blockchain system. Its researchers see a future for decentralized cryptocurrency, and they want to provide a means to conduct transactions using altcoins to potentially cut legal and transactional costs.
IBM currently offers a Blockchain on Bluemix, an implementation of its Open Cloud Architecture based on Cloud Foundry, an open-source platform-as-a-service (PaaS). It’s also a member of the Linux Foundation’s Hyperledger Project, an effort to create distributed blockchain ledgers for business.