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Roger Christianson
Roger Christianson

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What Does The Future Of Blockchain Technology Belong To?

A simple analogy to understand how to use the protocol of blockchain technology is to be like a doctor. Once making a medical document with your team and share it amongst a group of patients, the document itself is not only distributed but also electronically transferred instead of directly copied or sent. The protocol ensures that only doctors can change the format or contents without changing the rest of the file which ensures that data can be retrieved and altered securely. In many ways, a doctor's protocol is very similar to that of a protocol on how to use the technology.

Unlike traditional blockchains which are secured by a proof-of-work (POW) and blockchains which are secured by a proof-of-burnished code, a new way of doing business called "blockchain technology" relies on a distributed ledger known as ledger technology. The ledgers themselves are not necessarily Internet-readable and can only be read and manipulated by the users of the blockchains themselves. This is similar to how email can be protected from being hacked. Since the transactions made on blockchains are secured by the users' own stamp, they are considered less-risky than transactions done on traditional ledgers.

An example of how to use the ledger technology of blockchain technology comes from the recent financial crisis. In June 2021, a group of hackers stole about a trillion dollars of digital currency from nine different digital currencies including MasterCard, Visa, and PayEagle. Because of the way these currencies work, the theft was relatively easy. A hacker could easily break into a computer network and download the entire ledger. Because the currencies are complex, there was a long and complicated chain of custody that had to be followed.

As a result, many governments and international agencies were left scrambling to figure out how to prevent future cyber attacks. In late August of this year, the heads of the G7 said that the threat of terrorism was one of the biggest threats to the world and that they would work together to prevent it by using distributed ledger technologies. In September the Japanese government and several financial institutions published an academic paper on how to use the technology to better fight money laundering. In November the head of the Swiss central bank addressed the Central Bank of Japan about the same topic. At the time, he gave some hints that the country might soon switch to using the blockchain technology.

In late December, the International Monetary Fund released a report that outlined its plans for the future of blockchain technology. According to the report, the IMF was hoping to improve efficiency by migrating its various currency platforms over to the same secure ledger technology. By migrating to the new infrastructure, the protocol for each individual currency will become more standardized and reduce the risk of interoperability problems. The move follows several high-profile hacks targeting different currencies and institutions.

With such foreseen concerns, now is a good time to consider investing in the future of the blockchain technology. Currently there are several well-established companies working to build the infrastructure needed for a global electronic cash system. In addition to their efforts to develop new software and hardware, these companies have also invested significantly in hiring the most qualified cryptographers and mathematicians to help them design and implement a new global ledger. They expect this to occur in the near future, perhaps as early as next year, although it may take longer than that depending on the severity of the current breaches.

Cover photo by Hitesh Choudhary/Unsplash

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