From the driving license register to the fraud resistant voting system – does the idea behind Bitcoin make authorities superfluous? Many people see Blockchain as the next digital revolution after the internet. The technology is out and can’t be stopped again. Many startups try base their business model on the blockchain technology and at the current state of development, possibilities  are far from exhausted.

A blockchain is a decentralised database, which contains a backup against subsequent manipulation. Each block newly attached to the chain s linked to the previous block and contains the history as a checksum of the previous block. New blocks are created through a consensus process. After validation they get attached to the blockchain.

The original consensus process was the proof-of-work method. The basis for the trust between the parties is the assumption that the longest chain is the real one, because its creation was the highest effort and all shorter chains must ultimately be counterfeits.

An outstanding advantage of the blockchain technology is that the technology does not need any payment provider like banks or credit card service providers, which must be paid for their achievements. The first implementation could be found in a public blockchain called Bitcoin.

Bitcoin was born ten years ago and was a niche product for years, until it became a speculative object and its value went through the roof. There are now more than 3,000 cryptocurrencies, including numerous fraud models, which only collected money and simply disappeared.

Blockchain is more than just a technology for cryptocurrencies

Although it is still possible with cryptocurrencies to transfer funds anonymously under the tax authorities’ horizons, they will sooner or later shake hands and claim their taxes. This is why several countries now establish their own cryptocurrencies.

The biggest problem of the blockchain consists in the efforts in time and energy for the necessary calculation steps. While around 200,000 transactions are carried out worldwide every day in the Bitcoin world, in Germany around 60 million wire transfer transactions are made each day. Although blockchain technology is the technical basis for these cryptocurrencies, it can also help improve and simplify transaction security in other distributed systems.

In a blockchain you can map processes that require public acknowledgment. Land title register entries can be made in a blockchain and births or deaths can be registered. Marriage certificates can also be deposited in the blockchain. All reporting could be done using a blockchain. This concerns, for example, registration and deregistration of a residence, also for the registration and deregistration of cars including the vehicle test certificates and the automatic collection of fines could use a blockchain. Countries only have to replace paper licence cards with cards (credit card format) and to build a centralised database of driving licences in their countries.

Voting system based on blockchain

The blockchain technology is also suitable for voting systems, because it would not only be protected against manipulation, reliable and secure, but could also be anonymous. The use of such e-voting systems is also imaginable for referendums and could spur the current growing desire for a more direct democracy.

Blockchain systems such as Ethereum offer the possibility to integrate Smart Contracts as script, which automatically and permanently control the conditions of a contract and automatically execute individual regulations of a contract when certain events occur. The automated processing of these contracts significantly reduces administration and control costs.

An example of such a blockchain is the Global Copyright Register planned by Copytrack, which allows payment of the license fees incurred in the case of image usage by third parties without the intervention of a bank and thus significantly reduces the transaction costs, especially in the international area.

Risks of blockchain technology

The use of blockchains is not that easy and user friendly. Numerous hacks demonstrate, that the technique of public blockchain is also not secure enough. If the blockchain technology wants to emerge from the field of enthusiasts, several criteria must be met:

  • New blockchain projects must meet more the requirements and habits of potential users.
  • Standards must be established. In the future, however, this will only be possible in the area of private blockchains.
  • And what I alway say: Transactions must be processed faster
  • Transaction processing must get easier.