What is Blockchain?
All blockchain applications are based on the same premise: that by using a combination of cryptography and distributed secure storage, you can create a completely secure system on which to run various real-world and digital applications.
Moreover, all blockchain systems are essentially based on the same premise, whereby users can combine cryptography with a distributed system—namely a system for maintaining ownership records—to create secure tokens (which are made all the more secure by their lack of a centrally-controlled database).
Whether or not cryptocurrency is involved, the principles are the same: designated units or tokens are secured by the user(s) assigning each token a cryptographic key. The assignment of this key and the ownership of the key/token is recorded in a decentralised database, which is known as a distributed ledger.
Concept image of blockchain. Image Credit: Pixabay.
The growing record of cryptographically-linked blocks contain a cryptographic key, a time stamp, a cryptographic hash of the previous block, and other transaction data. Because the distributed ledger is maintained by all of the users, the whole system is inherently secure.
Ultimately, blockchain can be used to create a single source of truth for anything that it’s applied to. This means there are a multitude of ways that engineers can use it to improve various parts of our working lives.
Blockchain for Engineers
Many people don’t know much about blockchain beyond cryptocurrency, but there are in fact many uses for blockchain that aren’t cryptocurrency-related, and many of them are of use to engineers in one way or another. From granting the ability to gather investment for new business ventures, to allow users to create a secure assurance layer for supply chains, there are plenty of ways that blockchain can benefit engineers.
Cryptocurrency was one of the first blockchain applications to become popular. Many of its proponents still don’t understand it that well, and every cryptocurrency has slightly different rules and regulations. It still universally relies on the same basic tenets described above: distributed nodes or users keep track of where each unit of currency is, who owns it, and what cryptographic key describes it.
In addition to this, all of the available cryptocurrencies are based on the idea of being anonymous and decentralised in nature: in other words, they’re currencies that don’t require a central bank to be managed. All cryptocurrencies have some way of keeping track of the ownership of built-in units, with the ownership of each unit being provable by the use of a cryptographic key.
The increasing popularity of cryptocurrencies, especially the better-known examples like Bitcoin, has helped boost the image of blockchain technology. At the same time, multiple developments in blockchain applications outside the realm of cryptocurrency have also blossomed.
You may find that some clients want to pay you in cryptocurrency. Whether you want to go along with this is up to you, but make sure you do plenty of research into the cryptocurrency they want to pay you with—and especially research whether the country you’re based in (or where the client is based) has any upcoming or existing regulations that could affect your paycheck!
Fundraising and Initial Coin Offerings
Just like other types of entrepreneurs, engineers may need to raise funds for new business or product ideas. In a popular method for raising capital, the group or individual who seeks to raise funds issues cryptocurrency tokens to offer a secured block of their future business. These Initial Coin Offerings (ICOs) can be high-reward, but they also carry high levels of risk.
Engineers may come across this method of funding if they are hired by startups, so it’s important to have some idea of how this system can work—and how it can fail if your income is going to rely on this system.
There have been numerous ICO failures, and, depending on who you ask, the whole ICO theory may be fatally flawed. Have a good think before working for a company that’s planning to fund itself via ICO.
A blockchain illustrative image. Image Credit: Pixabay.
Supply Chain Management
This is somewhere that most of us are likely to come across blockchain in the next few years (whether or not we work in traditional industries or more cutting-edge areas). Protecting people’s supply lines and making sure the components they receive are genuine has been a long-standing problem for many industries.
Blockchain in supply chain management can be used to track and trace individual components or items, but it can also be used to reduce paperwork costs thanks to smart contracts (more on this later). Naturally, such traceability can prove essential, particularly in cases where there’s a risk of receiving counterfeit goods (which may of course lead to problems with your product down the line). There are no industries where saving money on administration isn’t desirable.
There’s also the opportunity to combine blockchain supply chain management with the internet of things. IoT sensors and tags can help track items more effectively, making the whole system even more efficient.
Intellectual Property Protection
CoEngineers.io is an example of a novel blockchain-based application used to manage a publication platform, through which engineers can share their ideas. The principle is that you have a way to prove when and where you published your idea, giving you a secure backup should you need to fight for your intellectual property (IP) in court.
There are other platforms offering similar systems for digitally protecting your intellectual property, such as Bernstein. Essentially, blockchain is by its very nature ideal for protecting IP of all types. Because it records ownership, along with a secure timestamp, everything needed to protect your ideas is built-in.
As discussed before, who doesn’t want to save time and money on administration? Many engineering projects end up with extremely expensive and complex administrative systems, often involving regular payments to numerous different suppliers and contractors.
Smart contracts are a small, self-executing contract, usually digital. An example in an engineering context would involve a payment to a chosen supplier that is triggered automatically when a certain number of components are delivered to the depot in question. It’s obvious that setting up a lot of these sorts of contracts could save time and paperwork, thus cutting overall costs and increasing profits.
The blockchain ledger is updated automatically when these contracts are triggered—both making sure there are no duplicate payments and ultimately providing a secure proof for all parties to be able to access.
Data security concept image: the link of a chain surrounded by 1s and 0s (i.e. binary language) to represent the idea of digital security in blockchain. Image Credit: Needpix.
Blockchain isn’t just useful for assuring physical supply chains. It can also be used to protect digital supply chains as well; after all, you might need digital designs or other data from another part of your company, or even an outside contractor. Blockchain can help you be certain that the data you receive is from the right source.
Smart Energy Grids
The way electricity is distributed around the world is rapidly evolving, with a lot of effort going into developing smart grids. Smart contracts can give us a system where the meters attached to microgenerators write what they produce securely to the blockchain, making smart energy grids that self-manage more efficiently than ever before.
There are already several examples of blockchain-powered smart grids around the world, and we will see this method for managing energy distribution grow.
Looking to the Future of Blockchain
Engineers in particular can expect to see blockchain applications expand into more parts of our working lives over the next few years. The best-known uses, cryptocurrency—and now ICOs—are on shaky ground, with many governments looking at regulation. However, non-currency-related applications of blockchain are starting to take off, and this could lead to a world where trust is built into our very transactions, as more and more businesses take care of their administration on an increasingly digital level.
It’s vital that we start to gain an understanding of blockchain—because it’s soon going to be impossible to avoid.