Blockchain applications in the real world

The complexity of the blockchain ledger has led to its utilization in various real-world applications. This article discusses some of the many applications of blockchains that we might come across today, including cryptocurrencies, NFTs, and smart contracts.

What is a blockchain?

Before delving into the various applications, let’s go through a quick overview of what blockchains are. They're essentially digital ledgers that are decentralized, distributed, and public. Blockchains are used to register transactions across numerous computers, ensuring that retroactive changes cannot be made without changing all subsequent blocks and attaining network consensus.

Applications in the real world

Now, let’s look into the various applications of blockchain we see today.

Cryptocurrency

When the term “blockchain” pops up, most of us think of cryptocurrency . So how do popular cryptocurrencies such as Bitcoin and Ether work, and where does blockchain come into play?

Let’s revisit the definition and focus on the ledger. In a bank, for example, a ledger could be recorded manually in a book or a database, depending on the nature of the data. Cryptocurrency uses the ledger that blockchains function on to record all transactions. As a result, all transactions are distributed on this public ledger and updated by those who hold that currency. This method allows transparency and decentralization, something common banks don't typically have nowadays.

The image below provides a detailed idea of how the transaction process works:

NFTs

Non-fungible Tokens, or NFTs, have become increasingly popular since the Bored Ape NFT went viral on social media. Various celebrities and notable personalities own NFTs, and they have now become a symbol of art and luxury. These are images with unique identification codes and metadata to distinguish them from each other.

These NFTs are entirely based on blockchains. Since they're tokens like cryptocurrencies, they're mostly similar in the way they work. However, the leading and most crucial difference is that two cryptocurrencies from the same blockchain are interchangeable. This means that cryptocurrencies are fungible. As the name suggests, non-fungible tokens are not interchangeable, although they may look identical in the same blockchain.

Why were blockchains used, to begin with? There are numerous benefits, including transparency, immutable ownership, and interoperability. All these would have been difficult to provide without blockchain technology.

The most commonly used blockchain after Bitcoin is Ethereum. They're specifically known as ERC-721 in that community. Moreover, Ethereum also supports smart contracts, which are explained below.

Smart contracts

Smart contracts are simply programs stored on a blockchain that run when certain conditions are met. Certain prerequisites, such as a binding agreement, are required before a program is placed onto the blockchain. So why do people choose to use them? They're often quick to execute, and all records are encrypted to ensure security. Moreover, no intermediaries are required, which reduces costs and security risks.

Conclusion

This is just the tip of the iceberg regarding all of the applications blockchains have in the real world. Cryptocurrencies, NFTs, and smart contracts all use blockchain technology in a way that exhibits the immense need for them today. As a result, they have become valuable and relevant assets in various fields worldwide.