Blockchain 2.0 being at the height of its development, there are quite a few different terms and concept, often overlapping ones. Let us cover the main ones in brief. Microtransactions
This appears to be the simplest concept among those I am to describe, but it is certainly worth mentioning.
The Visa/Mastercard backbone technologies had been originally designed as centralized structures, and their bases make attractive targets for attackers, as we see from the many "hacker" movies and real life cases. Plus they are unable of effecting really small (micro)transactions. By small I means the minute transactions not supported by the traditional payment systems. Blockchain enables transactions worth portions of a cent. Small as they may be, this opens up a whole new horizon of opportunities.
Let me give you a simple example. Let's suppose in a city there are several companies operating cargo drones.Blockchain will make the drones able of economic team play—not only with the drones of the same fleet of but with third-party drones, too. For example,Drone 1 has to deliver cargo from A to B. It is free to calculate whether or not it is more economical for it to deliver its payload to point C and put outa tender for it to be delivered from there to B by third-party drones; if feasible for both parties, it may strike a deal or complete the delivery by itself. This will improve the overall performance of the drone network.
There is another example I have seen quoted in the literature: your car is caught in dense traffic but you badly need to get along really quickly: let's suppose your wife is in labor. You are ready to pay the other road users a certain amount of money to make them move aside and give you the right of way. Those who let you pass (drivers who are not in a hurry to make their destinations) will each get a microtransaction for their help. Blockchain with its microtransaction feature set is exactly the engine to enable this. In a centralized system such transactions would be too costly to be considered. Smart contract
Those of you who had never heard the term before are probably now asking themselves what a smart contract is. And yet, indirectly, we deal with this concept every day. This is a contract from our life, but one written using a programming language and automatically executed as soon as certain triggers are pulled.
The classic example of such a contract is the vending machine, always automatically operating according to a fixed set of rules: you pay the money, your make your choice—the machine releases your purchase. In the smart contract context, code becomes law; it cannot be contested and it will always be executed to a letter as soon as the conditions are met. At least, until recently I had never heard of any means of challenging such a contract. But every rule has its exceptions (I am going to tell you about one such interesting case later). The most important nuance here is that the contract must be executed without fail. Smart property
Smart property is a new concept we are not used to at all yet. In this case property rights (for a car, apartment, etc.) are cryptographically fixed in the code.The asset (property) will only operate if recognizing legitimate user rights for the use of that property. This makes the transfer of property as simple as any transaction.
Of course, the smart property concept is based on widespread use and adaptation of decentralized trusted blockchain, which as of now appears to be quite a distant future. Yet I wouldn't be overly pessimistic—there are already blockchain startups used to register diamonds and watches.
By way of adding to the idea: using the information about the current balance of supply and demand supplied to it from the internet, the smart property item can potentially be engaged in economic activities of its own. Thus, a taxicab without a driver—a self-owned one—will be marketing its services or taking orders all by itself, balancing out its tariff based on time of day, current supply and demand. Dapps (Decentralized Applications)
These are apps executed in blockchain.Bitcoin, being a transaction-focused peer-to-peer network, happened to be the first ever decentralized application. The opportunity to make smart contracts and write executable code within blockchain has given birth to all sorts of decentralized applications. Besides, Daps can be quite independent from any particular blockchain, operating as entirely stand-alone applications. Example: MadeSafe, a distributed data storage application. In short, it operates like this: you make your disk space and up-time available too the network users and collect your premium for that; alternately, you can upload your data to the network in exchange for your service. There had been similar projects in the past (for example, Wuala
), but now, for the first time ever, they are founded on economic principles: you simply offer your space and get paid. So far there is no certainty whether the project will survive. For your info: Wuala was closed in 2015.
Internet sources give a list of criteria an application must satisfy to be called a Dapp. I think these should be covered in some detail:
- A Dapp must be fully open-code, it must operate as a stand-alone application and no organization may be able to claim possession of the greater part of its tokens. A Dapp may adapt its protocol in response to suggested improvements and market feedback, but all changes must be adopted by consensus of all its users.
- A Dapp's data and operating reports must be encrypted and stored in a public domain, the so called decentralized blockchain, to avoid any potential network outage.
- A Dapp must require a cryptographic token (bitcoin or original app token) for access to it. Every bit of input contributed by miners must be rewarded in Dapp's tokens
You can find quite a long list of different dapps based on Ethereum: http://dapps.ethercasts.com
. I shall not discuss them at length in this article; instead let me give you a few examples for better understanding:
There are lots of them—you can spend hours studying the different options allowed by blockchain. DAOs (Decentralized Autonomous Organizations)
In my opinion, one of the most impressive blockchain-based concepts is that of a decentralized autonomous organization. "What's that anyway?" you are sure to ask. Before I give you the answer, let us think. The traditional organizations we know of are all based onsets of contracts and agreements enforced by external agencies (laws, courts of justice, authorized bodies, etc.). This certainly increases the operating costof such an organization and impairs the reliability of its rules and procedures. DAO, too, is based on a set of contracts, but these are not paper contracts but smart contracts executed in blockchain environment. This puts DAO ahead of the previous concepts and turns it into a sort of a company's robotized manager. DAO can collect and store the money received by way of investment, it can spend that money based on a known set of rules agreed upon by DAO members, and so forth.
Let us take a look at a few down-to-earth examples of decentralized autonomous organizations:
- An automated marketplace for trading resources or other valuables. A distributed independent marketplace with equal conditions for all participants. Some of the closer examples: stock markets or RTB-based advertising markets.
- The communities involved in organizing p2p interplay, such as you do or profi.ru, can well be based on decentralized principles.
In addition to DAO, there are such concepts as DACs (decentralized autonomous corporations) and DASs (decentralized autonomous societies).These appear a bit redundant to me, as they are in effect integral to the DAO concept and are not much different from DAO in terms of operating a decentralized organization. The different terms in this case seem only to mimic the familiar forms of centralized organizations, as we know them.
By way of summary: the DAO concept may greatly alleviate (or completely do away with) the company's operating costs by automating its operations, in full or in part.