While music lovers have welcomed digitisation as the democracy of the industry, music industry has remained the same. Piracy through illegally downloaded content digs into the artist’s royalties and labels’ revenue. To add to this is the lack of a rights management system, which leads to loss of revenue to the artist and company. The revenue takes abnormally long time to reach the artiste. Area of concern is unpaid royalties, which are often suspended in various stages due to missing information or rights ownership
Artists are also suffering by a lack of sales transparency where although Digital Service Providers report a huge volume of transactions, they end up receiving payment for only 20 to 40 percent of these transactions. This has led to several artists choosing to keep their music off such on-demand streaming services, causing notable gaps in the libraries of popular
These very areas are where Blockchain can make a difference. As a publically assessable and decentralised database that is distributed across the internet, Blockchain maintains permanent and undeletable records in cryptographic form. Transactions occur across a peer-to-peer network, and are computed, verified and recorded using an automated consensus method, eliminating the need for an intermediate or third party to manage or control information. The very architecture of Blockchain being distributed and peer-to-peer brings immense potential to deal with the present woes affecting the music industry.
DIGITAL RIGHTS DATABASES
A main area in which Blockchain can bring immense and positive change is in the creation of a digital rights database. Digital rights expression is one of the main issues afflicting present day music industry. Identifying copyright of a song and defining how royalties should be split between songwriters, performers, publishers and producers is difficult in digital space. Artists lose out on royalties due to complicated copyright scene. Blockchain’s distributed ledger system, which ensures that no single entity can claim ownership, provides the perfect rightfull solution. Secure files with all relevant information such as composition, lyrics, linear notes, cover art, licensing, etc., can be encoded onto the Blockchain creating a permanent and inerasable record.
PAYMENT OF ROYALTIES
It has been observed that Blockchain technology can also be used to facilitate automatic payment of royalties through ‘smart contracts’. And the ‘smart contract’ encoded in the Blockchain enables the proceeds to directly reach the artists as well as the producers, writers and engineers. Such a system, removes the need for intermediaries and provides a transparent ecosystem that ensures all stakeholders receive their fair share of royalties.
Digitisation of the music and media industry has also left artists and producers to deal with the rampant problem of piracy, with users finding innovative ways to copy, record and distribute content, without compensating the copyright holders. The immutable security that Blockchain technology provides can be utilised to prevent it. By encode tracks on the Blockchain, which ensures that a unique record is created every time a song is played preventing copying of the content.
The music industry, disrupted by digitisation, is currently in a grappling due to age-old structures that are unable to cope with the present day digital demands. With this Blockchain technology offers solutions to build a healthy and robust ecosystem that can benefit both artists and producers. While there is still a lot to be explored on how Blockchain can revolutionise the music and media industry, it is clear that Blockchain technology is something that the industry is in dire need of.
The Blockchain Technology can ensure open and well-timed exchange of energy for value, restoring trust between consumers and suppliers. These solutions will, in turn, bring about an increase in competition among service providers and drop service costs drastically.
The main purpose of Blockchain Technologies is to remove and replace the requirements for such intermediaries with a distributed digital network users who work in tandem to verify transactions and safeguard the integrity of the ledger. This allows records of financial transactions to be distributed to several other computers that store data locally.
Trading of oil and gas reserves
The purpose is to run independent blockchain oil and gas trades alongside their live trading platforms. This test identified an error in a trading volume quickly, saving time that would have been spent rectifying the error. It is also believed that blockchain technology can ensure trading systems are secure from hacks and fraudulent trades.
A noteworthy upcoming application works on data gathered from sensors placed on equipment and other assets. The idea is to use them to identify defects and prevent losses. The system also helps gather data via blockchain IoT to develop a model that predicts events, enabling anticipatory planning. This ensures the promotion of asset integrity and worker safety.
The world is steadily shifting from dependence on fossil fuels and other harmful sources of energy. Solar energy is at the forefront, followed by other new alternative industries such as wind and hydrogen systems.People who own solar panels are given the capacity to sell the excess produced electricity to their neighbors. Blockchain creates this first peer-to-peer energy trading system for electricity assure an accurate record of transactions. It further optimizes accounting and metering through decentralization.
Another application of blockchain in the energy distribution industry is the design of cryptocurrencies for service payments. Several companies have launched model projects to facilitate such transactions. Some companies have even extended the use case of blockchains beyond just payments. An also notable mention is the development of smart contracts that makes it feasible for individuals to seamlessly trade excess energy. With surplus energy sprouting across the globe from biotech ventures, blockchain will unlock the possibilities. Now the accounting for distribution and consumption no longer must be a matter of heavy software and expensive machinery.
As of now the utilization of blockchain technology in energy distribution industry points to lots of benefits.
It is evident that the wave of blockchain technology is a change that will challenge present service delivery models and the effects have already apparently showing in the energy and power sector and support is building.
Payment ecosystems are evolving at an accelerating pace to embrace new transaction processing methods and technologies. Let us understand how we can use blockchain use in simplifying payments.
The payment verticals of retail banking, merchant retail, transaction banking, billers, and digital banking that have traditionally operated in isolation are evolving toward a consolidated, real-time, any-to-any ecosystem.
Payment ecosystems square measure evolving toward a period of time, any-to-any payments experience for consumers; blockchain is a fundamentally disruptive technology that will play a role in the evolution toward real time.
Blockchain has the flexibility to modernize a payment’s elementary imperative of transferring price between multiple parties, securely and with minimal operational or technical friction. Modernizing the fundamental imperative delivers substantial benefits in the future use of computing for banks, businesses and governments.
Recent rapid growth of peer-to-peer market exchanges for lending (Zopa, Lending Club and Funding Circle, etc.), accommodation (AirBnB) and taxi services (Uber) has demonstrated the potential of peer-to-peer architectures. Blockchain has the potential to accelerate and change such models in each new and existing markets.
The areas of application for blockchain stretch so much on the far side pure payments. Across the banking system, uses include post-trade settlement, asset management, securities, and trade finance. Beyond banking, blockchain interest includes insurance, government, identity management, and accounting services. Not only is this likely to generate new opportunities for payment providers, but also new entrants with disruptive business models, as new market areas become more practically addressable.
Blockchain technologies are immature and their ability to support the challenging non-functional requirements of payment services has yet to be proven.
Current blockchain proof-of-work algorithms require seven seconds on average to gain consensus; further technical maturity is required in this area to support consensus in under 25 milliseconds. Recent advancements leveraging a proof-of-stake approach hold promise to improve consensus performance. Technical advancements are being made toward maturity; technical maturity has accelerated over the past year, fuelled by increasing blockchain investments worldwide that exceed $1.5 billion.
Different types of uses in payment system:
Value Transfer: The use case for transferring funds between parties is the major focus. Blockchain 2.0 technologies could be applied to a variety of different payment sceneries.
In single currency domestic payment the impact could be to reduce or remove the need for central counterparty and the delays in setting transaction net or gross in real-time. Transfers in multiple currencies between countries cross border payments.
Trade Finance: The use case for trade finance covers a single common record of the liabilities and obligations of parties in trade finance. Possible users of blockchain 2.0 include: invoice fraud prevention, process efficiency, service improvement.
Reference Data: Enable the rapid, auditable and secure updating of records by any authorized participant and sharing the change across the network of users. Potential areas where these technologies could be used to streamline the update process and simplify integration into existing payments processing include hot card files, sanctions lists, routing records etc.
As real-time, open-source and trusted platforms that securely transmit data and value, they can help banks not only reduce the cost of processing payments, but also create new products and services that can generate important new revenue streams.
The biggest key to turning the potential of blockchain’s use in simplifying payments into reality is a collaborative effort among banks to create the network necessary to support global payments. Blockchain technology itself works—there’s no debate about that. Now it’s time for banks to seem at the larger image and work along and with non-banks—to facilitate outline the backbone which will underpin a universally accepted, ubiquitous global payment system which will remodel however banks execute transactions.
The blockchain serves as an immutable ledger which allows transactions to take place in a decentralized manner. Blockchain-based applications are springing up, covering numerous ﬁelds including ﬁnancial services, reputation system and Internet of Things (IoT) and so on. Let us understand through this blog how does Blockchain Architecture work.
Overview of Blockchain Architecture
Blockchain systems can seem complex; however, they can be easily understood by examining each component technology individually. At a high level, blockchains utilize well-known computer science mechanisms (linked lists, distributed networking) as well as cryptographic primitives (hashing, digital signatures, public/private keys) mixed with financial concepts (such as ledgers).
Hashes An important component of the blockchain technology is the use of cryptographic hash functions for many operations, such as hashing the content of a block.
Hashing is a method of calculating a relatively unique fixed-size output (called a message digest, or just digest) for an input of nearly any size (e.g., a file, some text, or an image). Even the smallest change of input (e.g., a single bit) will result in a completely different output digest. Hash algorithms are designed to be one-way (known as being preimage resistant): it is computationally infeasible to find any input that maps to any pre-specified output. If a particular output is desired, many inputs must be tried by passing them through the hash function until an input is found that produces the desired result. Hash algorithms are also designed to be collision resistant (known as second preimage resistant): it is computationally infeasible to find two or more inputs that produce the same output.
Transactions A transaction is a recording of a transfer of assets (digital currency, units of inventory, etc.) between parties. An analog to this would be a record in a checking account for each time money was deposited or withdrawn. Each block in a blockchain architecture contains multiple transactions.
Amount – The total amount of the digital asset to transfer.
Inputs – A list of the digital assets to be transferred (their total value equals the amount). Note that each digital asset is uniquely identified and may have different values from other assets. However, assets cannot be added or removed from existing digital assets. Instead, digital assets can be split into multiple new digital assets (each with lesser value) or combined to form fewer new digital assets (each with a correspondingly greater value).
Outputs – The accounts that will be the recipients of the digital assets. Each output specifies the value to be transferred to the new owner(s), the identity of the new owner(s) and a set of conditions the new owners must meet to receive that value. If the digital assets provided are more than required, the extra funds are returned to the sender (this is a mechanism to “make change”).
Transaction ID/Hash – A unique identifier for each transaction. Some blockchains use an ID and others take a hash of the specific transaction as a unique identifier
Asymmetric-Key Cryptography A fundamental technology utilized by blockchain technologies is asymmetric-key cryptography (also referred to as public/private key cryptography). Asymmetric-key cryptography uses a pair of keys: a public key and a private key that are mathematically related to each other. The public key may be made public without reducing the security of the process, but the private key must remain secret if the data is to retain its cryptographic protection. Even though there is a relationship between the two keys, the private key cannot efficiently be determined based on knowledge of the public key. Asymmetric key cryptography uses the different keys of the key pair for specific functions, dependent on which service is to be provided. For example, when digitally signing data, the cryptographic algorithm utilizes the private key to sign. The signature can then be verified using the corresponding public key.
Addresses and Address Derivation A user’s address is a short, alphanumeric string derived from the user’s public key using a hash function, along with some additional data (used to detect errors). Addresses are used to send and receive digital assets. Most blockchain systems make use of addresses as the “to” and “from” endpoints in a transaction.
Ledgers A ledger is a collection of transactions. Throughout history, pen and paper ledgers have been used to keep track of the exchange of goods and services. More recently, ledgers have been stored digitally, often in large databases owned and operated solely by centralized “trusted” third parties on behalf of a community of users (i.e., the third party is the owner of the ledger).
Blocks Users may submit candidate transactions to the ledger by sending these transactions to some of the nodes participating in the blockchain. Submitted transactions are propagated to the other nodes in the network (but this by itself does not include the transaction in the blockchain). The distributed transactions then wait in a queue, or transaction pool, until they are added to the blockchain by a mining node.
Chaining Blocks Blocks are chained together through each block containing the hash of the previous block’s header, thus forming the blockchain. If a previously published block were changed, it would have a different hash. This, in turn, would cause all subsequent blocks to also have different hashes since they include the hash of the previous block. This makes it possible to easily detect and reject any changes to previously published blocks.
A blockchain is simply a distributed data structure that is built linearly, over time and is independently verified and audited by all actors in the network.
In general, blockchains contain transactions packaged into blocks that are mined using significant resources and new “tokens” are created as a result of this mining.
The network-at-large cryptographically verifies that all transactions are legitimate and uses consensus rules to determine what the valid blockchain contains. As a consequence, blockchains introduce a revolutionary new way to create systems that are free from reliance on any centralized trusted entity to dictate truth.
Blockchain is everywhere, literally. But not many people have a clear understanding of this simple, transformational technology. I say “simple” because if you understand its architecture and functionality, you will be marveled by how brilliant it is and in how many ways it can be exploited. Of course, there are complexities involved but they are at a micro-level. So, if you are looking for a jargon-free, not-so-technical explanation of the blockchain concept, this post is for you.
Another thing before you dive deep, blockchain finds many other applications apart from Bitcoin. In fact, Bitcoin is just one of the 700 applications that work on the blockchain principle. But since cryptocurrencies seem to be the flavor of the season, I will mainly talk about blockchain technology in the context of digital payments.
Why Blockchain Technology?
Historically, monetary transactions have relied heavily on intermediaries or middlemen for authenticating the transactions and maintaining records. They acted as a regulatory body to prevent frauds.
Digital assets are more vulnerable since they are easy to compromise and duplicate. They are generally files that can be duplicated if their source code is accessed. Therefore, permission had to be sought from banks in case of money) or intermediaries (for stocks, etc.) for completing a digital transaction. This process could take time but was important to prevent the problem of double-spending (spending the same asset more than once).
So, in 2008, someone called Satoshi Nakamoto released a whitepaper in which he detailed a revolutionary technology by which digital transactions could be verified, authenticated, recorded and completed, without any intermediary! In fact, all the checking and record-keeping was to be done by people themselves. But not everybody is equipped with special verification powers. This can be achieved by specialized people who can solve complex puzzles (miners) by a process called mining. The good news is that miners are normal people like you and me (peer to peer), not banks or middlemen. They use the processing power of super-powerful computers and software to solve big puzzles (like Sudoku, only tougher). Each puzzle has a definite answer and follows a complex algorithm. The puzzle gets harder as the network gets bigger. All miners in a network have to follow the network’s protocol strictly and they are rewarded for their services by Bitcoins. Once a transaction is verified and attached to the network, it is irreversible. Reversing, modifying or deleting a transaction would require manipulation of all previous transactions (remember, it’s a chain). This is practically impossible and thus blockchains are thought secure.
Blockchains have eliminated the need for a bank by fulfilling three of its roles- storing value, verifying identities and keeping transactions records. Hence, blockchains intrigue people more than other digital payment methods like PayTM that require tie up and verification from banks.
A network of value
Blockchain can be interpreted linguistically as a chain of blocks. A block being a bundle of transactions and the chain made up of many interconnected blocks. Miners compete with each other to verify all new transactions by solving complex puzzles. The miner who gets to the result first, attaches his solution (proof of work) and is awarded with a fraction of Bitcoins that are generated now. The other miners double-check his solution and if a majority is in agreement, the transaction completes (Consensus).
Verified transactions are bundled up with their proof of work and made into a block. The new block is time stamped and attached to the existing blockchain, in a chronological order. Now, everybody in the network knows that payment has taken place and it becomes impossible to spend the same currency twice.
Since every block contains an encrypted link to a previous block, all transactions can be back-verified till we reach the origin of the first transaction. So, data that once enters a blockchain becomes immortal, a property it shares with internet!
Some people describe blockchain as the internet of value, and it seems fitting. In the internet, anyone can upload information and others can view it. A blockchain allows anyone to send Bitcoins (encrypted currency) anywhere but only the person who knows its unique address (private key) can access them. So, to transfer your Bitcoins you have to share your coins’ unique address with the recipient.
A distributed ledger
Blockchains not only have an auto-verification system, record-keeping is also automated. A copy of the entire blockchain is available to everybody on the system. Since blocks contain encrypted records representing receipt or payments of money (Bitcoins, in this case), blockchain is a type of virtual ledger. There is no central server that holds the record database or that gives permission to access the database. It is distributed and decentralized. As explained before, there is no need for an intermediary.
Blockchains can be private
Another revelation- blockchains can be private. I know, this essentially kills our favorite feature of blockchains- decentralization. But hold on; there’s more to this. Bitcoin blockchains are public, meaning anybody who has a computer and an internet connection and follows the rules of the blockchain, can join. Then he is given a copy of the entire database. A new transaction cannot be added to the ledger till all its associated previous transactions are verified. Once everything is found in order, the new entry is written and the entire database is synced and replicated to reflect new addition. As you can note, their process has built-in redundancy. This also makes the blockchain concept a bit sluggish.
Enter… private blockchains. They have rules governing who can access the network. They are mostly initiated by enterprises for their private use; something like an intranet. Private blockchains can be accessed by anyone who has been granted permission (invitation) by the starter of the network or who matches the protocol set by the starter. Since the number of participants in private blockchains is less, processing speeds are much faster and processing costs are lower than of public blockchains.
Aside from the access rights, public and private blockchains share similar features:
Both are decentralized. A copy of the entire blockchain is available with each and every participant.
Both have an access protocol (consensus).
Both are immutable and irreversible.
Public or private, the blockchain concept is intriguing. They have made digitization of assets possible and transfer of assets faster. Their encrypted, peer to peer mechanism has phased out the need for regulatory bodies and administrators. And while the blockchain concept purists might protest that private blockchains aren’t exactly permission-free, we say- better a devil known than a devil unknown!
Blockchains are made to go beyond Bitcoins
Although blockchain’s application in digital currencies and asset transfers is most widely documented and exploited, blockchains go way beyond finance. Blocks can store any kind of encrypted information. Bitcoins are also lines of code that hold a unique address.
Apart from handling currency, the blockchain concept can be made to execute some actions (in the real and physical world) if they work in tandem with other technologies. Actions can be to fetch external data such as medical records, census information, intellectual property, weather reports, inventory details, etc. But here comes a problem. Not all participants in a blockchain trust each other. So, how can they filter who can access their data? This can be done using smart contracts. A smart contract contains sets of conditions that must be met by a user, for him or her to gain trust and enter a blockchain. Once a user meets all criteria, blockchain programs trigger and perform some action.
Consider an example. You must have heard of smart devices. They are regular appliances fitted with sensors and connected to the Cloud. These devices are programmed to operate in a predefined manner if certain conditions are met. For example, a smart glucometer keeps monitoring the user’s glucose level and triggers an alarm when levels rise beyond a certain defined limit. They might also send a message to the user’s physician if a low or high sugar situation arises. Now, add blockchain to this equation.
Suppose the physician stores all patient records in a blockchain and shares its private key with his patients. He will be controlling access to confidential records. Apart from securing his patients’ data in encrypted form, the blockchain will be governed by smart contracts that will control who can access the data. Suppose an invalid transaction is tried, the entire blockchain is alerted and doctor, as well as patient, gets a notification. A smart contract can set a protocol that if an input is valid, access should be granted. Programmed devices will be triggered to perform any action- increase insulin dose, contact emergency room, etc. incredible, isn’t it? No need for manual intervention, no hassle, no delay! The Blockchain concept is more than a bubble. It’s an ocean of possibilities and opportunities. Take a dip and find out for yourself!