There are several ways that Private blockchains differ from Bitcoin blockchain in the following ways. They are not:
(i) transparent and decentralized
(ii)fully open source code
(iii) open access for use
Instead, a private blockchain leverages the technology of blockchain within a more limited company. Even though much of the perceived benefits of Bitcoin are driven by its transparent, open-source, decentralized format, a private blockchain that is permissioned may still have benefits as against a centralized standard server system.
More advanced applications of blockchain and Bitcoin have the potential to change the or impact any industry that exists that relies on storage and value or verification of information. The programmable features of Blockchain and Bitcoin technology may facilitate the development of independent governance systems, legal constructs, and contracts, or the ability of interaction between interconnected devices and even pay each other in the internet of things. While many of these promising applications of his technology are grand, it is possible to impact short-term results will make our current payment, accounting products, and settlement serve more transparent or efficient.
Through this, we are optimistic about the future of the blockchain. We have seen genius uses and applications of it into tasks that we had already considered mundane and not going to change, but the blockchain has caused them. The blockchain has led to the creation of hundreds of companies all seeking to exploit the technology and disrupt industries as we know them. It is still too early to speculate what exactly will happen with the use of blockchain but we can only have our minds open to the possibilities of blockchain as it is here to stay.
Given the lack of a central regulatory oversight, Bitcoin also has several challenges. Given the ease of access to the decentralized peer-to-peer payment system, Bitcoin has new opportunities for illegal activities, including money laundering and tax-evasion. In the US, decentralized virtual currencies have been regulated, by regulating the exchanges like Bitcoin Exchange and wallet providers as if they were regular money transmitters or financial operators or who are required to be in good standing with Know Your Customers (KYC), Anti-Money Laundering (AML) and money transmission laws.
It is important to note that the standard expectations of financial privacy may be undermined when these regulations are placed into the blockchain space. There is a growing concern to reconsider the impact of existing KYC/AML/regulations because of the technological framework that provides tools for better fraud prevention and governance —which then reduces or even eliminates the need for such an extensive set of regulations.
It is important to remember that it is not Bitcoin that is the real innovation, rather, it is the underlying technology which is the innovation – blockchain, Bitcoin is one of the successful possibilities of this new technology, which can be incorporated and used in many application across different business categories. Before Bitcoin regulation a virtual currency, it important to understand the real opportunities that its underlying technologies provide, without getting sidetracked by the cryptocurrency menace. New possibilities are now attainable, thanks to the blockchain. Looking at the financial applications, more secure trustless transactions can be executed due to blockchain technologies, for instance, creating free and secure escrow system with built-in multi-signature features.
Blockchain technologies have the capacity to provide a more secure and efficient securities market, by enabling both clearances by peers and automatic settlement without a centralized clearinghouse. It has been understood by the U.S. Securities and Exchange Commission and it now allows for blockchain issues securities when we encode the conditions of a derivative instrument into a blockchain, the derivatives market will be more transparent and efficient, automating all transactions and payments. When the actual value of derivatives is linked together with the derivative, a direct monetary connection is established, which makes crashes like what we saw in 2008 impossible.
Far from financial applications, the blockchain can also be used as a tamperproof and decentralized registry of titles, such as a land registry or as a way to record any licensing or contractual agreements, like intellectual property.
In the context of smart cities initiatives and Internet of Things, by 2012, there will be approximately over 50 billion interconnected devices, each needing to communicate and transact with the other. Because no private authority or the central public could be tasked to be the clearinghouse for all of these transactions, Blockchain technology provides the security and efficiency needed to execute and govern trillions of transactions.
Finally, the most blockchain recent versions make it possible to execute comp code, in a Deterministic and decentralized manner, without the need of a central server. Decentralized prediction markets or decentralized marketplaces allows for the creation of decentralized applications which are neither controlled nor owned by anyone, but simply exist on the blockchain, and executed each time there is an interaction with them.
The advantage is that no one can alter the incorruptible code. Besides, as blockchains enable new forms of value creation and distribution within a particular network, they open up new possibilities for new establishing of decentralized organization and the generation of economic and social coordination, with lower cost, more equality of access, and greater transparency.
However, the problem is that no one is going to be held responsible for the blockchain code operations, for better or worse. This application is not jurisdiction-specific, and it can be agnostic to any jurisdiction’s rules. Like the way the internet is, it will be close to impossible to stop all illegal activities that blockchain technologies bring to life. While governments might not know how to control the use of this technology, they could try and limit the adoption, and regulate the development of these technologies.