Blockchain Technology Fundamentals

Strategic Positioning Within the Blockchain Industry

From the moment Satoshi published the Bitcoin whitepaper, the blockchain space has been on an upward trajectory as a largely economic phenomenon. The debate on using Bitcoin as a means of money and perhaps someday replacing fiat currency has stolen the spotlight and captured the attention of regulators and powerful financial institutions and not in a good way.

Generally, the industry has been hyper-focused on its desire to create financial wealth and determine what this technology will do to financial institutions, that they have neglected the fundamentals of blockchain and how it can be applied to real-world problems.

The media does produce some articles of what could be possible with blockchain but these articles are often full of misconceptions and preconceived notions that end up doing a disservice in educating and pushing the adoption of the technology. As a result, businesses and regulators often look at blockchain as a threat instead of something that can really make an impact on how any industry operates and change the outcomes of society.

This is evident by legislation currently up for debate.

The "INVEST in America" infrastructure bill, H.R. 3684, contains a small provision, tiny even given its 2700 pages, related to the funding of the $1 trillion dollar bill. This provision requires reporting to the IRS any event where someone regularly provides any service where there is a transfer of digital assets on behalf of another person. The fear is that this broad language casts a wide net to include miners, validators, and developers thus stifling innovation. The provision itself underscores a basic problem the US has with respect to blockchain and cryptocurrencies. The vast majority of regulators and legislatures don't understand the need, the capabilities, nor the fundamentals of how decentralized blockchain-based verification all works.

Another bill, H.R. 6154 is making its way through the legislature as well. The "Crypto-Currency Act of 2020" focuses on the financial aspect of crypto citing taxes and investments, completely leaving out fundamentals and innovation.

Given just these two examples the question becomes, "why?" Why don't the powers that be understand the implications of a blockchain-based supply chain, loyalty systems, or research data integrity? What about the ability to provide regulatory proof and quantum-resistance? Is it possible the industry of VCs and paid media have created the very problem the industry is now faced with by picking winners and losers, focusing on market share, and ignoring fundamentals?

Throughout Dragonchain's existence, we have written many articles outlining our advanced capabilities, documenting every milestone along the way. It's no secret that from the very beginning at Disney, the team set out to find solutions to the real-world problems that face businesses. We bridge the gap between legacy and emerging technology while being mindful not to create new problems for businesses in the process.

The team built a platform for any business use case in any industry

We could have narrowed our focus on one particular use case, but as a platform, we refused to limit our capabilities nor did we want to limit what businesses could achieve. To apply this on a broad scale the team built a platform for any business use case in any industry.

Early on, Dragonchain quickly found that it was not feasible to know every possible scenario that may pop up for each individual business. So, the creation of a blockchain platform became about building a foundation. We had to understand and accept the true nature of how business gets done, not necessarily reinvent the wheel, as they say.

So, we asked a few questions. What are the most common business patterns in software? What are the most common patterns of pain points across all businesses? What is the most important information for businesses to share? What do businesses really care about? Of course, there were other questions. In fact, there were several things we learned along the way that were weaved into the architecture. But, understanding the infrastructures and the commonalities amongst every industry helped us build the platform we have today.

Communicating Capabilities

We have always been very deliberate in our messaging. Although at times it has been difficult to break through the noise, we have remained true to our vision and focused on our capabilities instead of specific use cases. We want businesses to understand what is possible on an atomic level. Once they grasp the capabilities, they can assemble them in a way that is meaningful and valuable to their particular business. This removes the risk of businesses rejecting blockchain because they don't need a currency token.

We often get asked the question, "What problem does Dragonchain solve?" We think that's the wrong question. In fact it's a very limiting question. Can you imagine defining the future applications of the Internet based on what people at that time thought the Internet should and shouldn't be used for? Today, we use the Internet for just about everything, only limited by our imagination.

Dragonchain wasn't built to solve a specific problem, it was built to provide capabilities.

The right question to ask is, "What are the fundamental capabilities of Dragonchain?" From there a business can build a solution to any problem.

So, how did we build a platform of capabilities that can be used by any business? It starts with the architecture.

Individualized Business Blockchain Systems

One of the most important things other blockchain companies or projects fail to understand is the importance of business flexibility. Others neglect to take into consideration that adding narrow-focused, use case specific, solutions can wreak havoc to the business's infrastructure. Dragonchain's solutions can be applied to any issue and use any existing business system. That includes any cloud or on-prem infrastructure, software application, or any other workflow process already in use. This flexibility alone is paramount for any business.

We achieve this flexibility through a layered architecture. At the foundation is the infrastructure. It's the business hardware. Businesses don't want to use specialty hardware because it costs too much and it often takes specialized training. Commodity hardware like the regular off-the-shelf computers that are mass-produced at a nominal cost is ideal. Well-known solutions like AWS, Azure, Intel, AMD, and Google are also ideal.

Next, is the operating system. A business should be able to use commodity operating systems such as Linux, debian, BSD, or other open-source software. This provides for the biggest pool of knowledgeable users.

Then, comes commodity platforms. These are things like Docker, Apache, and a blockchain platform like Dragonchain.

Finally, at the very top is business logic. This is where businesses can build their specific solutions that tap into all the capabilities Dragonchain has built out over the years. Because the individual business solutions are built on top of a base of well-established systems they can be deployed anywhere. This future-proof system can be migrated to any infrastructure that may arise in the future and does not have to be rebuilt every time there is an advancement in a workflow process or technology.

Scalable Business Blockchain Platform

Unlike other blockchain platforms, Dragonchain's platform has patented scalability. Each business system is independently scalable and any increase in data does not affect network speeds. This mitigates the surprise change in fees and bogged down networks that affect operations. In addition, any foreign blockchain system will not affect network congestion. Every business system is also economically scalable. The business's fees are locked and are not affected by what any other smart contract on the network does.

A More Successful Solution

Much like capitalizing on commodity infrastructures, operating systems, and platforms, businesses can have more success using Dragonchain's flexible platform. The business's trusted team of developers can easily use any language they are already comfortable with to write smart contracts with advanced capabilities. There is no need to hire blockchain specific expensive developers like those needed with Ethereum. The business's team is also already familiar with the culture within the company including its customers, employees, and partners as well as its philosophies, policies, and procedures. This unique ability to keep development in-house is both economical and proficient so projects can have faster turnaround times.

With the inclusion of smart contracts, businesses can streamline processes. Unlike others, our smart contracts can act as self-oracles by publishing and watching for information from any source for complete automation. Time-based smart contracts are programmed to execute at a specific time or specific intervals. And watcher smart contracts execute based upon events or state changes on other blockchains or traditional systems. Additionally, smart contracts with Dragonchain are hybrid to maintain privacy and proprietary data where needed.

Scalable Blockchain Verification Platform

Each business system is coupled with a verification platform called Dragon Net. Our patented Interchain technology joins multiple blockchains in a lattice-type structure. At its base, each business's own blockchain can connect to any traditional - already in use - system or blockchain to ledger transactions. All business data is private and protected unless explicitly permissioned otherwise. Proof of these transactions is however decentralized to over 2000 other blockchains including Bitcoin and Ethereum for considerable proof, measurable in billions of dollars.

When businesses wish to release actual data for verification they can do so without exposing sensitive information. This allows businesses to adhere to GDPR/CCPA and other regulatory requirements such as HIPAA. We provide proof of compliance on blockchain that won't expose personally identifiable information. This guarantees personal data stored inside will be protected.

Proof as a Utility

Proof of every business transaction goes through a series of decentralized verifications and validations. This ultimate "level 2" scaling solution goes beyond Dragon Net to efficiently connect multiple blockchains to Bitcoin and Ethereum to capitalize on immutability, decentralization, and accountability but more importantly measurable proof.

For the ten-plus years Bitcoin has been operational, it has produced a level of security of historical significance. Dragonchain uses the fundamental utility of Bitcoin as a decentralized immutable record to secure the proof of every business transaction. We also send a hash of the proof to Ethereum, another strong, proven blockchain. Dragonchain leverages the combined power of multiple networks to provide customers with unprecedented and measurable security.

To quantify the use of multiple public blockchains in securing proof we created the transaction security value metric which shows in real-time how many dollars ($USD) of energy consumption is behind securing that one specific transaction. This measurable proof is recorded into a proof report. The report provides a provable history of events and can be distributed to interested parties like partners or regulators.

Operational Patented Interoperability

The entire foundation of the Dragonchain platform was purposefully built with flexibility in mind to provide ways for any business to easily implement a blockchain solution and propel adoption. The architecture, mostly thought not possible even today, was built in 2014 and has been operational since 2016 when we were the first multi-chain hybrid to tap into the Bitcoin public blockchain from our private blockchain. In 2016 the platform was open sourced to provide avenues for businesses to benefit from the architecture. Since then, we've offered interchains with Ethereum, Bitcoin, Hyperledger, and private Ethereum. But we don't have to stop there. A business can interchain with any blockchain or traditional system for specific utility and security.

Decentralized and Digital Identity

The ability to provide selective transparency allowed us to build a decentralized identity solution called Factor that uses only minimally necessary information to prove certain data points about an individual.

The blockchain-based identity solution provides better access control and management of data. Individuals or companies can control who has the ability to view and edit data, reducing unauthorized access and mitigating the risk associated with storing PII. (e.g. risk of data breaches, and GDPR compliance).

Patented Behavior System

Dragonchain built a loyalty and rewards system as a tool for businesses to increase customer engagement. Loyalty programs often go beyond customer engagement and are used to analyze data, optimize member experience, and guide the decision-making process.

Our patented system can also be applied to incentivize employees and partners. With on-chain data, businesses can analyze behaviors and processes, reward employees and partners, and identify areas for improvement in a workflow process improvement program.

Den

Den.Social brings this concept to social media. Den built the social media site based on a marketplace with modeled scarcity and decentralized governance. The inclusion of a marketplace in social media will incentivize good behavior and foster quality content by rewarding the creation of quality content, evaluating that content, and participating in the ownership of individual communities. rewards the posting and evaluation of quality content.

Businesses can also use Den and its incentivized behavior system to build a branded community to engage with their customers and expand their reach.

Ready for the Future

Quantum Encryption

Even though Dragonchain built a flexible, secure, and scalable platform there was one component that was missing. As mentioned earlier at the base of the lattice-type architecture of Dragon Net is that business logic that sits on its own private blockchain. Securing proprietary and sensitive data to the business blockchain is left to the business and its best practices for data security. We routinely advocate for decentralization and the mirroring of systems to protect business data. But we have always felt that this was one area where we wanted to do more to ensure all was being done to assist in securing the data. So we recently partnered with AQED to integrate quantum encryption technologies into the core of the architecture. Now businesses can be prepared for the coming years and future advancements in technology.

Energy Efficient

It is interesting to note that due to the well-designed architecture businesses can use the Dragonchain platform and be energy efficient. Not only is our platform infrastructure (including managed nodes), by default, hosted in carbon-neutral facilities, but our verification platform, Dragon Net, operates at just 0.02 Watts of energy per transaction. More powerful than this minute amount of energy is the security it affords businesses. Proof of every business transaction is secured with approximately $4 billion USD worth of network energy per year while using only 0.02 W per transaction. Businesses can now use blockchain technology efficiently and responsibly.

At Dragonchain, we always have and always will be focused on building fundamental solutions to tackle real-world business problems. We really believe we are at a point in time of historical significance where those solutions will guide the future of business.

There is no doubt that the potential for value creation in the blockchain industry is enormous. However, what we consider to be valuable is fundamentally based. This is routinely at odds with the media, regulators, financial institutions, and speculators who look at blockchain as a purely economical phenomena.

Like our platform, we have a hybrid opinion of blockchain. We appreciate the financial implications of the technology, but there is more to it. For the first time, people can merge possible financial ownership with the ability to create real utility with that ownership. Anyone can come in and easily create and build products that have significant utility and actually improve processes for a given situation. The true value lies in the creation, not in the speculation.