What Is the Blockchain?

XR Today Team

Definition, features, companies, and top applications for immersive technology

Insights
What Is the Blockchain?

The blockchain refers to a data storage and transmission protocol based on an architecture of connected ‘blocks’. Cryptographer David Chaum first mentioned the concept of the blockchain in his 1982 dissertation, Computer Systems Established, Maintained, and Trusted by Mutually Suspicious Groups, but at that time, the technology did not exist to make it viable.  

It has only been in the last decade or so that blockchain technology has become popular worldwide, gaining from distributed computing systems and wide availability of computing power.  

Today, blockchain is among the top emerging technologies for both consumer and enterprise use. According to Deloitte’s 2021 Global Blockchain Survey, 81 percent of organizations agree that blockchain technology is scalable and can go mainstream due to the current state of infrastructure environments.  

How will this influence immersive technologies like augmented and virtual reality (AR/VR)? XR Today explores the significance of the blockchain to understand it in more detail.  

Defining Blockchain 

Blockchain is defined as a data storage and transmission system built on a distributed ledger, where the ledger comprises a growing list of records or blocks, each storing a data unit. The blocks are connected to each other using cryptography to ensure secure data transmission.  

Blockchain technology could revolutionize financial transactions. In traditional transactions, there is a centralized sender and recipient with a regulatory body governing the terms and conditions.  

Blockchain disrupts this pathway by introducing a distributed structure where each piece of transaction information is stored in a different computing node.

There is no centralized body and everyone involved in the blockchain transaction has transparent visibility into its pathway. In a way, it is similar to a peer-to-peer computing network.  

The rise of the blockchain is attributed to an anonymous white paper authored under the pseudonym Satoshi Nakamoto in 2008, which was interestingly released following the events leading to the 2008 financial crisis in the United States, which, according to Cointelegraph, could have been potentially avoided if transactions were conducted with a transparent peer-to-peer network like blockchain instead of the centrally-regulated infrastructure we use today.  

For financial transactions, blockchain technology is used to power cryptocurrencies like Bitcoin and Ethereum, but there are other applications as well – a blockchain-based equivalent of social security numbers that contains a person’s identity data.  

Blockchain is characterized by the following five features: 

Key Features of Blockchain 

Immutability

Once a data unit has been entered into a block on the blockchain, it cannot be deleted or modified in any way. A change to the blockchain will just be recorded as another data unit, with full visibility into when and by whom the change was initiated. This makes data stored using a blockchain unchangeable in nature, and largely immune to corruption. 

Decentralization

Decentralization is an inherent characteristic of blockchain, which means that there is no single governing body or regulatory authority managing it.

Even if a governing body was to formulate rules regulating the use of blockchain, it would be next to impossible to enforce those rules. This is because a single blockchain relies on multiple computing systems in different locations, with no one system owning it fully. 

Consensus-driven

Consensus is linked to the decentralized nature of blockchain. As the blockchain is owned and managed by a group of computing systems, approval or consensus from each system is needed to make any addition to the blockchain.

For instance, if blockchain technology is used for financial transactions, then a fraudulent entity will not be able to perform unauthorized actions without first getting it verified and approved. 

Distributed ledgers

There are two types of blockchain – a public ledger and private or federated blockchain. Both types involve data records held across a distributed ledger, with multiple stakeholders having visibility into what the ledger contains. 

Security

 Cryptography is at the core of blockchain technology, with every data unit encrypted through a cryptographic hash. In other words, the true nature of the data remains hidden unless a person has access to a cryptographic key.

Each block has a unique hash of its own, and also contains the hash of the previous block, which is what helps connect the different blocks in the ledger together.  

Blockchain Applications for XR 

Now let us look at how blockchain can be used alongside immersive technologies, particularly in VR.

  • Marketing attribution for VR ads – Marketing attribution traces consumer eyeballs and ad traffic back to its source so that marketers can invest in the right channels. This information can be stored in a blockchain for faster processing and transparency.  
  • Blockchain-based governance in the Metaverse – Governance systems in the metaverse can be designed using blockchain technology to verify documents or prevent unequal control or a monopoly by a single organization.  
  • NFT Sales – Non-fungible tokens (NFTs) are an asset class built on blockchain that contains the value of real-world objects in a digital file. It assigns 3D objects such as a VR artwork with real value, making it suitable for trade and commerce.  
  • File standardization for virtual worlds – Researchers suggest that blockchain could enable a universal file format that is incorruptible but can be executed by anyone. This InterPlanetary File System could drive interoperability between virtual spaces.  
  • Blockchain wallets in gaming – VR games could come with built-in blockchain wallets that allow gamers to buy in-game objects and trade with each other using cryptocurrency. The wallet would also be interoperable across games, improving the gaming experience.  

Companies Offering Blockchain XR Solutions  

There are a number of companies already making inroads into the blockchain for the AR/VR space. For example, GazeCoin has developed a blockchain-based cryptocurrency system that operates using gaze and eye-tracking.  

Astate World is a new company developing a platform called MetAstApp, where you can store avatar and world data in blockchain records. NetVRk has developed a token specifically designed to buy VR objects, virtual land, and virtual ad space.

Even Meta has announced that blockchain will play an important role in its vision of the metaverse, firmly positioning this technology as a gamechanger for the future.  


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