
Blockchain and why does it matter
Blockchain has been a buzzword for a little while now, but not everybody understands what it is and its implications for our future. It’s been around since the rise of Bitcoin in 2008 but in the last year it’s interest has exploded as the solution for some institutional problems in the world.
Let’s start from the basics and understand what is a Blockchain. Simply put, it’s a distributed database that only accepts appends, meaning that nobody owns it and it’s immutable, two major characteristics of the technology. Records in the Blockchain are called blocks, each having some data (transactions in a cryptocurrency case) and a link to the previous block. The main objective of applications using Blockchain is removing entities known as third parties, basing it only on cryptography trust.
It sounds hard to understand, but I’ll try to make it easier. Imagine a bank transaction, something really mundane. If Alice wants to transfer $10 to Bob, she has to open a transaction request in her bank, which validates if she has that amount in her account, then transfers it to Bob. Depending on Bob's bank account, even which country he is, that transaction could take days. The problem with this kind of transaction is that a single institution does all the work, creating a small monopoly of your money that can create delays and large taxes, especially if you want to send money overseas.
Now imagine the same thing, but now using a transaction based Blockchain, say, Bitcoin. This time she doesn’t need to go to a bank, trust a bank, to take care of her money and transfer. She just need to tell the network her intentions and the network, a bunch of people she doesn’t know and probably won’t ever know, validates her transaction and after validating, her transactions is broadcasted everywhere, updating the Blockchain around the world. A single transaction can be validated and executed within minutes, doesn’t matter where you are or where you are sending the funds, the transactions is just like any other, there are no differences.
It’s quite disruptive, trusting people around the world to validate your money instead of trusting the bank that’s been there for centuries. Maybe it’s scary, but frankly, it is not. All the validations are based in mathematics and cryptography, making it secure, maybe even more secure than your bank account.
Most of you won’t take all your money and convert it in cryptocurrencies right now, so you probably don’t care much about this technology. The thing is, Blockchain has lots of uses beyond transactions and currency. With the development of smart cities and the fight against bureaucracy, you’ll probably see more of this technology over the years. Dubai is already planning to implement Blockchain based solutions for real estate, healthcare and smart grids and this trend soon will reach cities all over the world.
With this kind of solutions being implemented by your government, you can forget about signing hundreds of documents, sending them to an office and waiting to the documents becoming valid, not only you will save days of your life, but also fewer, maybe none, mistakes will be made during the process. This means that you could be able to pay for your electricity on demand or even buy a house in one day.
The goal is a faster world, with less bureaucracy and less regulatory agencies, making peer to peer interactions more effective. That could happen with Blockchain’s help.
