Today, companies like Google, Facebook, Amazon and Apple control the majority of computer servers and data that power our web applications (Gmail, Facebook Messenger, iTunes…). While, in finance, only a handful of banks control our transactions through their central systems.
With concerns around data ownership, tax avoidance, and some banks’ criminal offences, imagine instead a network of independent computers providing secure storage of data that only you control. This is one of many things that blockchains enable.
Changes to data on a blockchain network are ‘signed’ by individuals (with a private key), thus can be restricted to only the original author. This digital ‘signing’ is crucial when it comes to making financial transactions; only you should be able sign for money (cryptocurrency) leaving your account/wallet.
History and motivation
Although blockchains hit a peak in popularity early 2018, they are not a fad. The oldest blockchain network, Bitcoin, was born out of the Global Financial Crisis (GFC) in 2008. Furthermore it makes use of networking and cryptographic algorithms developed in the 70s.
With this foundation and significant development to date, a growing number of people are confidently building products on more sophisticated public blockchains, like Ethereum. Meaning your data and transactions return under your control, without the need to trust in centralised organisations.
It is empowering when our data and finances return to our control. Public blockchain networks provide a secure option to store and use our data in a decentralised way, even large financial transactions.
By leveraging blockchain, high bank fees and other core problems could eventually become a thing of the past, as the centuries-old banking system becomes obsolete. That is unless innovators become locked out by patents from financial institutions; a topic for a future article.