Blockchain -why the skepticism ?

Sijesh P
Sijesh P
Aug 25, 2017 · 3 min read
<Image source http://www.stevenhallam .com/>

Blockchain is a term ubiquitous in the public world. A large segment of people, which includes the political and the business leaders shared their skepticism on blockchain due to its relation with bitcoin and the anonymity (or pseudonymity) it offers. The confusion arises because any effort to explain blockchain, will lead to a discussion on ‘Bitcoin’ and the philosophy behind its invention. Growing cyber threat in today’s environment, raises skepticism about bitcoin and anchors impression of cyber criminality in many minds. Of course it is true that the society is not completely ready to accept the freedom and liberty a cryptocurrency (bitcoin or similar currency) offers.

The fact of the matter is “Blockchain is not Bitcoin or any other cryptocurrency”.

The world encountered similar kind of problem, when they tried to explain what is internet in ’90s. It was described, the main advantage of Internet is email and surfing information without encyclopedia and the biggest challenge was software piracy. As if you are undermining the transportation possibility of an ocean citing the disadvantages of a fishing boat. Blockchain is an ocean putting forward avenue of possibilities and bitcoin is just one kind of fishing boat made for a specific purpose to solve one specific problem.

A hitherto unknown SatoshiNakamoto, who invented the cryptocurrency called bitcoin, brilliantly constructed a recipe using existing proven concepts- ‘game theory’, ‘cryptography’ and ‘P2P networks’ into a viable distributed consensus system. Bitcoin is a specific implementation of blockchain.

Blockchain — why we need it?

In order to understand the significance of blockchain, it is important to understand the vital role intermediaries play in today’s world. Intermediaries like banks, governments, clearing houses, corporations (e.g., visa, PayPal, uber, Airbnb) facilitate the transaction of money, goods and services by creating trust and certainty. For e.g. when an individual or business makes an electronic payment, they require a trusted 3rd party like a bank or credit card agency to confirm and validate the transactions. In case of real estate transactions, government agencies record and transfer the property ownership. Buyers and sellers use intermediaries because they may not trust the other party, but they trust the intermediaries’ assurance. However this trust comes at a cost, as each of these intermediaries charge a fee to maintain a ledger of who owns what.

The new technology called blockchain eliminates the need of “Trust” to a larger extent because it is implicit in the platform. This is the technology that will pave the path to an era of radical transparency and frictionless commerce. There are no middlemen involved in a blockchain transaction to facilitate and verify the exchange; it’s all done instantly on the distributed network, with the record of transaction logged permanently in the database. It’s a machine-to-machine process that has no human touch points once the transaction is entered.

Blockchain — what is it?

In simple terms, blockchain is a ledger of records arranged in cryptographically secured data batches called blocks. It allows multiple parties to collaborate without having to trust each other. It is essentially a distributed database to which data can only be appended, which means historic data can neither be lost nor corrupted. The main attributes of blockchain are transparency, authentication and auditing.

What is blockchain ?

“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” Don & Alex Tapscott, authors Blockchain Revolution (2016)

This is an interesting video which explains the technical concepts behind blockchain technology in simple and easy to understand terms.

By creating a decentralised immutable record of any asset, blockchain allows us to expand the horizon of internet not just to exchange information, but to exchange value without intermediaries. The report published by world economic forum identifies the potential use cases of blockchain from across the industry.

The main challenges in mainstream adoption of blockchain are scalability, privacy and interoperability. Solving these challenges require massive public and industry participation and fundamentally new way of blockchain thinking.

Overall, the blockchain technology has the potential to disrupt the world and revolutionise industries. One of the greatest possibilities of blockchain technology is the power to decentralise the reliability, thus leading to elimination of intermediaries in many services and business processes.


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