What is Blockchain?
When you hear blockchain, the term is synonymous with Bitcoin, it is often confused as the same category and because of the negative perception bitcoin can receive as “magic internet money”, blockchain is often overlooked. However, blockchain may be one of the most important evolutions in technology and even more significant than when the internet was first publicly available. Blockchain powers bitcoin and although it’s original purpose was created for Bitcoin and other cryptocurrencies, this is just one application of this powerful technology.
As a starting point, think of blockchain as a public spreadsheet in the cloud that can be programmed to record and track anything of value. Once a transaction occurs, a record is created and is validated globally by computers participating in the network. Once the transaction is validated, the record is permanent and immutable. The owner of the transaction has the power to move anything of value freely and instantly without borders or intermediaries. Some examples that can apply to Blockchain is financial transactions, medical records, or even land titles.
When the internet was first available publicly, it’s primary purpose was to store and retrieve information. There are currently archaic practices in place to store and track this type of data that haven’t evolved as much as since the early days of the internet. So what exactly is special about blockchain technology when there are already current processes in place?
let’s breakdown why blockchain will revolutionize the way we interact with each other:
- Information. Blockchain stores information in batches, called blocks that are all chained together in a continuous line. If a person makes a change to the information, that block isn’t altered or rewritten, instead a new block is created to store that information displaying that a new change has been made at a specific date and time. Blockchain is the evolution of the centuries old “general financial ledger”, essentially blockchain is a non-destructive way to track data changes over time. For example, let’s say there is a dispute between two people on who owns a piece of land, blockchain can identify through it’s immutable ledger who exactly owned that property and to whom it has been transferred to over time.
- Decentralization. Rather than keeping these records in an age-old book or a single file system database, this brings up one of the most important aspects to blockchain and how it has actually revolutionized technology today: Blockchain is designed to be decentralized and is distributed across a large network of computers. Since the information stored on the blockchain is decentralized, this reduces the ability to tamper any data significantly. This decentralized model creates a unique characteristic that humanizes technology, it creates trust in the data. Before a new block is added on the chain, there is a procedure that has to happen. First, a cryptographic puzzle must be solved which creates the block. Whichever computer solves the cryptographic puzzle, it shares the solution to all the other computers on the network, this is called “proof-of-work.” The entire network of computers will verify this proof-of-work that the original computer solved, and if correct, the block will be added to the chain. The combination of these complex math puzzles and the verification from other computers on the network ensures that we can trust each and every block on the chain. This phenomenon allows the network to confirm, validate, and build trust with each transaction so the user can simply interact with the data that has already been fully insured. This is a great segue into one of the most important features of blockchain technology and how it transfers total power to the user
- No more intermediaries. Typically when you facilitate a transaction between two parties there is an intermediary such as a bank or a lawyer to view records and keep the information confidential. These intermediaries act as the trust between the parties and are responsible to verify, for example, Person A is the rightful owner of a specific property. This method limits risk but adds another step into verifying a transaction which means more time and money is spent. For example, If the land title was stored in a blockchain, there will be no need for a middle-man since all the information stored in a blockchain has been verified to be true and can’t be tampered with, the data is secured. This type of trusted peer-to-peer interaction with our data can revolutionize the way we access, verify, and transact with one another.
Blockchain isn’t a single network, it’s a type of technology that can be implemented in various ways with many different applications. When you spend more time marinating on real-world use cases that Blockchain is applicable for, you will begin to realize the technology cannot only disrupt multi-billion dollar industries, but also multi-trillion dollar industries. Blockchain as of today is disrupting the monetary system, financial markets, and democratizing venture capital via its first killer application, cryptocurrency. The common person now has the opportunity to invest into the newest technologies that were previously only available to private institutions or high net worth individuals with a much lower barrier of entry. Blockchain has forced banking to rethink its current practices as it has enabled the individual to act as its own bank and allow to move cryptocurrency freely without any intermediaries globally. The cryptomarket is worth 300 billion as of today and is projected to be worth multi-trillions. As you can see, the underlying theme of decentralization is the transferring of power from institutions to the individual. How far can Blockchain go? Tim Draper believes it will force governments to become a service and the individual can choose which government that suits best for them without needing to relocate:
“Down the road, you won’t have to physically leave a place to choose a better government. From wherever I am, I can get social security from Chile, healthcare insurance from Canada, education from Russia. The whole system will be much more virtual.” — Draper (via Cointelegraph)
This is already happening in Estonia, in which you can become a “e-resident” within 3 hours online and be able to operate your business globally while serving Estonia’s tax system. For example, You can setup a virtual office, accounting, and reporting all within Estonia’s online government platform: https://e-resident.gov.ee regardless of where you operate your business in the world.
The scope of how blockchain is going to revolutionize technology is largely undetermined as its mostly uncharted territory. We are currently at the ground floor, however, the ecosystem, energy, and community is reminescent of the early internet days. Thousands of developers are contributing to the technology out of pure passion, world class researchers and scientists are devoting a majority of their time to blockchain, and billions of venture capital is pouring into the ecosystem. Regardless of on our opinion of how effective blockchain will be, it will certainly garner a lot of attention as it grows over time.
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