Blockchain Blog 03: Blockchain, For the Data Age
Our economy has been evolving since the beginning of trade. We evolved from hunting for survival to a global trade which we do today.
As humans, we always have found ways to lower uncertainty about one another, so that we can exchange value. If we go back to the time when we were hunter-gatherer economies, we just traded within our village structure. We had some informal constraints in place, but we enforced all of our trade with violence or social repercussions. As our societies grew more complex and our trade routes grew more distant, we built up more formal institutions like banks for currency, governments, corporations. These institutions helped us manage our trade as the uncertainty and the complexity grew, and our control was much lower. Eventually, with the internet, we put these same institutions online. We built platform marketplaces like Amazon, Uber, Airbnb, just faster institutions that act as middlemen to facilitate human economic activity. These institutions are a tool to lower uncertainty so that we can connect and exchange all kinds of value in society.
Institutions are just formal rules like a constitution, these institutions are the grease that allows our economic wheels to function. We have escalated our societies from the agriculture and industrial age to the information age, and now we already are in the data age. In this data age, institutions operate and provide more usable and efficient services in the economic structure with the use of data they have gathered. And that is why the major concern we have today is how to further lower the uncertainties we have on them? Can we trust the centralized institutions anymore in this data age? Is there any better way to adopt? What if we have new technologies available to further lower the uncertainty, not just with political and economic institutions, like our banks, our corporations, our governments, but we can do it with technology alone.
That is where blockchain comes into play. So before understanding what blockchain is, let's understand How blockchains lower uncertainty and how they promise to transform our economic systems.
Blockchain a Solution for Data Age?
There are major three forms of uncertainty that we face in almost all of our everyday transactions, where blockchains can play a role. We face uncertainties like not knowing:
1 - Who we’re dealing with?
Say I want to buy a used smartphone on eBay. The first thing I’m going to do is look up who I’m buying from. Can users be trusted? Do they have great reviews and ratings, or do they have no profile at all? Reviews, ratings, checkmarks: these are the attestations about our identities that we cobble together today and use to lower uncertainty about who we’re dealing with. Blockchains allow us to create an open, global platform on which to store any attestation about any individual from any source. This allows us to create a user-controlled portable identity. More than a profile, it means you can selectively reveal the different attributes about you that help facilitate trade or interaction, for instance, that a government-issued you an ID. Having this kind of portable identity around the physical world and the digital world means we can do all kinds of human trade in a totally new way.
2 Not having visibility into a transaction.
The problem in many companies, especially those that produce something complicated like a smartphone, is they’re managing all of these different vendors across a horizontal supply chain. All of these people that go into making a product, don’t have the same database. They don’t use the same infrastructure, and so it becomes really hard to see transparently a product evolve over time. Using the blockchain, we can create a shared reality across non-trusting entities. By this I mean all of these nodes in the network do not need to know each other or trust each other, because they each have the ability to monitor and validate the chain for themselves. So we can create that using blockchains. We can create a decentralized database that has the same efficiency as a monopoly without actually creating that central authority. So all of these vendors, all sorts of companies, can interact using the same database without trusting one another. It means for consumers, we can have a lot more transparency. This is a whole new world in terms of our visibility.
3 Not having recourse if things go wrong.
What if you don’t send me the smartphone? Can I get my money back? Blockchains allow us to write code, bind contracts, between individuals, and then guarantee that those contracts will bear out without a third-party enforcer. For example, you are financing that phone, but you don’t need to release the funds until you can verify that all the conditions have been met: You got the phone.
I think this is one of the most exciting ways that blockchains lower our uncertainties because it means to some degree we can collapse institutions and their enforcement. It means a lot of human economic activity can get collateralized and automated, and push a lot of human intervention to the edges, the places where information moves from the real world to the blockchain. So rather than all of our uncertainties slowing us down and requiring institutions like banks, our governments, our corporations, we can actually harness all of that collective uncertainty and use it to collaborate and exchange more and faster and more open.
So what is the blockchain?
Blockchain is just an online distributed system, which can store information, and it is based on inter-connected blocks which are open to everyone.
In other words: It’s a chain of connected blocks that can store information.
Blockchain technology is a decentralized database that stores a registry of assets and transactions across a peer-to-peer network. It’s basically a public registry of who owns what and who transacts what.
The transactions are secured through cryptography, and over time, that transaction history gets locked in blocks of data that are then cryptographically linked together and secured. This creates an immutable, unforgeable record of all of the transactions across this network. This record is replicated on every computer that uses the network.
On the blockchain, you can think of it as an open infrastructure that stores many kinds of assets. It stores the history of custodianship, ownership, and location for assets like the digital currency Bitcoin, other digital assets like a title of ownership of IP. It could be a certificate, a contract, real-world objects, even personally identifiable information.
Is Blockchain Technology still an infant?
Well, we need to research more in the upcoming days. I don’t want you to get the impression that the blockchain is the solution to everything, The truth is, this technology is in its infancy, the new startups and existing institutions are continuously experimenting. We already have a few of the proven blockchain-based technologies in various categories of finance, and others.
There are tons of people working on this, from financial institutions to technology companies, start-ups, and universities. And one of the reasons is that it’s not just an economic evolution. It’s also an innovation in computer science. Blockchains give us the technological capability of creating a record of human exchange, of exchange of currency, of all kinds of digital and physical assets, even of our own personal attributes, in a totally new way. So in some ways, they become a technological institution that has a lot of the benefits of the traditional institutions we’re used to using in society, but it does this in a decentralized way. It does this by converting a lot of our uncertainties into certainties.
We will further talk more about the technical aspects of blockchain, its association with bitcoins, and more use cases of the blockchain in further blogs we come up with in 28 Blogs on Blockchain and Cryptocurrency Research
Read Next Part: Blockchain Blog 04: Blockchain — A Hope for the new World?
Entire Series: 28 Blogs on Blockchain and Cryptocurrency
- 3Commas Review | Pionex Review | Coinrule review
- Ledger vs Ngrave | Ledger nano s vs x | Binance Review
- Bybit Exchange Review | Bityard Review | Jet-Bot Review
- 3Commas vs Cryptohopper | Earn crypto interest
- The Best Bitcoin Hardware wallet | BitBox02 Review
- BlockFi vs Celsius | Hodlnaut Review | KuCoin Review
- Bitsgap review | Quadency Review | Bitbns Review
- Crypto Copy Trading Platforms | Coinmama Review
- Capital.com Review | Crypto Lending Platforms in Hong Kong
- How to Swap Crypto on Uniswap? | A-Ads Review
- WazirX vs CoinDCX vs Bitbns | BlockFi vs CoinLoan vs Nexo
- LocalBitcoins Review | Cryptocurrency Savings Accounts
- What is Margin Trading | Dollar-Cost Averaging
- Uphold Card Review | Trust Wallet vs MetaMask