Blockchain Technology: Expectations vs Reality
Blockchain technology has many benefits and can power use cases with tremendous social value
Last week, we started explaining cryptocurrencies. Naturally, I would have loved to dive into the benefits of cryptocurrencies to the society. But before we get there, let us talk about blockchain — that thing you have heard about so many times but do not yet know what it is 🤣
Do not be stressed by the technical jargon that people use to describe blockchain.
A blockchain is simply a database containing a growing list of records called blocks, linked, and secured using cryptography. The database is not necessarily complex — you can use a spreadsheet to create it with minimal effort. Each block contains a hash pointer that links to a previous block, timestamp, and transaction data. In the end, you have a chain of blocks or a blockchain — as people like to call it. One important thing to note is that the database is an open, distributed system, with every participating node (computer) maintaining a copy.
Market analysis shows that blockchain technology will rule the future; it has many benefits: data transparency, immutability, decentralization, and security. Also, it is likely to inspire a new generation of platforms that are easy to use, accessible, scalable, and interoperable. In addition, blockchain technology will power use cases with tremendous social value:
- Verifying digital media to help limit the spread of fake news.
- Opening eCommerce and financial markets to the unbanked, etc.
However, for blockchain to become mainstream and support both innovative and regular use cases, users should bother less about selecting the right platform, consensus algorithm, or smart contract. Neither should they worry about interoperability with other users on a different blockchain.
Simply put, users should not have concerns regarding the blockchain’s infrastructure and protocols — like the Internet’s DNS and TCP/IP protocols do not matter to web users. All web users care about is their web-based applications. Blockchain users should only care about their decentralized applications and smart contracts.
Even though blockchain technology has a promising future, current trends prove unlikely to meet the expectations. Nations and their governments are fighting hard to limit and control blockchain projects. For example, in June, the Chinese government banned cryptocurrency trading and mining in China.
Unless the technology matures through innovation, sensitization, and proper reforms to support its use cases, it may not attain the expected market visibility and utility.
So far, blockchain technology has seen a massive breakthrough in the financial industry — cryptocurrencies, DeFi — and the art industry — digital collectibles and NFTs. However, it has not lived up to market expectations in driving new societal and business models — most blockchain projects are still in development or experimentation.
Not to despair, blockchain technology is the future!