Why is Blockchain technology so disruptive?
The concept of a Blockchain was the first time introduce in the paper Bitcoin: A peer-to-peer electronic cash system published by an unknown entity or organization with the name Satoshi Nakamoto. The digital currency Bitcoin has since started to transform financial systems and will for sure continue to do so.
As revolutionary and disruptive Bitcoin is, it is only the tip of the iceberg. The technical concept of a Blockchain has since spread around the globe, like a wildfire and sparked a lot of interesting projects.
To understand the potential of Blockchain technology, we have to first understand the properties of it.
In computer science, and other fields, systems are categorized by the degree of centralization. Centralized, means there is one central component that controls the system. The next step is decentralization. A decentralized systems consists of multiple centralized systems. The final step are distributed systems, with no central component at all. Distributed systems, from a technical point-of-view, are no new concept. One prominent example is Filesharing via BitTorrent with Distributed Hash Tables (DHTs).
What is then so disruptive about Distributed Blockchains?
The disruption is not so much a technical one, but a socio-economical. Not only the system is distributed, but also the organizations behind it. That means in layman’s terms, that multiple organizations and private entities have to reach consensus. If designed correctly, no party should have an unfair advantage over any other.
Publicly Verifiable Ledger
The distributed nature, in combination with crypographically verifiable transactions, that are further verified by the network, by combining them in linked blocks, creates a public ledger that could be verified by everybody. By solving the double-spending problem in a distributed way, Bitcoin was the first crypto currency that was able to eliminate any central authority.
To formulate the power of this technology more clearly:
Blockchain is the technology that allows us to build completely distributed systems and structures that have no single point of failure, not from a technical point of view, nor from an organizational, nor economical. It is the first time in history that we are able to build real big scale democratic systems.
Reread that paragraph a few times and try to imagine what this means for our society and humanity as whole.
In this publication with the name The Blockchain, I will present a few of this Blockchain projects, the concepts and ideas behind them.