What is blockchain?
BLOCKCHAIN IS SO HOT RIGHT NOW
For me personally, I have always been fascinated by technology and finance. The Dotcom boom and bust was a wild ride. From the rubble came a wave of new tech companies. Namely Google, Facebook, and many others. Tremendous investments were made to build out the foundation of the internet.
Wireless communication and the growth of LTE, Wifi, and Bluetooth have completely changed our lives. Mobile communication and the upcoming launch of 5G is going to be really cool.
The financial crisis and housing crash was an interesting experiment that seems to be repeating itself. Banking is primed for a major technology overhaul.
Every now and then we encounter seismic shifts in how technology will shape our future. Currently, that new technology is the Blockchain. You have probably heard of it by now. Bitcoin and Ethereum are examples of applications built on the blockchain.
There is so much to digest. It can be difficult to filter through the noise as most conversations right now are very technical. This is generally a good thing as we need really smart people to build out the infrastructure of what will blockchain do for everyone.
Although I have been following this technology for some time now. I am just recently focusing more attention to learn more about possible beneficial applications of the blockchain.
A blockchain is a digital ledger of records or transactions arranged in data blocks. Blocks are linked together through a cryptographic validation known as a hashing function. Follow the link if you want to nerd out for a bit or have trouble sleeping.
Linking the blocks together forms a blockchain.
What makes blockchain and this type of data structure so hot is applications can be decentralized. Records are not stored in any single location, are accessible by everyone, and are immutable. Meaning it is nearly impossible to hack.
How does blockchain help us?
Let’s look at the most popular application of blockchain technology. Bitcoin is a digital currency that is built on the blockchain. There is no physical paper, like a US dollar. It is all digital.
The challenge with making this purely digital is you could copy it for example. Also, how do I know your Bitcoin is legit and you didn’t counterfeit it.
This is where blockchain technology enables us to use Bitcoins to buy and sell goods online with the confidence.
Wait a minute. We can already buy and sell goods online. What’s wrong with PayPal and the current checkout system?
Well, for one thing, these transactions are controlled by just a few companies. We pay a ton in fees just to transfer money. Have you ever sent money overseas? It transfers from bank to bank adding fees upon fees and days to the process.
There is no central company or person controlling Bitcoin. Bitcoin technology does not recognize a person or entity for validation. Completely decentralized. There are blockchain applications which are hybrids though. So it is not all or nothing.
Blockchain hopes to make this more efficient by minimizing the middleman and enabling direct peer-to-peer transactions.
A few more reasons to implement blockchain
No single authority in control
No concentration of power
Secure (uses a push mechanism rather than pull). The network only sends what is needed where banks pull information from your account with credit cards for example.
Continuous innovation since it is an open network
No prior authorization needed to use the blockchain
Consumer protection allowing users direct control of their information
My focus here is to summarize my thoughts around Blockchain and related applications. Specifically around how to apply this exponential technology to everyday businesses. The intention is not to be too technical because Ill get lost myself.
How will blockchain effect banks?
How will blockchain effect supply chains?
How will blockchain be regulated?
How will blockchain affect my parents?
I hope to answer with future discussions. I cannot predict if Bitcoin will hit $20,000 or die out. However, one thing I know for sure is blockchain technology is not going away.