Blockchain fundamentally changes the way we do business with one another.
In the past we relied on a central point of authority to validate transactions as authentic and secure.
Going forward we will rely instead on an anonymous global network of validators (or a limited group of trustees, in some cases).
If this sounds like gobbledygook, just remember this equation:
Blockchain is to transaction as social media is to Internet.
Just like communication used to be one-way, from authority to masses, so too all transactions will be peer-to-peer.
If you read The Cluetrain Manifesto even briefly you’ll get the idea.
The Ultimate Decentralized Authority
In the “olden days,” gold and silver coins were a simple and intuitive way to trade.
When currency became paper-based, the intrinsic value became one of faith in the issuing institution.
Meaning – we all had to agree that whichever government (it used to be a local bank, in the United States) was issuing the paper was reliable.
And if that government decided suddenly to make the currency worth more or less artificially (e.g. printing more paper) there was nothing you or I could do about it.
Of course in modern times we don’t even look at a piece of paper but rather rely on the exchange of digits electronically. We use debit cards, credit cards, and now we use our iPhones. Cash, as paper, is rapidly becoming obsolete.
The reliance on digital currency creates a huge incentive for criminals to hack the system. They only have to get to the central issuing authority, disrupt the digits, and then what happens to money?
Blockchain, as the underlying technology behind cryptocurrency (crypto- means that it’s encrypted digital currency), fundamentally changes that equation and restores the power to the people.
Because it is exactly what it sounds like: A domino effect in which the earliest movement of the chain is validated once and forever worldwide. Future transactions are subject to a network of worldwide validation and value is only created by the people who use computers to do the work of checking.
It will be fascinating to see how various governments coordinate (or don’t) to manage a technology that is fundamentally resistant to centralized authority.
Imagine the implications: A world in which nobody controls the money.
- “Introduction to Blockchains” by John Kelsey at NIST. A surprisingly easy to understand PowerPoint even if you don’t understand all the technical stuff.
- “Blockchain Basics: Introduction to Distributed Ledgers,” Sloane Brakeville and Bhargav Perepa, IBM
- “What Is Blockchain Technology? A Step-By-Step Guide For Beginners” at BlockGeeks.com.
- “How I Explained Blockchain To My Grandmother” by Enrico Camerinelli
- “The Blockchain Revolution, The Ultimate Industry Disruptor” by Raphael Davison, Global Director of Blockchain, Hewlett Packard Enterprise
- “Here’s Why Blockchains Will Change The World” by futurist Don Tapscott and his son, blockchain expert Alex Tapscott, who coauthored Blockchain Revolution: How The Technology Behind Bitcoin Is Changing Money, Business and the World
- “How Blockchain Applications Will Move Beyond Finance,” by Christian Catalini, Harvard Business Review; see also “21 Areas of Blockchain Application Beyond Financial Services,” by Elena Mesropyan
- “A New Form of ID Allows You to Be A Citizen of the World,” by Corin Faife, Vice.com (Note: for those interested in government policy and regulation, see in particular mentions of passports, buy-what-you-use models of payment for government services, and marriage as a time-limited “smart contract” subject to renewal.)
- “What Is The Genesis Block?” (no author listed)
- Frequently asked questions about Bitcoin, from Bitcoin.org
- “A Comparison of Bitcoin and Ethereum” (no author listed), from TrustNodes.org
- “What Would Happen To Bitcoin If No One Mined It?” (no author listed), Quora.com
Posted August 6, 2017 by Dannielle Blumenthal, Ph.D. All opinions are the author’s own. This post is hereby released into the public domain. Photo credit: geralt/Pixabay (Public Domain). (Note: This post was updated at 12:55 p.m. EST to add the article from Vice.)
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