Demystifying the Blockchain
Regarding New York Time’s article Demystifying the Blockchain we want did our own research to know if blockchain is the answer to all of the biggest challenges to business. What do you think about it? Here are our thoughts.
Blockchain is not a new technology, but the growing interest in it is definitely a trend on the rise. It remained obscured by other technologies for very long before it caught the attention of the public.
All of a sudden, there were so many questions. How is this possible? What is the technology that made cryptocurrencies possible and viable? Regardless of the confusion surrounding the blockchain, we’re going to try and bring it closer to you, including some very interesting applications of this technology in the real world.
Let’s start with some basic:
So, what is Blockchain?
Some experts refer to Blockchain as an undeniably ingenious invention. The creator of the Blockchain is Satoshi Nakamoto and, simply put, it is a technology that allows digital information to be distributed without copying it.
This is achieved through a database containing information that is shared and continually reconciled. Every record kept through the Blockchain is not stored in a single location. Instead, it is spread all over the internet and hosted by dozens of computers thus being truly public, accessible and incorruptible.
How can one obtain Bitcoins?
Typically, one can buy Bitcoins from a Bitcoin exchange. If one searches on the internet one can find many of them. Normally, this also involves going through a Know-Your-Customer process.
Alternatively, one can earn bitcoins by participating in what is called the mining process. This involves using computational techniques that can help the network to validate and process transactions on the blockchain.
Although there are different mining approaches, in the case of Bitcoin, node earnings from mining are proportional to the ratio between the dedicated computational power of a specific node and the overall computational power of all the nodes.
Since this process is computationally intensive, it is very difficult to earn money this way unless one purchases special hardware that is built specifically for this task, rather than normal computers.
The blockchain is, of course, being used to create all sorts of cryptocurrencies.
But more important, it is touching all different industries.
The advertising industry plans to use it to track its ads all over the internet; the music industry is planning to use it to track songs; banks and mortgage companies want to use it to track the deeds of homes and the complicated process of tracking all the documentation; shipping companies are investing in blockchain technology to track bills of lading, the pharmaceutical industry wants to use the technology to verify the drug supply chain.
If it is successful, blockchain technology will bring a new level of enhanced trust to business and will also cut out the middlemen that have historically tracked — and profited — from the complexity of so many different systems trying to communicate with each other. That could lower prices for goods and services.
At the same time, for all the promise of blockchain, there are real questions about whether it may be applied to solve problems that don’t exist. Databases already exist and, in certain cases, a centralized database might actually be preferable to the blockchain.
The blockchain is ultimately about solving society’s ultimate challenge: trust. Or rather, lack of trust. Blockchain is about using technology to create a shared sense of trust by a group of disparate participants.
The most important question is whether the hundreds of projects like Decentraland, where individuals are using real money to buy virtual property, will end well or badly and whether that experience will ultimately instill or undermine trust in this emerging technology.
What do you do think? Do you agree of how we demystified it?
