The Internet with it’s associated protocols brought about new dimensions to human interactions.. How effective is the blockchain in it’s quest to disrupt different sectors despite the magnificent technologies that precede it?
Unlike how blockchain was constructed by a single entity generally known as “Satoshi Nakamoto”, The Internet was the work of many pioneering scientists, programmers and engineers, who in their respective endeavors developed new functions and technologies that contributed to the “Magic Tunnel of Information” we all are enjoying today.
Just how ‘The Internet‘ changed our lives we truly cannot measure, this ‘information superhighway‘ would not have been experienced as much as it is, if it was given up during the period of it’s struggle, but thanks to the persisted and dedicated work of great visionaries, it is a tangible reality today.
Blockchain – despite its current limitations and struggles is attracting the attentions of great minds, keeping governments and institutions on there toes, and the world in general is peeping on a side bar in the wake of what could be.. about this innovative tech.
To disrupt already established industries requires the possession of phenomenal abilities and functions. Can blockchain be tag as such phenomenon? How is it propagated? what makes it so unique and hyped? These are questions that need good answers, but first lets make an attempt to describe the tech.
What is blockchain
Blockchain according to Wikipedia
is a growing list of records, called blocks, which are linked using cryptography. Each block contains a cryptographic hash of the previous block.
Also – An open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.
In my own words
Blockchain is a decentralised consensus-driven network of nodes, which can record, verify and arrange data in a chronological order of time into blocks joined by hashes which can not be edited or altered.
A block can be of varying size according to how a particular blockchain is programmed, containing an index, a timestamp, a list of transactions, a proof, and the hash of the previous Block.
An hash is an encrypted information of a block or transaction.
Blockchain represents a new paradigm for the way information is shared, unlike how traditional ways of sharing data is controlled by a central authority, blockchain is run and made to function using the computational power of computers – each generally regarded as a node which is maintained by individual(s) or organisation(s) that wish or find a reason to take part in the network, motivated either by the incentive mechanism of the blockchain itself via it’s cryptocurrency, or the need to be a validator for a business process, thus, a decentralized technology.
Blockchain as the recent phenomenon
It all began in the year 2008 when an individual or group of individuals known as “Satoshi Nakamoto” created the first blockchain which was intended to power the first decentralised form of money “Bitcoin” classed as cryptocurrency – a name which is said to be derived from the cryptographic technology the system adopts.
Although, the hype around the technology stem from the focus of the ‘magic money’ it was meant to power, many visionaries are now making some serious analysis and study about the tech itself.
A good example of this can be seen with China – despite her hostile and stiff relationship with cryptocurrency, China remains one of the top countries who is seriously invested in developing blockchain tech. Another good example is Maersk ‘the world largest shipping company’ who announced in March 2017 that it is using blockchain-base-ledger to manage and track paper trails of tens of million of shipping containers by digitizing the supply chain. It was also rumored recently that Turkey adopted blockchain tech for her political election.
Different sectors, institutions and countries are on the look for ways to adopt and put the tech to it’s best use, as research continues to be made to fully understand it’s technicality which will aid its development to some good standards.
How Blockchain is Propagated
A common notion that comes to mind when the technology is being called upon is how the name ‘block-chain‘ was coined which could be easily understood base on how the tech is being propagated.
Transactions are written on the system in such a way that each is compactly packed into a block to the volume the block can accommodate base on the block size, and is directly link to a previous block via cryptographic hashes. Any changes made to the previous block would render all blocks after it useless or incorrect. This method ensures data cannot be modified or altered once written on the system and are arranged in a chronological order forming a chain, thus, the name “block-chain”.
The financial crisis of 2008 was an eye opener that centralize system are unreliable, this is said to be one of the major catalyst that gave Satoshi a clue and serve as a motivator that made him work on developing a decentralized ‘self-governing system’, where agreement is achieved through a formed consensus.
The consensus the bitcoin blockchain adopted is know as the “Proof of work” which is carried out through the work of what are known as miners – a miner is a specialized computer that uses its computing power to solve complex mathematical problems in other to validate transactions which as a result produces new blocks.
The first miner to arrive at a validated solution will create a new block and be rewarded bitcoins (as with the bitcoin blockchain) for a job well done.
In order to maintain a decentralized system, blockchain system is designed to run on different random computers know as “nodes“, each one having a continually updated copy of the system and take part in the consensus process, they also ensure high security of the system. Nodes are run by random anonymous individuals who themselves can not influence the system as it is self-governing.
The record of the block chain is also very important in achieving consensus in a way that, the longest chain in the network will provide a true picture of the state of the system and serve as a determining factor in case a node with a fake chain record is entering the system to cause a damage.
Nevertheless, a fake node can never create a chain that would have a longer record than the genuine ones, as the computational power to achieve that would be extremely costly and unprofitable.
Why is Blockchain Unique?
For the first time in history, we are having a decentralized database/computing system which has gone mainstream. Traditional ways of keeping records has been the responsibility of central authorities, who are rewarded awesomely by the charges of the service they render and more importantly unrestricted access to users data in their care.
These central authorities formed a very lucrative business model around the information within their reach, notable examples are Google and Facebook. Two tech giants who rely massively on user-base data accessing their service to propagate sponsored advertisements, which is their #1 revenue generator.
The funny part is that users are willingly giving out their previous data to these tech companies without being rewarded a dim from the share of their mouth-watering multi-billion dollar profits.
Blockchain represents a powerful tool for users to completely control what is theirs and put the power back to where it truly belongs.
The period this will be achievable cannot be easily predicted as the tech is gradually evolving but it has open up a new hope for a decentralized structure just like “The Internet” did.
Areas blockchain is already improving
Blockchain in Finance
The primary reason bitcoin was created was to serve as a means of payment, though the retention of the cryptocurrency by many is of different agenda, as some consider it a store of value, other consider it as a speculative tool while some others found ease transacting with the digital money base on it’s many advantages over fiat currency.
With regards to the coin primary mission
Secure: guarded by its robust underlaying tech, the coin should never be stolen right from the blockchain unless a owner lost his/her private key.
Easily Managed: unlike how fiat cash can be hard to sometimes manage and carry around, it takes just a durable wallet on a mobile phone and a sign on a transaction to transfer or make a payment in bitcoin.
Fast: although, their are ongoing work to improve the scale of the network, tech like ‘the lightning network’ is already in place to ensure payments are made in just a blink of an eye.
Borderless: this is by far one of the major advantage of cryptocurrency in general. I can remember waiting for almost a week before I could receive a payment from a friend in an outside country, with cryptocurrency such transaction would take just minutes, with no added stress of going to the bank or converting to a local currency as that could be done right on some crypto exchanges
Feeless/No third party involved: third parties are taking great advantage propagating payments made in fiat, imagine a deduction of 10% and above just because you are serving as a middle man between a two party. With cryptocurrency there is little or no fee deduction in making payment as there are no middleman involved.
Blockchain in Logistics and Supply Chain
Managing complex distribution of many products, especially those aimed at different countries can be really bothersome. Total transparency from the production stage to the distribution stage through many channels is really lacking and these are costing companies and parties of different kind fortunes. Just like how Maersk experiment with blockchain tech to propagate its supply chain back in March 2017. This sector in general can benefit greatly from the transparency the blockchain tech provides and be rewarded massively both in cost reduction and effective tracking of the supply chain which if implemented in the right way would have a big overall positive impact on companies adopting the tech.
The potential use case of blockchain technology is limitless, it is even touted to form new industries for future economies.
There is a constant debate whether blockchain tech is capable of disrupting many traditional industries.
In my own opinion – blockchain, rather as a wholly disruptive tech that attack traditional businesses, will provide a platform to potentially create new foundations for economic and social systems.
Just like no one would believe TCP/IP standards would enable the Internet to reach this height and enable us enjoy it’s plethora of benefits. “Blockchain has the same potential”.