I’ve attended a couple of events on Blockchain recently and heard it described as “still version 0.2, we’ve not reached version 1 yet” and “it’s still the Wild West.” But the best quote I heard is that Blockchain will “disrupt the disruptors.”
Most people equate Blockchain to Bitcoin and other crypto currencies, but actually Blockchain is the technology that powers those currencies. Blockchain is a type of distributed ledger technology (DLT) and many practitioners are using that term to get away from the negative connotation linked to Bitcoin.
The conferences have been an opportunity to find out more about real world examples of the use of Blockchain. There are a number of start ups which are using the technology as well as big companies.
So what exactly is Blockchain?
Put simply it’s an alternative to the traditional database structure run by a single organisation to hold data. Blockchain also stores data but it's distributed among many owners. In addition it has some features which makes it able to store transactions that are extremely difficult to change. The way it does this is by the data itself being distributed on many nodes (or cloud servers). Each time a new block is created, it has to be verified that it is correct and it contains the id of the previous block. A block can’t simply be created - it has to go through a confirmation (or mining) process and whoever successfully mines the block receives some kind of benefit. There are a number of miners and this is the key to making the block difficult to change - the only real way is for miners to collude. The good news is that you don’t need to find miners to use Blockchain. Platforms such as Etherium and EOS allow even small companies to use Blockchain technology by building their applications on them.
So how can Blockchain be used?
The uses are Blockchain are still being developed and, as many other technologies, it will be several months or years until we see the real benefit. At the moment, companies are overlaying existing programs on the block chain. It’s similar to when the Internet first started. So one of the first things people did was to put shops online. It wasn’t even envisaged that it would be possible to build social networks. That came much later. One example I came across is the ownership of art. Art Blocks
have a platform where artists can upload digital art. They currently use Etherium. The artist sets a price, normally in Ether (a crypto currency similar to Bitcoin) and a user can pay for the art and buy it. The transaction is recorded on the Blockchain and when a user tries to download the art, a check is made on the Blockchain that the user is the one who has purchased it. The user can also sell the art on using a secondary market. The main barrier at this stage is the number of steps before a user can buy the art. They need to set themselves up on Etherium, buy Ether at an exchange, find the art they want, register on the site, pay for it using their Ether and download it. The actual transaction can be a little complicated as well. A user has to hold a private key that’s linked to their wallet as well.
As I’ve mentioned already, the real benefits of Blockchain won’t be seen for a few years, but many people are saying that Blockchain is the new big thing of the internet - effectively Web 3.0. It’s a good time to consider whether Blockchain can be applied to any systems you are looking to build and if the answer is yes, you could actually get investment into projects. There are many investors who are looking for investments into Blockchain startups and some of the figures are eye watering. Being “the Wild West”, caution is advised but if you have a solid application then be prepared to fight off people wanting to give you money.
So how will Blockchain disrupt the disrupters?
It’s already starting to happen. Take Uber as an example. There’re very successful but built on a traditional platform and their drivers don’t have to give up some of their fares for marketing and they don’t get any benefits if Uber makes a profit. There’s a new startup call Eva that’s built on Blockchain technology but it puts the drivers in direct contact with the users. This means that the drivers can keep more of their money and can be cheaper than Uber. Distributed ledgers are also ideal for social networks and things like supply chain management. Watch this space for more details of what's coming.
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