The following is part 1 of a 3 part opinion series on the blockchain by Daniel Sutton.
Blockchain has the potential to redefine the way we transact. It represents a technological Swiss Army Knife, cropping up in applications from tracability of food to borderless money transfer. While often associated with the indelible ledger of Bitcoin transactions, broader appreciation for the implications of a trustless, two party transaction mechanism are inspiring a new generation of Blockchain companies to diversify their market scope. What TCP/IP is to the internet, Blockchains will be to transactions.
###So what is Blockchain, exactly?
Blockchain, in its essence, is a public ledger (chain) of all transactions associated with a given application (blocks). This Blockchain charts every instance of an asset being transmitted from one party to another in a way that enables irreversible, auditable exchange. As new transactions occur, they are grouped into chunks (blocks), and added to the ledger (chain) in chronological order. This Blockchain can never be edited without record, and gives a map of transactions from the genesis of the asset.
###Great! Why should I care?
This indelible ledger offers new value to transaction systems mired in ancient processes. When one writes a cheque, the objective is to transact currency from one party to another. That cheque enters the hands of the recipient, then is passed on to her bank. The bank passes the cheque through a few hands, and ultimately verifies the identity of the signor by referencing a squiggly line that the signor made in the bottom right hand corner.
If the squiggly line looks like the squiggly line that the bank has on file for the signor, the bank moves funds from the original account to the recipient. If the signor does not bank with the recipient’s institution, then the recipient’s institution has to qualify the squiggly line with the signor’s institution, requiring further manpower and validation. This process is expensive, lengthy, and based on pens and paper, a technology popularized in the 17th century.
The future of Blockchain
Blockchain enables transactions to bypass 3rd (and 4th, and occasionally 5th) party qualification. It relies on complex algebra and algorithmic validation (as opposed to the matching of squiggly lines) enhancing the security and consistency of the transaction. It takes milliseconds and costs almost nothing. The end product? A validated, consistent, and trustless confirmation that you have received funds, that your apples are organic, or that the deed to your new home is in your possession.
Blockchain is already being applied to a variety of financial applications today. Brands from VISA to Deloitte are adopting the technology to further their efficiency and consistency goals. It is likely you will start using Blockchain applications in your everyday life, if you have not already.
Disclaimer: Views and opinions in this article are those of the author and do not necessarily represent the views of, and should not be attributed to Blockchain Tech Ltd.