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Why blockchain matters furthermore than you think?

  Hi, welcome to another storror of the technology.


 Shortly after the 2008 global financial crash, a mysterious white paper emerged from an unknown entity, a person or group, calling themselves Satoshi Nakamoto. In this mysterious White Paper, a new peer-to-peer financial system was discussed. It was to use a digital cryptocurrency called Bitcoin.

 It was an omen to people being sick of centralized power meddling with economic systems. Many perceive this new system as a better way of doing things. The technology invented to power this new system was called blockchain, and Nakamoto's paper was its grand unveiling. In this article, we'll talk about some exciting implications of this technology and the impact it could have on all of our lives.


 So what is blockchain? It's the underlying technology behind cryptocurrencies like Bitcoin and Ethereum, but its use has go far beyond that. It all sounds complicated, but let me try and break it down into one sentence and important concept that you need to remember. Simply put, blockchain is a continuously updated record of who holds what. These records are split into link blocks and then secured using cryptography. The cryptography part just means that you can be sure about the records.

 This is dubbed as automated trust, or trust that's inherently built into the system. The list of records, known as a distributed ledger, is decentralized and available to everyone to see and verify.


 In addition, the blockchain is tamper evident and unhackable due to its distributed nature. Everyone knows when a block has been messed with because it is rejected by the rest of the system. 


 Blockchain has a social perception strongly related to Bitcoin and other cryptocurrencies, and most people view the blockchain as something for intellectual, tech savvy criminals or people that are anti government. But the emerging truth is that the blockchain has applications far beyond cryptos and as a whole will be nothing short of revolutionary.

Bockchain is just a special type of data repository that is in itself tamper evident.


 Blockchain technology has been called the next stage of the Internet by many. That it holds vast promise for every business, every society, and for all of you individually. Let me break it down. Our current Internet is an Internet of information. It's based on the concept of copying and distributing information, be it video, e-mail, or data. All of these are copies. For example, if you want to watch a video on YouTube or receive an e-mail, you're looking at a digital copy of the original.


 But what if we take this further to the next stage? What about assets that provide real value, like contracts, such as a house or car ownership, a stock, a bond, money, votes or digital identities? The problem is you don't want to have these things as copies. For example, you don't want to send someone $5000, yet still have the original $5000 under your name. This was called the double spending problem by cryptography. Despite the name, this basically means the problem of having two digital copies of something that should only have one unique identity. The cryptography element of the blockchain enabled it to be the first technology of its kind to solve the double spending problem. Now, for the first time, we can build a new stage of the Internet based on real value, and this is partly why it's such a big deal. So where can the blockchain be applied? 



Now we'll talk about  FITs model of blockchain application. FITs is an acronym using this model. The best place to use blockchain are places with high possibility of fraud and intermediary the middleman environments with high throughput and stable data.  You should try to run against your environment what's called the FITs model. The FITs model stands for fraud if you are in an environment where there is a history, propensity, likelihood of fraud involved in various transactions. Then the blockchain can assist in reducing the likelihood of fraud actually occurring. That is why blockchain is being used for international finance transactions. The next area of the FITs is the eye. If you have an environment where there are intermediaries involved, then you may be able to disintermediate those parties if they really don't provide value.




 He goes on to say that we can get average transaction settlement times from two days down to 15 minutes by taking away middle men. Throughput, or number of transactions per second, is another consideration. It turns out that Bitcoin can only do 10 transactions per second, while MasterCard and Visa can do about 80,000. But researchers are currently looking into increasing the throughput. You then look at things which what Vincent Grimoldi from the University of NSW has developed. He's been able to increase the throughput to 400,000 transactions a second through what's called decentralized puddings using 100 Llaptops, PCs to do the processing power. And next is the stability of data. For a blockchain application, you don't want volatile data. You want things that are going to stay the same for at least a while. Things such as land ownership, titles, and personal information. So that's the theory about what systems you should look for in regards to using blockchain applications. 



But where is the blockchain actually being used today? Here's a quick fire round of applications underway. Blockchain land registries are being looked at in Honduras and Sweden. Diamonds are looking to be tracked by the blockchain to stop things like blood diamonds. The NASDAQ Stock Exchange will soon begin a blockchain system to record the trading in privately held companies. The Bank of England has stated that the blockchain is a significant innovation that could have far reaching implications in the financial industry. Not only this, but six banks including Barclays, Credit Suisse and HSBC are all planning on making a single digital cryptocurrency to clear and settle transactions using the blockchain. Microsoft is even getting in on the action by building a framework using the Ethereum blockchain. On the social media front, the steamit a Reddit competitor, and its video companion Dtube, a YouTube competitor. Both are blockchain based platforms where you can get paid in cryptocurrency for creating content. This is showing a new direction and where social media could go. As a matter of fact, I've actually just signed up for Steamit myself. OK, so this is all good, but let's turn things up a notch. Blockchain goes even further when we talk about something called a decentralized autonomous organization, a DAO for short. Because of blockchain technology, we now have the capability to create huge company organizations that are distributed and automated for the first time in history. This has never been done before and could provide near limitless potential. Before the blockchain, we were already halfway there. We have organizations like YouTube that are a mix of the old style central management with a decentralized user base creating content. A Dow would have computer code that runs the rules and decisions instead of a central management team at the top. The people in the decentralized network would decide on the rules, form a consensus and create something called a smart contract. Basically a set of computer coded rules that are computer would execute later when needed. In other words, a DAO is like a democratic company that's automatically run. So a DAO is meant to be a decentralized, so it's on the blockchain. There's no central management involved, autonomous in that the code will run the transaction and it's meant to be some form of organization. The difficulty from a legal perspective is that no one at this point in time has been able to classify exactly what a DAO is. It may be that in a few years time. Dao will become so popular that legislators will need to create special legislation that will recognize what a DAO is. But at this point in time, no one knows.


 Let's take a look at a basic hypothetical example of how this might work, but just with one smart contract. So, say in the future when the blockchain is readily established, you want to buy a used Tesla Model 3. Traditionally, you go to a dealer or an individual. You'd make sure that  he tells me the history of the car. You'd hassle for a price with the seller, takes the money out from the bank, transfer the money, sign a lot of paperwork, wait for the money to clear, and then you can finally have the car. This will take around a few days to do. Now with the blockchain. Using a smart contract, you could have this order all carried out in real time. The car would be uploaded to the blockchain so that you would already know that the details are correct. Because trust is built into the system, you could buy this car with a cryptocurrency that's attached to your bank account and all of the ownership and other details about the car is executed in a smart contract, so everything would happen in a matter of minutes instead of days. Your ownership of the car is now attached to your digital identity on the blockchain. The global records in the blockchain system is now updated so that everybody in the system now knows that this car was sold to you. You can take all of this a step further by linking up different smart contracts into an organization similar to Airbnb or Uber, so the whole process is automatic with rating systems of service and customer satisfaction, etc. 




Although that setup is a sharing economy model, a group of smart contracts can easily be arranged in this way. So I hope that you're beginning to see the importance and potential of such technology, but it's not all roses right now. There are still some downsides. Malicious smart contracts, for example. These can theoretically be designed to clog up the entire system. In addition, if there are actual coding errors within a decentralized autonomous organization itself, this could create massive problems. Another thing is that the blockchain is also permanent. Every record of a transaction is stored there for all time, and this doesn't sit well for those concerned with privacy and the right to be forgotten. There are going to be some entities called oracles and these guys have special clearance to make edits on the blockchain, but overall this is still an issue that needs further looking into. As I tell people, you know when we talk about blockchain and we talk about DAOs and I ICO's and things of that nature. We are, at this stage in the blockchain ecosystem, probably the equivalent of 1993, when the Internet was opened up by President Clinton and the National Science Foundation. Prior to 1992, the Internet was only open to research organizations, government agencies, defense contracting organizations. Who would have thought in 1992 that we would have companies Like Google, Amazon?  All of those companies have taken advantage and looked at the Internet and said how can I use this piece of technology?  



       I don't believe it's rather there will be some smart people out there who will look at this technology and say, let's do this and the rest of the world say, wow, that's really something I want to get on board and I want to utilize that service. So while everyone's focused on the buzz of artificial intelligence, I really think that the blockchain is a dark horse that's going under the radar, mainly because it's not as romanticised and the concept is a little bit harder to grasp. Regardless, blockchain is the next step of the Internet, a complete overhaul of how things in our world are going to be recorded, organised and run. In the end, I personally think it's going to be a combination of artificial intelligence and the blockchain that will be our future. So what do you guys think? Are you looking forward to things changing in this way, or are you hesitant? Let me know your thoughts below.        

 

 

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