Make Dollars and Sense of the Blockchain
Look past the hype to understand blockchain technology
Blockchain technology rose to fame when Bitcoin was named as the prefered currency for purchases on Silk Road, the dark net marketplace. More recently, projects and cryptocurrencies such as Ethereum, Litecoin, and Ripple have joined the mix, with sensationalist headlines documenting meteoric increases and decreases in price.
But the blockchain has potential reach far beyond digital currencies.
An understanding of the underlying technology powering this latest market craze is important to looking past current trends and grasping the long-term opportunities presented by blockchain-based applications. Here’s what you need to know.
The importance of Blockchain
At its heart, Blockchain technology is a cryptographically sealed digital ledger that’s distributed amongst a network of peers. It’s similar to the P2P networks that power file-sharing platforms like Gnutella and BitTorrent. It’s also been used by proprietary media-streaming applications like Spotify.
If you’re a fan of HBO’s Silicon Valley, you may remember that Pied Piper inadvertently created and distributed a decentralized P2P Internet protocol in season 4. The real-life Tor browser runs on a similar premise, and several smartphone companies operate on the principle of creating a similar mesh network to provide cell service.
In fact, Blockchain technology is viewed by some as the next generation of the Internet. Currently mesh cell networks and the Tor browser are slowed down by the low volume of users. Creating speed requires a large user base, so these services simply can’t run as fast as the broadband Internet you’re currently used to.
Of course, changes to net neutrality rules and the proliferation of VPNs may very well tip the scales in favor of the decentralized P2P Internet. But that’s not the only place Blockchain technology is valuable.
Implementing Blockchain in business
A distributed, decentralized transaction ledger has benefits far beyond providing Internet service. IBM’s Martin Schroeter recently explained to CNBC’s Jim Cramer that Blockchain technology can streamline a lot of logistical processes for industries like retail, manufacturing, and even the investment industry itself.
In his example, if you were to buy IBM stock today, it would take three days to process, whereas with Blockchain, it could be verified instantly in real time. Imagine how that kind of instant, verified transaction could disrupt the legal industry by preserving the chain of custody in criminal cases or creating smart contracts to decrease the friction of creating secure, legally binding agreements.
Everything from supply chain management to quality assurance, accounting, and even voting could potentially be revolutionized using Blockchain technology. It’s something that has the power to affect industries far beyond cryptocurrencies.
So ignore the hype surrounding the value of cryptocurrencies like Bitcoin and Dogecoin. There’s a rush to create new ones every day, and in 10 years, they’re likely to be as valuable as a Schrute Buck
The underlying blockchain technology, however, may have far-reaching implications in a wide array of industries for years to come.