Many have already heard of Bitcoin, and maybe even Ethereum, on a surging wave of mainstream media coverage. Not everyone fully understands what they are, and what it is that they exactly do, but they’re arguably doing a disservice to the technology they run on – the blockchain.
One could say it’s a double-edged sword. Blockchain wouldn’t have broken into public and popular consciousness and captured the imagination of tech mavens worldwide if it wasn’t for the Bitcoin project.
In the same breath, one can say that Bitcoin has completely stolen the limelight from what is really important – the technology it actually works on, the blockchain. If you’ve read some of the articles out there, you might have even heard about blockchain, but you were probably wowed with the supposed millions being made in a few months investing in Bitcoin. Make no mistake: the most important development is the underlying technology.
Think of the relationship between Bitcoin and blockchain as analogous to what we call ‘the internet’. Everyone assumes the internet is what you see on your browser. Pages like google.com, timesofmalta.com, and so on. However, the web is just one service which is running on the internet, which in reality is a global infrastructure of computers sharing information.
So, what is blockchain? Why do people like me believe it’s the next technological breakthrough? Well, this is easy enough to explain. Technology has historically proven revolutionary, in human experience, when there was a strong need or gap to fill. Starting from the printing press, which filled the knowledge gap, to the steam engine (and eventually combustion engines) replacing the horse-drawn cart and filling the energy gap – and paving the way for the industrial revolution. And on to the telephone filling the communication gap and replacing the telegram, and most recently the internet – filling the information gap and giving rise to a revolution therein.
By now you might be thinking, what gap exists right now? I would argue that there is a very real trust gap. Right now, business and any transaction begins from a position of inherent distrust. Knowing each other is no longer enough. We distrust each other so much that we invented a whole sphere of business called intermediaries to manage our trust. These intermediaries include insurance agencies, banks, brokers, real estate agents, government agencies, agents, and so on and so forth.
Bitcoin has completely stolen the limelight from what is really important – the technology it actually works on
The issue with these ‘keepers of trust’ is that they’re relatively expensive and slow to react. In some cases, they’re found to be highly corruptible, prone to mistakes – and most importantly, to some degree, control our actions and information.
Blockchain is a distributed ledger that provides a way for information to be recorded and shared by a community. It can be thought of as the notice board of old, at the local church or centre, where important transactions, events and legal rulings were recorded for all to see. As a technology equivalent to that simple notice board, Blockchain uses advanced mathematics and cryptography to create a repository of truth. This would be something which cannot be changed or tampered with, a quality that we in the industry call ‘immutability’.
Now, imagine the same notice board being locked, with everyone who has access to that notice board retaining the ability to write on it and read it. However, no one is able to remove or change records on it. Furthermore, before an entry is committed to the notice board there is a mathematical system in place to check whether that information is correct or not.
Another advantage is that everyone has a copy of that notice board and if the system finds that one or few (less than 50 per cent plus one) are different, those notice boards which don’t match are replaced and updated with the correct version, every time a new record is written on that notice board. Imagine also that there are millions of people using the same notice board and that it is accessible irrespective of geographical location.
The use of blockchain can reduce overhead costs when parties trade assets directly with each other, or quickly prove ownership or authorship of information – a task that is currently next to impossible without either a central authority or impartial mediator.
Moreover, blockchain’s ability to guarantee authenticity across institutional boundaries will likely help parties think about the authenticity of records, content, and transactions in new ways.
Will banks and intermediaries disappear? No, they won’t. However, every serious company out there must start exploring Blockchain technology. It is going to be the ultimate disrupter of business, and companies will either transform themselves or perish.
James Catania is the CEO of Intelliblock, a premier blockchain solutions provider for the European market. Situated in Malta, Intelliblock makes full use of state-of-the-art infrastructure and the national willingness for blockchain adoption to present its portfolio of products.
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