Thousands of articles have been written about bitcoin and then mainly the dangers and threats. However, it is way more interesting to take a close look at the underlying technology: the blockhain. Mainly because it is promised to be the next generation of the internet and it will most likely change money, business and the world.
Currently, if one would like to send money to someone else, he or she has to go to an intermediary or government authority. These big institutions will then do the authentication, identification of people, clearing, settling, record keeping et cetera. Their entire business model is based on these kind of services that establish trust in our economy.
However, this will not be for long. In 2008, an unknown person or persons named Satoshi Nakamoto came up with the Bitcoin protocol. By doing so, he showed the world the possibilities of the the underlying blockhain technology. For the first time in human history, people all around the world are able to fully trust each other and transact peer to peer. People now start to realize that we are able to rethink the economic power grid and to get more independent from these big intermediaries.
But, how does this technology work? The blockchain is basically a giant, global spreadsheet that runs on millions of computers worldwide. This distributed database is open source and so anyone is able to adjust and see the underlying code. All things going on under the hood are open and transparent to anyone. The engine of the blockhain are the so called miners. These people run their computers to authenticate the occurrence of a transaction. After doing so, they create a new block and link it to the previous block (that’s why it’s called blockchain). Now it is evidence to everybody else in the blockchain environment which makes hacking practically unfeasible.
To make a long and quite difficult story short, the main reason why blockchain is going to revolutionize the world is the Internet of Things. As more and more devices connect and transact with each other, we’re going to need such a technology like blockchain that allows us to settle these transactions without intermediaries. Mainly because, these old-school intermediaries will simply not be able to settle trillions of real-time transactions between things.
Sources:
http://www.mckinsey.com/industries/high-tech/our-insights/how-blockchains-could-change-the-world
http://www.huffingtonpost.com/don-tapscott/five-myths-about-the-bloc_b_10105946.html
Here’s Why Blockchains Will Change the World
https://en.wikipedia.org/wiki/Blockchain_(database)
Hi Mathijs,
Thank you for your post. It is always interesting to read something about a disruptive technology with a tremendous potential, especially if it is Blockchain! I agree with you that Blockchain has a potential of revolutionizing the world we live in. The internet of Things could change the way we currently do things and experience our lives and take it to the next level. Many experts have labelled Blockchain as the biggest innovation since the internet. The hype around Blockchain is enormous and this is why it is also very important to look at the dangers and the threats. While Blockchain can potentially bring lots of benefits to the world, it has also the potential of bringing lots of disadvantages. The only way to prevent this or predict a certain negative outcome is to think about the dangers and the threats and how we should prevent or cope with it. Only when we do this, we are able to create something good out of Blockchain and unlock its full potential!
Hi Mathijs,
Thank you for posting regarding the topic. Truly, today you hear about Blockchain everywhere, but it is not known whether it is as efficient as it claims to be. Currently in order to manage the security of the network, Bitcoin is using more resources than the entire country of Ireland and that is only expected to grow. The technology is revolutionary, but how efficient is it in comparison to the Visas and Mastercards of this world. They can handle many more transactions per second than Bitcoin, even though that is the biggest public Blockchain network. I perfectly that it is going to revolutionize the transaction industry, but not maybe in as a direct way as you think. The utilization of Blockchain based systems to facilitate a bank’s back-end and interbank transactions might pose a better opportunity for the technology than just to replace intermediaries.