We all know the block chain technology called ‘Bitcoin’. The value of this ‘coin’ has increased enormously over the last years. A lot of people wished they invested in bitcoins in the early days so they now had some (or a lot of ) nice extra money. Nowadays there are a lot of different types of block chain currency of which Bitcoin and Ethereum look the most promising. But what does the introduction of these block chain currency mean for the business world and us in general?
So what is a block chain currency essentially? Let’s simplify the world of block chain technology for you. Imagine you would have a magic book. There are people around the world who also have a copy of the magic book. Now, everyone can write into that book; if you write something into the book, it appears in all other copies of the book, around the world, instantly. Nobody, not even you, can erase what you wrote into that book or what someone else wrote into that book. That’s basically block chain technology, on which Bitcoin, Ethereum, and all other cryptocurrencies are based.
This essentially means that a block chain currency is a ‘trustless’ currency. You don’t need to trust a third party, like a bank or a credit card company, to use the currency. All participants in the block chain can independently verify and check if the transaction is valid or not. As the number of participants in a block chain goes up to tens of thousands it is impossible to falsify these transactions as nothing written in the ‘magical book’ can be erased by anyone. This means that the middleman is taken out of the world of transactions. Artists will be able to go straight to the people instead of through a music label or art dealers can sell their product straight to the customer instead of through an auction house.
So if block chain currency will start to increase in presence it will lead to a diminishing need for banks and other third parties involved in a sale as the transaction will be verified by the block chain itself. This means that people and businesses will be able to trust and deal with each other transparently as easy as sending an e-mail is nowadays. So now there is only one question left, when does the middleman become obsolete?
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http://www.ibtimes.com/3-things-you-need-know-about-ethereum-next-big-thing-cryptocurrency-2535361 Accessed 4/10/2017
Newman, D. (2017) Blockchain 101 how this next big service will change the future. Forbes. Available at
https://www.forbes.com/sites/danielnewman/2017/04/13/blockchain-101-how-this-next-big-service-will-change-the-future/#125ae9364bd3 Accessed 4/10/2017
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https://www.svds.com/ethereum-the-rise-of-the-world-computer/ Accessed 4/10/2017
Hi Jan,
Interesting article! I myself have been looking into Blockchain technology too lately, as exactly the promise of ‘erasing the middlemen’ sounded very promising and revolutionizing to me.
It surprises me though, that you have no limitations or risks included in your article. I’m wondering if Blockchain is as trustworthy as everyone assumes. Naturally, middlemen cost time and money to people who, for instance, want to transfer money. But they are secure. Using Blockchain, every user is responsible for himself. Think about a future where middlemen are gone: what if one accidentally transfers too much money due to a typo and loses all of his savings. How would this person retrieve it? The solution would be to, indeed, make use of a middleman.
Next to that, it’s argued blockchain will prove to be a lot unsafer than we assume when it’ll be used on a mass scale (Laurent, 2017).
In the end blockchain needs time. Perhaps the limitations I stated above will be solved in the coming years. It’s likely that mass adoption of blockchain technology is not happening very soon anyway. It might end up to be an improvement to middelmens’ services, or prove to be indeed deleting these middlemen completely. I personally think the latter is overhyped, as they are too powerful to be gone.
Laurent, P. (2017), ‘A Rude Awakening For Blockchain’s Dreamers’, 23 January 2017 [online], https://www.bloomberg.com/gadfly/articles/2017-01-23/blockchain-fans-will-have-a-rude-awakening-in-2017