A Beginner’s Guide To Blockchain
Blockchain has almost become a household name, but why? Let’s take a look.
From time to time, a new technology promises to change our lives for the better. Experts discuss it in hushed tones, startup firms pop up in California and newspapers begin moving related stories from the business section to the news pages.
What is Blockchain?
It’s best to think of the blockchain as an open source document. Like Wikipedia and other common-usage websites, it can be edited by anyone with membership of that group. Each change leaves an indelible and tamper-proof record of what was done by whom and when. That in itself is ground-breaking and welcome after so much criticism centered around banking practices. Therefore the blockchain has the potential to become a cultural phenomena as a consequence of its transparency.
Contents of blockchain are publicly visible at all times, and they can be freely altered within pre-defined rules. Once each adjustment is verified by a group member or administrator, a time-stamped block is created that links previous and subsequent revisions in a chronological chain. It’s a whole new way of working, with the potential to disrupt numerous industries. If you believe the more excitable commentators, its impact will be dramatic in the coming years
Why all the Hubbub about Blockchain?
The blockchain becomes exciting when you consider its titular blocks could contain anything from information to money or contracts. And it’s the latter that is intriguing industry observers. For example, an undeletable record of who said what could supplant any legal contract. There’s no room for manipulation or fabrication within the blockchain. There’s also less need for middlemen like banks or lawyers, since a group of private citizens could theoretically agree unshakable terms between them. This presents opportunities for crowd ownership or smart contracts that automate transactions, while potentially eliminating fraud or errors.
What does this mean in the real world?
Although some pundits have suggested the blockchain could become as influential as the internet, such hyperbole needs to be taken in context. The introduction of Bitcoin eight years ago was anticipated to have a similarly transformative effect, with every transaction of the world’s first global currency recorded in the world’s first global blockchain. In reality, bitcoin has yet to be accepted as a standard payment method. However, that being said, blockchain’s reputation has been associated with Bitcoin’s enduring association with paying for illicit activities – every interaction is recorded, but with strict anonymity for all parties involved.
Blockchain Strength
Despite these PR challenges, the blockchain has proved exceptionally resilient for recording Bitcoin transactions. This has reassured observers that blockchain-related business models can facilitate transparent data exchanges, like electronic voting or insurance. Standalone databases could be replaced with a widely-accessible ledger of events, with transactions conducted in full view of every party. Processing times are also far faster – something currently taking days to conclude could theoretically be completed in seconds.
The property industry is particularly keen to harness blockchain’s permanence and accountability, given the labyrinthine nature of some commercial property deals and the number of middlemen required. The Swedish land registry is already piloting a scheme between two financial institutions and a startup enterprise, to see whether the blockchain can support a reliable record of events. In a decade’s time, the blockchain might be as commonplace and unremarkable as cloud-hosted documents or wiki websites are today.