Share, , Google Plus, Pinterest,

Print

Posted in:

The Sweeping Potential of Blockchain Technology

Bitcoin receives all the headlines and notoriety today. In contrast, Blockchain technology, the underlying computer science breakthrough that makes Bitcoin possible, is rarely discussed. However, it is Blockchain technology that’s on the brink of changing the world, as a truly disruptive innovation.

What does Blockchain technology represent as an achievement? Well, it may be best described as a decentralised database (or ledger) with network enforced processes for updating the database. It is a general purpose technology that can be applied to disrupt any centralised system that coordinates valuable information. Blockchain technology affords users a high level of transparency through its ledger, a very resilient decentralised platform (i.e. no central point to attack), network enforced security and openness, and high cost efficiency (i.e. no middlemen). Blockchain has the potential to irreversibly change data intensive industries, rather than capital intensive industries. As a result, in the future, data intensive industries like finance, gaming, communications, and media stand to be positively disrupted.

Recently, most coverage has been given to the disruption of the finance industry by Blockchain technology startups. This trend will continue to grow as there are over four billion unbanked people in the world. Through the use of Blockchain technology, this vast demographic can have their financial needs, economically serviced. A result that will be achieved via lower cost of transactions (from no middleman), faster money transfers, the ability to send small amounts of money (future for Internet of Things), publicly auditable exchanges, and stopping market manipulation (think: LIBOR rate scandal).

In gaming, Blockchain delivers to  its users, prove-ability and fair gambling benefits. For example, once a gambling outcome has been determined, interested parties may backtrack through the “chain” to verify no rigging of odds or cheating took place. Blockchain based casinos, like Chancecoin provide a high level of service and transparency to its user base.

The data and communications industry can be made more effective by providing censorship resistant communications (Bitmessage) – allowing for a P2P network to thrive from decentralisation encryption.

Blockchain technology has plenty of potential to disrupt and benefit the rapidly growing “sharing economy” through the construction of big networks that directly connect producers and consumers. The value is not derived from the technology, but from the network effects these sharing companies manage to secure. For example LaZooz, which is a decentralised transportation platform owned by the community, which utilises vehicles’ unused space to create a variety of smart transportation solutions. By using Blockchain technology La`Zooz works with a “Fair Share” rewarding mechanism for developers, users and backers. The platform will synchronize empty seats with transportation needs in real-time, matching like-minded people to create a great ride-sharing experience for a “Fair fare”.

Cloud computing is being disrupted by Blockchain technology. Zennet Supercomputer is a new startup offering supercomputer access without super costs. What it does, is it uses providers idle computing power at times when it is not being used (think: when a provider is sleeping). It also enables connection with many other computer providers around the world. Half of the computing power around the world is not used at night. When compared to Amazon’s corporate cloud service, Zennet is much more economical as it does not incur operating expenses like hardware, real estate, or IT. Businesses are able to cut expenses by using Zennet, and providers are able to earn money for renting out their computing power. Another Blockchain technology based startup disrupting the Cloud computing space is Storj, which provides its users a decentralised file storage system. It’s a very compelling service to emerge with a multifaceted value proposition that solves the challenges faced today in Big Data, Decentralized Storage, and File Sharing. 

Will we soon live in a decentralised future? Think of the many possibilities there exist to develop P2P energy networks, P2P communication networks, P2P logistics networks, and even Blockchain-powered Internet of Things. The opportunities are endless it seems. For most people, it’s very hard to predict what’s in store next. Almost every technology that ends up disrupting things, is over hyped. There is a hype cycle – people get more excited in the short term than is justified. Over more time, this leads to a cumulative set of deliverables that have grown so massive that certainly there’s some form of breakthrough. Many people were even sceptical of the internet, they said there wouldn’t be a significant amount of music listened too, or there wouldn’t be a significant amount of videos watched. For a long time this was true, until suddenly there was a tipping point, where a significant number of people had become used to the way the internet could better work satisfying their needs. Now, it’s hard to say when exactly this tipping point will be reached with Blockchain technology, but one thing is for certain, its hype is picking up speed, and there is substance behind the hype that will herald a new tide of interesting disruptive innovations far beyond just Bitcoin.

19 Comments

Leave a Reply
  1. Already social/personal lives are addicted to tech tools the humaness is gone with digital money severe challenges like who is point of control/cause/regulation/monitoring/accounts and audits of such tech solutions???

  2. Bitcoin is a digital asset and a payment system invented by Satoshi Nakamoto, who published the invention in 2008 and released it as open-source software in 2009.The system is peer-to-peer; users can transact directly without an intermediary.
    What is your take on criminal activity in Bitcoin? A CMU researcher estimated that in 2012, 4.5% to 9% of all transactions on all exchanges in the world were for drug trades on a single deep web drugs market, Silk Road. Child pornography, murder-for-hire services, and weapons are also allegedly available on black market sites that sell in bitcoin. Due to the anonymous nature and the lack of central control on these markets, it is hard to know whether the services are real or just trying to take the bitcoins.
    How can such incidents be prevented?

    • Hi Shantanu, thanks for your reply. Criminals are typically early adopters with new tech to escape/ circumvent the pursuit of the state authority. As the Bitcoin network grows, I would expect nefarious activities as a percentage of total transactions to diminish. Like any currency, Bitcoin is susceptible to criminal transactions. However, the fact of the matter is that the vast majority of criminal activities are still transacted in USD. The power of a central control should also be questioned- look no further than the recent HSBC case where they were caught facilitating the money laundering of billions of USD into cartel hands in Central and South America, an unforgivable offense that has translated into thousands of deaths. Not only would an example like this be impossible to recreate with the current Bitcoin network, but if the network could support a transaction of this size it could easily be researched and found in the Blockchain, which anyone has access too. When the internet first became main stream, there were pundits who proclaimed that criminals would now be able to communicate in complete silence. Well, with a reason like that does it seem reasonable and prudent to limit internet access and increase monitoring? This leads us into discussing privacy laws and the role of government agencies like the NSA. With Bitcoin, my take is that the benefits far outweigh the costs and that there should be less government intervention, allowing for a natural evolution of the network.

      -Taylor

  3. Very interesting article! Very well explained details of the blockchain technology. This technology will be an asset to millions of people who are not a part of the banking system. And it has a very vast potential in many fields. I particularly liked the last part of your article and i agree with you. With such a technology , the opportunities are endless. Great article!

  4. Very informative article, i was wondering if the social messaging apps can or are using such technologies to track down the origin of hatred messages that we frequently see in social media.

  5. Thanks Taylor for your reply..

    My question is what is stopping the governments from integrating block chain technology into their fiat currency system.. This may mitigate the volatility risks?

    • The Bitcoin network, though growing, is still very small. The technology still has lots of kool developing potential. Governments won’t start widely accepting it until all the kinks have been worked out. Back in the early 90s you almost required a degree in computer science to send an email, now, well it’s a whole lot easier. The new business potential in the space is what makes entrepreneurs excited, and bureaucrats nervous. Volatility is a characteristic of all fledgling currencies.

  6. Scammers seem to be the biggest bitcoin users partly because of the volatility: Few others are ready to conduct their business in a currency that can lose a quarter of its value overnight. While retailers and other consumer companies like to get free publicity by saying they accept bitcoin, most instantly convert payments into dollars. “If it doesn’t have a stable value, it’s probably not going to survive,” Eugene Fama, the Nobel prize-winning economist, said on a recent podcast.

    Looking back, bitcoin seems almost designed to encourage speculation. It initially was doled out in tiny amounts to “miners,” the people who contributed computing capacity to power the bitcoin network. Some of those early adopters got rich in 2011 when the website Gawker publicized Silk Road, and the price of a bitcoin went from $1 to $32. The chatter around newly minted bitcoin millionaires attracted speculators. The price topped $1,000 in 2013, then collapsed when one of the biggest exchanges, Mt. Gox, disclosed that $480 million in bitcoin had mysteriously disappeared and filed for bankruptcy.

    • Thanks for your interest Tom!

      I would recommend steering clear of Bitcoin as an investment vehicle, and speculation in general is foolhardy. The average Joe from Idaho will be one of the last to be disrupted from Bitcoin. And rightfully so, he trusts the worlds strongest currency and is well banked, having access to credit and secure savings. It will be the weaker currencies and economies that go the way of the Blockchain first (the Philippines are looking into building their fiat on the Blockchain). I don’t think we will see complete destruction of all fiat currencies, but they are fighting a system which is in all aspects far superior for the end user.

      The media would have you believe that “scammers seem to be the biggest bitcoin users” as they would have you believe that bank robbers seem to be the biggest users of the Ford Model T – purely sensational and irrational.

      Simply put the Blockchain is the protocol that Bitcoin is built on top of. The internet we use today is the internet of information, the Blockchain is the internet of value. The one is a communications protocol, while the other is a value exchange protocol. What made the internet of communication so successful is the fact that it was an open protocol that anyone could innovate on or build around. What makes the Blockchain protocol interesting is the same thing. If you want to innovate in finance or payments or any of these sectors there were no real open systems or a lot of those businesses would built on a geo basis often limited to those areas. By having a baseline protocol, it allows you to build and innovate around finance lots of interesting things can happen. In the same way that the internet of information or the communications protocol made it possible to send information instantaneously anywhere in the world, you now have the ability to transmit value. Value being broadly defined, Bitcoin being an alternative currency, a global currency that runs on those rails.
      Now, its hard to say if Bitcoin is the Friendster, Myspace, or Facebook, but its hard not to see the huge potential in the Blockchain.

      Mark Andreessen has said that this innovation is more substantial than the internet, its going to impact the world around us more so. If we go back to 1994 it was very difficult to envision all the ways the internet was going to impact our businesses and in fact it has changed all of them today.

  7. Excellent article explaining the significance of Blockchain technology across various fields especially finance. In a wave to support usage of Blockchain Technology in finance, Microsoft has launched its new cloud platform offering Ethereum Blockchain as a service. Besides this several banks including RBS and Barclays are investing in blockchain based distributed ledger technologies.

    (Source: http://www.wired.co.uk/news/archive/2015-11/11/microsoft-ethereum-blockchain-bitcoin)

    • I think its a positive that Microsoft will offer Ethereum (excellent scripting language). This will create more awareness and user access to Blockchain tech. However, I question Ethereum’s future viability as it has built a completely separate Blockchain from Bitcoin. Regarding the Bank’s leveraging the Blockchain tech, this will help them lower their operating costs and this savings should be passed on the to the customer. This is great and all, but I think the truly exciting application of the tech will be felt most in the developing countries of the World. Banking up until now has been a luxury service where the minority of the Worlds population has a Bank account and access to credit. Recall, what has occurred in Sub-Saharan Africa since 2001- they completely skipped telephone line infrastructure and gave everyone mobile phones. A similar phenomena is taking shape with global banking and finance. Anyone with a mobile device will have access to buy and sell bitcoin, and access global credit markets, making the current Banking model obsolete.

  8. A superb article explaining in lucid detail the many facets of blockchain technology. Bitcoin is a major disruption in the world of finance and money. Blockchain technology can be used for revolutionary disruption in finance and the monetary world. This has great potential for the future, it can bring in billions who are formally out of the banking sector. The interesting challenge is providing proper security. Slowly the pieces will fall into place and we might see the emergence of a alternate economy not dictated by big business and central banks. There could be a level-playing field for the small player. The prospect of disruption in cloud computing and IoT is also very exciting.

  9. Sounds like the verification process we do in software testing. we check the path to see if that is way we should have arrived at the final result. In a way, it is more like maintaining the state information of a finite automata machine and being able to backtrack from an outcome to see if we got their the right way. ( As software test engineers usually say, it is about “doing this right” than “doing the right things” ).

  10. It seems that the block chain can have data appended to the chain of transactions..Two possible issues can arise.

    1) How do we set the storage limit for these chain of events..?
    2)Are nodes in the chain secured? and What is the level of encryption applied to them..?

    This technology reminds me of token ring type network topology where the node who has the taken will transmit the data in the system of connected which increase the efficiency of data transfer by avoiding collision.

Leave a Reply

Your email address will not be published. Required fields are marked *