Unblocking the Blockchain: 3 Things You Need To Know
Don’t be the clueless kid on the block
PHOTO CREDIT: Getty Images
Arguably last year’s buzziest buzzword, blockchain is dominating the conversation across the tech landscape. Whether it’s in relation to Bitcoin and other cryptocurrencies, wide-ranging use cases beyond financial technology, or hearing the term thrown around loosely at a tech conference, nearly everyone’s heard about the blockchain protocol by now.
Yet many still scratch their heads over what it is, much less its long-term potential to transform the way businesses and governments operate.
For Southeast Asian start-ups, the opportunities afforded by blockchain are breathtaking. Why? Much of the blockchain ecosystem is underdeveloped, providing massive potential for early adopting start-ups to develop applications for a technology that will usher us in from an “Internet of Information to an Internet of Value.”
Here are the ABCs:
1. Skinny on the Block: What exactly is it?
Blockchain, as its name suggests, is literally a chain of blocks in cyberspace. Every time a transaction occurs, a block is created with time-stamped, uncensored information that is verified by the entire blockchain network. The new block is sealed and added to the chain, where it can no longer be further modified.
What this means is that, in the case of transferring money through the blockchain, the moment Person A sends a thousand dollars to Person B, the value moves from the former to the latter — with the entire open source blockchain network serving as witness to the transaction.
Don Tapscott, co-author of The Blockchain Revolution, defines blockchain simply as “an incorruptible digital ledger of economic transactions that can be programmed to record not only financial transactions but virtually everything of value.”
What this implies is that the potential of blockchain goes beyond the use case it has been associated with: Bitcoin and other digital currencies.
2. Immutability: Blockchain brings transparency back
An encrypted and protected database of agreements, pretty much anything that has value — from property titles and government contracts, to dollars and diamonds and diplomas — may be transacted on the block.
In an increasingly distrustful and polarized world, blockchain’s transparency and immutability is what makes it truly revolutionary. Once a deal is made, neither party has the power to manipulate the terms.
According to this Inc. article, the long-term, 25-year view of this technology, if implemented effectively, is its ability to provide cornerstone solutions to mankind’s most foundational problems. Leveraging widely-scaled blockchain systems could eradicate fraud, automate manual processes, and control for issues of authentication and trust.
3. Decentralization: No single authority controls the transactions
Much of the deals happening in the global economy today depend largely on centralized systems and intermediary parties. It’s a slow process that’s prone to biases and has resulted in red tape, unjust pricing, and, in some cases, fraudulent behavior.
Decentralization, a core aspect of blockchain technology, implies that no transactions within the blockchain can be lost or manipulated; no data can be located in a single location. Because blockchain allows for critical information to be stored across a massive network of computers, it effectively becomes a tamper-proof database. Whatever changes made on the blockchain affect the entire network.
According to this Inc. article, the implications of this technology include the transformation of legal documents. If legal documents like passports, birth certificates, and land titles were to be managed on the blockchain, there would no longer be a need for people to carry the traditional hard copies. Digital documents may be accessed using a key unique to every individual, thus removing the inefficient way of carrying and risking losing passports during travel.
Blockchain technology is also designed to eliminate the need for such expensive, error-prone middlemen, replacing them with algorithms that never make mistakes and can run without human intervention. The result? A cleaner marketplace that operates more efficiently than conventional models of organization.
Keen to learn more about blockchain technology? Visit the SGInnovate events page for information on the next blockchain technology workshop or event.