Article

Blockchain Beyond Bitcoin - Essential Introduction

May 2, 2018

Introduction

The world is evolving faster than ever and unless you have been living under a rock, you have probably heard about Blockchain before. If you know the technology inside out is amazing because there is still a lot of confusion regarding the nature of Blockchain and a lack of general awareness about its technology. In fact, many people may have heard about it but not necessarily understood how it works, much less its potential and what else the technology can do. Blockchain became recognized as a revolutionary technology thanks to Bitcoin and when most people think of Blockchain, still the cryptocurrency instantly comes to mind. But if we shift the attention from Bitcoin to Blockchain, the core of the discussion goes far beyond financial transactions, is extended in diverse and multiple areas. This because Blockchain takes the challenge much further and rather than just the financial services space, it can be applied to many other types of transactions to solve the problems inherent in them and overcome their technological boundaries. So, let's start with the important questions "what is Blockchain?" and "how it works?", without forgetting: "I have just bought some Bitcoin, so why are you bothering me with an article about Blockchain???".

Difference between Blockchain and Bitcoin

Blockchain is the data structure which powers the Bitcoin, it is a public, open and distributed ledger which allows for the permanent and immutable recording of all transactions that have ever taken place in the network. Bitcoin is THE cryptocurrency, famous for providing trusted, transparent, and accountable transactions in exchanging money over the internet. But if we dig deep, we realize that it is only an asset, an "app" built on the Blockchain technology and it is the latter the platform that ensures all transactions to be trusted, transparent, and accountable. Blockchain is the underlying technology behind Bitcoin and it is a digital medium for assets that are crucial for the modern economy (money, stocks, bonds, and so on), for this reason often described as the backbone of a new Internet Era, the "Internet of Value". What makes a transaction efficient is essentially trust and Blockchain's key purpose is providing trust in all transactions. Because establishing trust between two parties can be very difficult and time-consuming, for centuries we have been dealing with middle-men (Government, Bank, Lawyers, etc.) to ensure the deal goes smoothly. In fact, all the business and transaction logic of every kind of commerce has been performing by big institutions, like clearing and settling agreements, identifying parties, keeping records, and so on. Blockchain disrupt this legacy of dependency: is purely decentralized, a distributed database where trust is native to the system and established through mass collaboration rather than through a powerful intermediary.

How Trust is native to the system

Blockchain is a distributed ledger and it runs across a global network that constantly keep track and validate the system. It distributes the registry across several people (all of whom have an exact copy of the same registry) which is fully traceable and visible to all parties involved in the transaction. Every transaction is checked, certified and permanently recorded in the Blockchain. All information is encrypted and immutable and this eliminate the need for extra verification of authenticity of data stored. And since all parties in the transaction can view the distributed ledger, everyone can agree on how the transaction is progressing while it is ongoing, and how it went once it is complete. So even if one of those holders can't be trusted, the collection of all of them can be! Blockchain removes the need to trust a single individual, it allows you to trust the technology, a system of individuals that must all agree on the truth. Also, by monitoring the progress and agreeing on how every transaction took place, everyone who participates in the network retains power and control over their data. Thanks to this well-built consensus network, every participant on the Blockchain can transact directly with each other on their own terms and the ledger is guaranteed to be consistent without relying on a centralized authority.

Conclusion

You can now see the potential of this innovative technology in its power to revolutionize the way business networks operate. Having said that, I don't agree with the several grandiose and sometimes catastrophic claims about Blockchain (yeaaaah revolution!) but think that big institutions and organizations will embrace the new technology rather than wait for their collapse. Nowadays digital transformation is pushing several boundaries and big organizations need to adjust on a constant basis. Blockchain tackling all the problems inherent in a traditional business transaction, will be a crucial technology for modernizing dated structures and old-fashioned business logic.

Related Article

Article

Inside FIXER #4 - Working in a Dynamic and Fast-Growing Global Team

Interview with our Global Business Accel...

Article

Inside FIXER #3 - Working in a Dynamic and Fast-Growing Global Team

Interview with our Talent Acquisition Le...