Blockchain: What It Means For Us
By Shlomo Maital
At a Swiss-Israel Innovation Workshop I spoke at recently, in Lucerne, a speaker casually mentioned that the next world-changing technology will certainly be something called “blockchain”.
What in the world?
According to Florian Graillot, writing in the TechCrunch website:
In the blockchain, information is stored in blocks that record all transactions ever done through the network. Hence, it allows validating both the existence of assets to be traded and ownership. To avoid double spending, the technology requests several nodes to agree on a transaction to process it. A validation is also artificially difficult to achieve: miners leverage computer power to solve complex cryptographic problems (the proof-of-work). Every time a problem is cracked, a block is added to the chain, and all the transactions it includes are thus validated. The updated chain, including the new block, is shared with other nodes and becomes the new reference; this process leverages cryptography to prevent duplicate transactions.
Not too clear? Another try: With blockchain, chains of ‘blocks’, or transactions, you don’t need a middle man (e.g. bank) to organize buying and selling. It is done by a network of buyers and sellers, and the technology of blockchain enables secure transactions, without fraud. Blockchain is a matchmaker bringing together those who have something with those who want it. It is built, like building a brick wall…
It is best understood by the way it is used. Graillot continues: “ Bitcoin was the first use case of the blockchain, and the most famous one. Its founder developed this technology to process money transfers and to solve many cryptocurrency issues. Instead of having a central bank that issues money, and banks to validate financial transactions, Bitcoin relies on the blockchain. Abra, for instance, is leveraging this technology to ease money transfers across borders — they rely on Bitcoin to disrupt the remittance market.”
Blockchain is a disruptive technology – that is, a game-changing technology that undercuts huge established existing players (stock exchanges, banks, etc.) and instead enables smaller players and startups to compete, by creating value for customers.
“…..many applications of the blockchain could be explored. And startups are already working on this technology to disrupt industries. Indeed, every time a third-party is involved to process a transaction, the blockchain could replace it. ● Overstock developed “tØ” a public equities trading platform based on the blockchain. ● And in the same area, NASDAQ announced a partnership with Chain a few months ago: They are working on disrupting shares trading by using the blockchain. ● More generally, financial institutions, like Goldman Sachs or Barclays are teaming up with the startup R3 to create a new framework for the markets based on the blockchain. ● A few startups are going even further, and plan to use the blockchain to trade physical assets. Thus, Bitproof and Blocknotary are disrupting contracts by recording them on the blockchain; instead of completing your house sale in front of a notary, just store the contract on the public ledger. ● Colu, on its side, is using the blockchain to manage property through digital tokens that can unlock either online services or physical objects. ● This also could be applied to intellectual property. For instance, ● Verisart is using this decentralized technology to verify art pieces. It encodes copyrights of artwork and records them on the blockchain. ● ProofOfExistence, as well, is leveraging the public ledger to keep track of files you have created. ● To go further, the blockchain could be used to identify people. ShoCard encodes and stores personal information regarding identity. It could enable smart contracts, as well: As soon as terms are met, the contract is processed, thanks to the decentralized infrastructure. ● IBM is currently working on this application. It also unveiled a partnership with ● Samsung ADEPT, a proof of concept using the blockchain in the Internet of Things area.”
We don’t really need to understand the technology of blockchain. Enough to know that it can match supply and demand, worldwide, instantly, and in a secure manner, bringing people together. Marc Andreessen, legendary inventor of Netscape, compares it to previous tech revolutions: “Personal computers in 1975, the Internet in 1993 and Bitcoin in 2014.”