The first thing that comes to mind when Blockchain is mentioned is, Bitcoin! And then comes the thought of the gold rush which follows Bitcoin! Unstable or not, one thing is for sure the Bitcoin phenomenon is not going anywhere. And Bitcoin’s underlying technology, Blockchain is no more hidden. Its disruptive power is here to stay and revolutionize the business world. You’ve got to agree that Bitcoin and blockchain are among the hottest topics at present.
The Brookings Institution said, “The distributed-ledger technology that undergrids bitcoin… could change the financial system; think the Internet before browsers.”
But it’s not just the financial system, Blockchain has slowly spread its tentacles far and wide. Its disruptive influence is bringing some much needed change into every sector it touches. But what exactly is this blockchain that everyone is obsessed with?
Undoubtedly, this ingenious invention has taken the world by storm. But, to put it very simply, Blockchain can be described as the ultimate global database. It’s not beholden to anyone and greatly distributed. Thus ensuring that tinkering with the data on it is all but impossible. While it’s not so humble beginnings started with the birth of virtual currency, Bitcoin to be exact. But of late, it’s moved way past those beginnings to disrupt a vast range of business applications.
Everyone talks of the promise in adopting and implementing Blockchain into all sorts of businesses. So it’ll be interesting to see what fundamental changes this technology can bring in our society.
Wikipedia describes Blockchain as a list of records which grows continuously and are linked and secured with cryptography. Basically, it’s a shared ledger or database which exists in cyberspace which allows users to track records and accounts. But the main part is its highly distributed nature, which ensures security. This ensures that it’s safe from being tampered or revised, even by operators of the data store’s nodes.
But, all this aside; why is it so popular?
The Value of Distributed-Ledger Technology
We’ve explained that Blockchain is a distributed ledger or database. This database runs on millions of devices and is open to anyone. And the ledger doesn’t just have information, but anything of value can be stored securely and privately. Like money, titles, deeds, music, art, scientific discoveries, intellectual property, and even votes. Blockchain being decentralized, eliminates the need for powerful intermediaries like banks, governments and technology companies. Therefore it uses mass collaboration and clever code to establish trust and ensures integrity and trust between strangers. So this ability that makes it difficult for people to cheat others makes it very valuable in business.
The business world had been inundated with talk about the need for a distributed-ledger technology. Quite a few people dismissed it as a sci-fi hype, a faraway idea interesting but not yet relevant. But until the introduction of Blockchain no one knew where to start and now everyone can make use of distributed-ledger technology to better their business. Blockchain completely rejigs and changes the way we do business by ensuring equal security, control, and user-friendly structure.
Blockchain and Bitcoin’s connection
Spending fiat currency online can be troublesome. So when Satoshi Nakamoto came up with Bitcoin, it offered a great opportunity for users to pay for goods and services via the internet. Great! But, as always there is always a glitch. How do you ensure that the digital currency is not spent multiple times? This phenomenon called Double-spending, is an error which allows the same digital token to be spent multiple times. Often, double-spending occurred when a digital file which could be duplicated or falsified was bought.
The introduction of Bitcoin resolved the issue of double-spending. It used computer science, cryptography, and game theory when they released Blockchain technology for the first time in January 2009. Shortly after, ‘Genesis” the first official block was created. This allowed for mining of Bitcoins and then the first transaction took place.
Bitcoin for all its fame stayed in the background mostly until 2013, when it started getting some traction. At present, there are thousands of different cryptocurrencies and tokens in the market. And their market value at present is over $400 billion now.
Here’s how it’s revolutionizing the business world
Remember when the internet first came into being? It was the first native digital channel to obtain information. Similarly, Blockchain is now the first native digital channel for value. And this will have big implications on the business world.
Rights to intellectual property:
Previously, content creators were obligated towards corporations for packaging and distributing their creations. And the content creator even had to pay a significant amount to these corporations which acted as the middleman. Along with a loss of revenue, they also won’t have much say how their creative works are priced, shared, or advertised. With the introduction of Blockchain, several start-ups and registries have emerged on the scene which favours the creator. They provide a platform for the artist to distribute their works and get compensated for full value.
The ultimate registry for the Internet of Things (IoT):
IoT is the link between Internet and communication devices implanted in everyday objects which allows them to send and receive data. Simply put, it’s the world of sensors, moving objects like vehicles and or any device with embedded electronics. These devices can communicate with the outside world over an IP protocol.
Blockchain and IoT is a perfect combination because Blockchain enables and enhances several different application scenarios and use-cases for IoT. The entire lifecycle of IoT devices and applications can be simplified with Blockchain. This will prove to be the stimulus which will get business processes to act on these events.
Blockchain-based distributed ledger provides IoT with trust, record of ownership, transparency, and the overall (decentralized) communication backbone it needs. Another important aspect where IoT needs help is security standards. And Blockchain with its high end cryptography actually helps with IoT security. It can also be used as a go-to registry for ownership and maintaining data generated through IoT. This will prove to be the catalyst which facilitates growth of IoT across homes and enterprises.
Maintaining smart contracts:
Blockchain enabled smart contracts are disrupting the existing business practices. These smart contracts execute the terms and conditions between engaging parties automatically. This makes it safe and easy for these mutually unknown parties to establish contracts with each other. Blockchain enabled smart contracts take this a step further by preserving a proper system of financial transaction and automatically implementing multiparty agreements. They are also beneficial to the business processes because they are quicker, less prone to errors, decentralized and reduces costs as well.
Opening up manufacturing:
Today, creators still use centralized platforms to sell their wares and as a result protecting their Intellectual property of their creations becomes troublesome. This is where Blockchain technology can help. It can open up markets for manufacturers of all sizes and all types, while protecting their intellectual property. The creators can store the data, rights and other metadata about any substance on the blockchain. So it allows for protecting intellectual property while still opening up the limits of corporate manufacturing. Blockchain-based markets will ensure that buyers and sellers can contract in an open market with more ease.
Provides clarity to the global supply chain industry:
The global supply chains at present have many points of failure. Brands which rely on them for prompt and quality shipments face a lot of risks. With a market cap of $40 Trillion, global supply chain forms the backbone of service economy and manufacturing industry. But from a business-process viewpoint, it can only be described as a spectacularly inefficient mess! The addition of Blockchain will go a long way in straightening this mess by increasing transparency. This in turn will help in reducing costs, risks and drive agility and adaptability.
Increasing collaboration by eliminating intermediaries:
Intermediaries like large social network providers, are still necessary for establishing a level of trust and co-ordinate between people and organizations. This offers a perfect opportunity for blockchain-based systems. Blockchain based social networks will have better functionality which can be customized to protect data and thus empowering consumers. This will eliminate the need for such intermediaries. So the existing vendors will have to adopt Blockchain or face disruption.
The arrival of Blockchain Technology on the scene is considerably like ushering in the second generation of the Internet. Blockchain offers a wealth of options for improving every aspect of business. Organizations need to embrace Blockchain Technology and disrupt from within to stay ahead in the competition.