“Blockhain will dwarf the internet. It will enable structural disruption in every single one of the business we are working in” Elon Musk
Underpinning this bold statement surely this new technology must be quite sophisticated. Nothing of that.
What does it do ?
Blockchain’s simple premise is that it is able to track (time stamp) and thus authenticate digitally all products of value (including “humans” by the way).
How does Blockhain work ?
Blockchain is born out of the encryption protocol used for the popular or rather unpopular Bitcoin encrypted payment currency. Bitcoin is a virtual payment new currency that started to live online 5 years ago. Bitcoin took a turn for the worst due to high speculation and fraud but the encryption protocol on which it is based seems here to stay.
The premise of the encryption protocol is very simple – if you find a way to time stamp a digital transaction simultaneously on thousands of different data basis spread all over the world, it becomes de facto impossible to erase that ONE time stamp. You would have to hack simultaneously in thousands of databases which is impossible. That simple process allows to build a digital universal ledger where every historic log of an event is authenticated. It is therefore impossible to be tempered with.
Blockchain major threat for the global Banking industry ?
Today only 25% of the world population is able to make a transaction online. The banking/financial infrastructure today is technology built in the 5O’s . This current infrastructure is not future proof because it is :
- Costly for micro payments : micro payments today are not taking off because of the cost model per transaction that is too high. In many parts of the world however, where people make $5 a day, micro-payments are the bulk of the payments.
- Costly for global payments : to do international payments, banks need to use a complex net of bank inter connections and charge very high fixed costs
- Not agile enough to innovate with as the legacy banking IT is too complex and totally closed. Because blockchain is an open source platform it will enable an exponential growth of services that will sit on top of the blockchain protocol
Future applications of blockchain ?
Blockchain will bring the V of Value in the WWW. Anything of value that needs authentication and tracking over time can be a candidate to tracked via blockchain. Providing the 70% of the world with a digital passport. Organising digital elections. Official record keeping of all your public files including housing property.
Some resources to consult
Check out this Retail wired talk of Brock Pierce which I found very comprehensive and with a lot of insights.