Blockchain: Understanding the Building Blocks of Bitcoin and other Cyber Currencies
It will fundamentally disrupt money, they say. It will change the world, they say.
Are they right?
Blockchain, at its heart, is simply a ledger for the digital age. Ledgers and contracts are ripe for disruption. To wit, contracts today still use language and style rules from the 1700s. Heretofore the Customer shall be referred to as “Lessee.”
Why the ancient language? Why capitalize all nouns, a technique that fell out of fashion at the end of the eighteenth century? Why maintain right and left justified typesetting when you have modern typesetting equipment? The answer boils down to a resistance to change and the safety of tried-and true methods.
In general, steady compliance is a smart strategy for keeping ledgers. But we are well into the Digital Age, and tools still using norms from the 1700s are overdue for a fresh perspective. According to the Harvard Business Review, today’s ledgers “are like a rush-hour gridlock trapping a Formula 1 racecar. The way we regulate and maintain administrative control has to change. Blockchain promises to solve this problem.”
A blockchain ledger records transactions in perpetuity. “(Blockchain) is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Functionally, a blockchain can serve as an open, distributed ledger that can record transactions between two parties efficiently and in a permanent way,” according to Wikipedia. Blockchain is the backbone of Bitcoin and other cyber currencies.
“Blockchain is the backbone of Bitcoin and other cyber currencies”
If “they” are right, this technology could change the foundation of the worldwide economy, which is in fact built on ledgers, contracts and records.
Adoption to this radical new approach is, of course, a massive challenge. Its peer-to-peer foundation, versus backing by a government or major corporation, and its digital nature are both important parts of the hesitancy to use it.
However, reconciling multiple, non-connected accounts and ledgers in a business is tedious work, at risk of human mistakes. Blockchain means a single source of truth. “Companies are already using blockchain to track items through complex supply chains,” according to HBR.
Clearly, there are benefits to this technology, although widespread adoption and fulfillment of its enormous predicted capabilities are likely to take many years.