Blockchain and cryptocurrencies are one of the most popular words nowadays. Everybody is talking about it or even have heard these two before, but mostly no one can really explain how it’s done, what’s behind, why is so secure (as people claims) and finally (the most important) — what kind of problems it solves (or maybe not? scam?).
Sifting through the pile of fake news
The problem is we don’t verify anything. We read some piece of information and instantly we believe that’s true. It’s easier instead of digging into that and find out on the own what’s underneath. Instead of that, we can hear so many opinions that blockchain is for everything, and how amazing it is meanwhile it’s really rare when someone mentions the real problems that could be solved by using this.
Technology that doesn’t solve anything is useless. You can create your programming language but who cares if it doesn’t introduce at least one improvement that developers will love.
Instead of yelling, around that blockchain is the future, please tell me how I can use it in my business and how it could help growth.
Of course, this market has also opponents — people who don’t believe in that technology. That’s fine, we all have rights to our own opinion. Even though, please verify your arguments, read publications, analyze algorithms, try to find answers for the questions that could confirm your doubts. If you don’t do this beforehand, conversation with you is just a wasting of time, sorry.
Blockchain technology is not perfect. Definitely, we can’t use it everywhere. There are some places where we can apply it though. Let me show where.
A quick story of value
First of all — What’s the value? What’s the value for you? Are you valuable? Is it your car valuable? Are you giving value? Those questions are hinting what’s behind the word value.
When I give something to people — I’m giving value; when I’m selling a car — I’m giving value; when I publish this post — I’m giving value; When I’m talking to someone else — it’s also giving some kind of value. To sum up, value describes that something is good/important/useful/worth for you.
value(noun) — the regard that something is held to deserve; the importance, worth, or usefulness of something.
Usually, to define value, we are using money as a kind of measurable unit, but it’s not always really accurate. The amount of money is usually fixed, and we can’t define it by ourselves. For instance, the price of a T-shirt is constant, established by the company that produced it. What if I say this price for a mentioned T-shirt is overpriced or maybe underpriced? We actually can’t guess that, but what if we would be able to affect that price as on stock shares?
Here is the modern world. Computers help us to cope with many things. We can browse quickly the information by using the smartphone, we can do shopping online, we can pay bills by one click and so on… but… we haven’t discovered the way of digitalizing the value, until now.
Nowadays, it’s possible. We can digitalize the value of everything. A car, a youtube video, your book, your house, a link, a website, even yourself.
The question you might think now — Why we couldn’t do this beforehand? — Because we haven’t had the technology for that. The value is a very sensitive thing, if you want to store this, it can’t be just a database. It must be something that is super secure, and resistant to the modification by other people — that’s exactly what blockchain is, we can’t modify data that was saved before. It’s decentralized, often even distributed, and secured by the cryptography so even if we pay for someone to change some piece of information, it’s unenforceable. However, let’s consider we did some data manipulation somehow, and we’ve changed the data — your blockchain will crash as the keys used by customers will be not working anymore.
if blockchain wins, then the only thing countries have, are weapons ~Gary Vaynerchuk
Is it a revolution? What the blockchain can change?
No, it’s not. It’s not a revolution, it’s just a next footstep as with other technologies. What does blockchain actually the problem solves? Well… as I mentioned we finally have a way to store value, but the fact is… we don’t need intermediaries for that.
Let me show you an example. You are buying a house, what you need to do? Sign a contract, go to a notary to confirm that, transfer money, change the ownership in the notary (something like that).
Estimated time: a few days. costs: notary (depends on the country, I think at least a few hundred dollars)
What’s the solution with the blockchain here? Create a digitalized contract (smart contract) on the blockchain that says who is the owner of which property. Sign in digitally by both sides (you and the seller). Congratulations, you are the owner.
Estimated time: a few minutes. costs: transaction fee (depending on the chain, but let’s say around a few dollars)
An example of the house is digitalizing a value and ownership of the real estate. Please notice that we have eliminated the middleman that reduces the cost and time of the entire operation.
I think, now you are able to think about potential solutions where blockchain could be useful, and where not.
So, let’s try to think about areas where we can change something by using that technology.
This is the most common topic that comes with blockchain. Imagine a digital bank without any central organization. You can transfer money within even a few seconds, including international transfers. Do you need a loan? Sure, on the blockchain-based bank you can do it quickly — create a new smart contract that defines your agreement and that’s it, requested money is yours.
Have you ever bought a real estate? It’s always a long process and paperwork. Using smart contracts and digital ledgers you can do such a transfer without anything in the middle — no banks, no notary, no waiting!
The supply chain is the field that used to have a lack of technology to solve their problem of transparency and reliance. Usually, that kind of path, from production to the sale is quite long, and products have to pass by many hands until reaches the customer. This path should be tracked to assure the security and reliability of the entire delivery system and eliminate abuses. Of course everything like that you can achieve now with blockchain.
This is a really big market as well. Instant payments (no intermediaries), loyalty tokens that can grow as a market share and customers can trade with it, tracking delivery, secured transactions for big orders (eg. b2b) — it’s just a few examples of usability this technology in eCommerce. Probably in the future, all of the online shops will be decentralized or at least they will be connected to a decentralized payment/token system.
Right now, our distribution of energy is inefficient. Sometimes we can even waste our energy. Imagine such a system that could deliver on-demand or even trade that among your area! Your neighbor has more energy than he needs, and you need it even more? no problem, built-in system can trade that energy itself and deliver to you.
Privacy and identity
Because blockchain is well-know as a secure ledger, we can use it as a way of identifying people (digital signature). Sometimes we want to share only some piece of our data or even we want to know something about one fact, instead of sharing an entire document. For example, you need to show for someone else that you are legal age. To do that you have to show your ID where besides your age, it contains also more data (which you probably don’t want to share). What if I tell you, you can share just an answer to the question “are you of legal age?” — it’s called zero-knowledge proof and of course, blockchain can manage that :)
Insurance, hospital databases, history of a patient — all of them require secured systems that can assure truthfulness of containing data.
Of course, it’s just a few markets, where blockchain technology is useful. There is much more. Of course, it depends on the case because as I mentioned, you can’t use that kind of technology everywhere.
It’s a scam though!
To sum up, blockchain is a promising technology, it can solve some problems but it’s not a revolution it’s rather an evolution, just the next step toward new technologies. Some people still will keep saying “it’s a scam!” and on the other side “it’s a revolution!” — they both are right, the truth is somewhere between, just analyze the market on your own, dig into that technology and decide whether it solves your/someone’s problems or not.
This text is just my opinion, what I’ve noticed, and what I’ve learned so far. You can agree with me or not. The truth is, this market is still growing and I’m observing it and you should as well, no matter what is your opinion :)