Blockchain and cryptocurrency are the hot kids on the block that many people are talking about and have high hopes will change life as we know it. It has been long since we had this much enthusiasm and saw a technology talked about so avidly ever since the iPhone, iPod debuts and maybe the internet of things.
Technology has been evolving faster than ever before, from the birth of the internet out of a lab at CERN to digital spaces such as AOL, MySpace, MSN, Yahoo, Google and Facebook. The world is more connected than ever, so is technology.
Previously we relied on physical long cables to transfer data from one machine to another or large physical storage mediums to share data, but today you can access almost anything from a cloud drive or a centralised system over the web.
Blockchain is the new network and is going to help us decentralise trade allowing us to do transactions without intermediaries like banks or companies. I believe by the time you’re done reading this article, you will have an understanding of what block chain is. Blockchain is built to provide a way to transfer value, key emphasis on value and not just money. Blockchain technology is the persistent, transparent – public, append only ledger. A digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly.
Blockchain is usually better explained this way; you want to send money to Tukei, it will transfer the money from your wallet to Tukei’s wallet and register this transaction through numerous ledgers say 3 or more which check and confirm the transaction. Then they reflect the new balance on both wallets.
How Blockchain works
The devices that verify these transactions are called nodes and might often be run by miners too. This eradicates the need for a sole middle man which makes it had to control, sanction or censor the entire blockchain or system. The small fee charged per transaction/transfer is used to pay the several nodes on the blockchain that verified that transaction.
If you think about it, for some crypto currencies that are not so resource intensive, anyone including yourself could participate in the process or setup a node.
Let’s make it simple with an example; imagine you had a product you wanted to sell on eBay that is already a transaction going to happen because there is the buyer and the seller with eBay as the intermediary.
However, the same transaction can be done with blockchain where the seller is directly connected to the buyer, but there is still a middleman at the trade level. Only difference is that this time the middleman doesn’t dictate who you buy from, what you exactly buy, how it is delivered, who sells there, the money you pay or how it is handled.
Initially block chain was designed to be the backbone of cryptocurrencies, but it has grown beyond a singular function to be anticipated as a potential driver for numerous innovations that would benefit from decentralization such as in health, social media and online privacy.
Some people even thought it would be the new Internet, but clearly that was excitement for its plausible applications at the time. Today, block chain has silenced down a little because of the unfavourable instability cryptocurrencies have been facing since early this year, with Bitcoin dropping from $20,000 to $6,500 today.
This unreliability brings pessimism and stalls the dream that most people on the crypto bandwagon had anticipated, a true economy with close to no intervention from a third party like the government, large multinational corporations and the wealthy since it eradicated the need for intermediaries like banks.
This was not thought through though because intermediaries still propped up and they still have some control on what happens to cryptos. For instance, several exchanges and wallets exist which you need to trade (buy and sell) or keep your cryptocurrency.
You could do without them, but unless you are tech savvy the process can get complex, time consuming or even risky as seen by cases of people who have lost passwords and given up more than $1,000,000 or more worth of currency on their self-managed wallets.
This situation has created companies that can reject or approve which crypto can be traded and in some cases even ban or throw out some which indirectly controls the market forces of demand and supply for crypto.
This defeats the whole purpose of decentralization other than providing anonymity from traders by cloaking their identities. This too has been disputed for some crypto currencies like bitcoin.
I like how Michael Dunworth, CEO of Wyre Inc explains block chain and crypto currencies on LinkedIn. “When you think of blockchains, think of them just like a country. They’ve got their own different policies for decision making, they’ve got a different currency that they operate with, and they’ve got different audiences that it appeals too, along with larger visions of what they’re trying to accomplish.”
For instance, if the bitcoin blockchain is a country then, Ethereum is another country.
There are numerous organisations experimenting with other applications for blockchain technology such as AskFM with its social system for asking and answering questions which later fetch reward; Linux Foundation, Digital Asset, Intel, IBM and numerous other founding partners (close to 30) created the open source hyper ledger (hyperledger.org) which is being applied to health, supply chain and finance especially their popular Hyperledger Sawtooth.
Blockchain technology is already being applied in a lot of fundamental sectors despite most industry leaders not having the exact idea on what it could really be used for yet since the science around it is not like the alphabet, we look to everyone to suggest or experiment with how it could change the future.
Why is it important?
Truthfully, this is more of a science and it is going to keep on growing. We are not only going to see blockchain evolve, but also other technologies like Artificial Intelligence and Internet of Things.
I see blockchain and other technologies heading in this interesting synergy that will help us elevate the institutions we have used before to create that identifiable and verifiable trust. It may sound complicated, but at its core it is just like any other tool that will help humans to trade at a decentralised scale.
1. Quote from Michael Dunworth
Author: Emmanuel Luvuuma
Emmanuel is a freelance writer and an advocate for digital inclusion across Africa. He has taken on many roles such as the Community Manager for Kafeero Foundation, a Digital Skills trainer and as an IT Support Guru.