Blockchain – A Beginner’s Guide
If you haven’t heard about BLOCKCHAIN until now, I assume you might be living on some isolated island without much of human company. I guess you would have google’d Blockchain at-least once until now to quench the ‘need to know’. I’ve scavenged hoards of beginner guides promising simplicity and understanding to scratch my own itch of getting up-to-date, but sadly most of them were too superficial and useless.
You’re most likely reading this as a result of peer pressure or have a thirst to learn, or you want to know enough to be able to discuss it with confidence at your next high profile “impress all” meeting. Irrespective of the reason, I gift you a crash course on blockchain that won’t confuse you more but give you a slight nudge in the right direction.
So what exactly is Blockchain?
To understand Blockchain, it helps if you get to grasp the idea of Cryptocurrency (e.g. Bitcoin) initially. Bitcoin is associated with unregulated Digital Currency, designed to supply “trustless” transactions through associate Open Ledger system. What this implies is that transactions between two parties don’t need all the levels of trust systems we currently use (e.g., a bank, a check clearing house, a card processor etc) for the transaction to be deemed safe and valid. Instead, a combination of public publishing of the transactions and cryptography are used to ensure the trustworthiness and the validity of the transactions.
(Cryptography is a proven method of storing and transmitting data in a certain form, that also involves encoding and decoding of data, so that only those for whom it is intended can read and process it.) In order to achieve this securely, Bitcoin transactions are stored and transferred using a distributed ledger on a public, open peer-to-peer network. This ledger system is called a Blockchain.
To put it in simple terms: Bitcoin is an application that has Blockchain as it’s core, a cryptographically validated public ledger. So because of this, once an entry is made, it can’t be edited or deleted but can be appended with an updated value by adding a new block to the chain of blocks that make up the ledger that are then distributed around the network for validation, pretty cool huh?
A large number of the transaction systems that we use, suffer from a handful of limitations that Blockchain can either avoid or totally eliminate. Take for example, the money you use to pay your credit card bill may leave your bank account quickly but might take days to reach the end creditor. And obviously cash has quite a few limitations too; it’s only good in person, locally, and in relatively small amounts. Add to that: scams, online fraud, and old-fashioned human error, and you start seeing the value and potential of a system like Blockchain.
Why Blockchain is becoming more mainstream
In a recent Blockchain study made by IBM, they found that a third of the Three Thousand executives they surveyed are already using or considering using Blockchain based solutions for their business. And the full 100 percent of those surveyed expect that blockchain will be instrumental in supporting their business. Blockchain distills down systems of systems into a shared online ledger that can track everyday essentials — from financial transactions to SKU ID numbers. It’s a many-copied public ledger that is validated by the crowd participating in the system — whether you’re a banker, a government agency, a consumer, and so on.
On their THINK blog, IBM details several use cases for blockchain, such as tracking high-value luxury goods, digitizing and sharing documentation for global trade and shipments, circulating and transferring government files, and managing food safety. Blockchain has become a proven way for business operations across all industries to become efficient and accountable, for the benefit of both businesses and their customers.
Companies within Financial Services, Healthcare, Energy and other industries are literally racing towards Blockchain — the foundation of Bitcoin that swears to improve the efficiency of a number of processes, in addition to creating new business opportunities for companies. But the truth is, many are doing so just because of the fear of missing out, without a clear direction around it’s applicability and the timing of its implementation. Well, there has to be multiple layers of analysis and feasibility studies undertaken to understand the short term as well as long term opportunities and challenges, which would be instrumental in deciding about the right time to jump into the BLOCKCHAIN bandwagon.