Disruptive Blockchains Decrypted : Introducing The Internet of Value

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Disruptive Blockchains Decrypted : Introducing The Internet of Value

How many of you foresaw the advent of the internet age before it became a staple of our daily lives? Chances are, very few of you. Certainly, the average person couldn’t have anticipated just how much the internet would change our lives. Global access to the world wide web  has altered the way we consume information; how we communicate, learn, and conduct business. Over the course of several decades, an entire ecosystem evolved – one that we could never have been predicted, especially in those early years.

Similarly, the technology that underpins Bitcoin (a well-known crypto-currency) has now been around for almost a decade and has started to hit the mainstream media and non-technical observers.

Blockchain is a peer-to-peer public ledger maintained by a distributed network of computers that requires no intermediary or central authority. Essentially, it is a collection of mathematical algorithms and communication protocols that guarantee a level of security and authenticity for storing information.

If the Internet is dubbed the protocol (a set of rules) that facilitates communication, then the blockchain is considered the successor (or rather an upgrade) of that protocol. Don and Alex Tapscott, the authors of the book Blockchain Revolution declared blockchain to be the ‘Trust Protocol‘.

As the successor to the internet protocol, blockchain will be instrumental in forming the ‘Internet of Value’ – a world where money is transferred as easily and quickly as is information on the internet today.

To understand the fundamentals of blockchain is to grasp the attributes that blockchain has. A well summarised article on The Magic of the Blockchain concluded it’s attributes to be; a ledger that is immutable, distributed and cryptographically secure. Distilling this jargon further you’ll get the following :

Ledger : A historical record of trades and (or) transactions.
Immutable : Once a trade is recorded on the ledger, it is permanent and temper-proof.
Cryptographically secure : Everyone can trust the information at hand even when it’s gone through multiple processes and users. Allowing for independent verification.
Distributed : Everyone within the network (blockchain) gets a copy of the information on the transaction and everyone is always synced and updated with everything.

In The Single Truth We Trust

So what does it mean for a protocol with these inherent qualities? Well, it goes back to the design and purpose of blockchains; technology that ensures a secure, efficient and transparent transaction of data and or value (Bitcoin). More importantly, it is a public ledger that everyone can inspect, but which no single user controls.

However, we live in a world where multiple record keeping systems maintain the same data, clearly not the most efficient way of working together. The problem is that it everyone’s data eventually has to be reconciled with one another every time transactions or batch processing has concluded. This takes time, resources and results in countless human errors.

Blockchain Ethos: Shared, Fully Transparent, 100% Decentralized

Let’s illustrate the case by having you fill-up your car at the petrol station. You swipe your debit card to ‘authorise’ the purchase of the fuel. At this point, the transaction initiates a series of steps in which you, your bank, the petrol station and the petrol station’s bank will all need to update their records whilst passing through credit services and clearing houses.The experience may seem instant, but the process of actually transferring the cash from point A to point B takes several days, if not weeks when cards are involved.

By blockchain standards, this seems like a dystopia. Especially when there is a lag between the trade and settlement, facilitated by the movement of money (which is slow). So how do you fill up your car in a blockchain enabled world ? You simply add a transaction to the blockchain stating that some funds you control (an amount someone else has transferred to you) now belongs to the petrol station. This happens instantaneously and is real time in which by definition, the trade is itself its own settlement. In other means, the record of trades IS the money, which leaves a fundamental question to be asked – What is money ?(We’ll discuss this in the next blockchain series on how it will disrupt the financial sector.)

This is what is meant by the ‘truth’ in the context of blockchains, the merging of information and value stored in a distributed ledger technology which “. . . allows ‘trusted transactions [to happen] directly between two or more parties, authenticated by mass collaboration and powered by collective self-interests” wrote Don Tapscott, author of Blockchain Revolution. It is not surprising an article in The Economist eluded that “spread of blockchain [can be disruptive] for anyone in the ‘trust business’- the centralised institutions and bureaucracies, such as banks, clearinghouses and government authorities that are deemed sufficiently trustworthy to handle transactions.”

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