Friday, December 2, 2022

What Point Are We Missing in the Great Cryptocurrency Craze?

What Point Are We Missing in the Great Cryptocurrency Craze?

Amid this cryptocurrency frenzy of the past six months, people often forget that the real value of cryptocurrencies lies in the underlying technology — the blockchain.

Also read: Lawyer Daniel Kelman Takes on Peter Vessenes for Mt Gox Victims

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There is a lot of confusion going on regarding blockchain. A lot of people who are trying to get involved with cryptos lack a basic understanding of the technology, and how it could be applied beyond cryptocurrencies.

The blockchain concept is a decentralized distributed ledger database that has the potential to disrupt a wide variety of business processes and financial markets.

The digital revolution has introduced new and radical ways to conduct business through the introduction of new technologies.

At the core of this digital revolution is the biggest innovation in computer science after the invention of the Internet — of course, it’s the blockchain.

Not Only Cryptocurrency

At a recent panel discussion entitled “The Blockchain: Its Not All About the Money” on Sep 14th, executive director of the Center for Financial Markets at the Milken Institute Staci Warden added: “Too many people are confusing cryptocurrencies with the underlying blockchain technology. This panel is about the incredible promise of blockchains beyond cryptocurrencies.”

Yet people still struggle to understand the technology and how it could be integrated into existing industries. How will this integration affect existing markets and organizations? How will blockchain positively affect the economy in the long term?

To answer these questions, we firstly must try and understand what blockchain is, and what it entails.

What Is Blockchain?

Blockchain is a decentralized distributed ledger database that maintains a continuously growing list of records, which are named “blocks”. These blocks are secure from tampering and revision.

what is blockchain? graphic
A simple explanation to illustrate Blockchain – Image Courtesy of PWC

How is that? Each block contains a timestamp and a link to the previous block, which makes blocks very secure as any changes made are open and viewable to the public.

This is the technology underlying Bitcoin and other cryptocurrencies, and it has the potential to disrupt a wide variety of business processes and financial markets.

The main argument for blockchain is that rather than having central authorities such as banks, this technology uses the network to approve “blocks” or transactions, using cryptographic transaction data that are kept secure. The distributed nature of transaction approval and record-keeping makes the system harder to tamper with.

Many experts believe that this is the year blockchain technology will gain traction in the enterprise, and new understanding and research about the technology will lead to high-value applications and process simplifications.

It is very important to understand that blockchain technology is not layered on top of existing technologies. It requires a whole different way of thinking about the matter, and an entirely new approach to business.

There are no middlemen or third-party services involved in a blockchain transaction to verify or facilitate the exchange; that’s the point — it is all done instantly on the distributed network, with the transaction details recorded permanently on the database, making alterations public.

If we take these things into consideration, we can deduce that blockchain technology can be quite secure. Changing records would require over 50 percent of computing power supporting the network — the larger the network, the more impossible that becomes.

Blockchain in Virtually Every Industry

Although it may be difficult to predict how a technology such as blockchain will be properly and efficiently applied to different industries, it is possible to understand that there are various of potential applications and use cases for blockchain in virtually any industry.

More and more people this year have set their minds to understanding the technology and finding creative applications and uses for it.

Thanks to cryptocurrencies, most of the attention has focused on applications in financial services. However concepts, prototypes, research, and investments are emerging in every major industry, leading to innovative creations that will change technology as we know it.

Does this help to explain blockchain and its implications a little further? Let us know in the comments.

Images via PWC, Shutterstock

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