RSK CEO Diego Gutierrez: How Bitcoin Will Transform Information Sharing
At the World Blockchain Forum in New York City, RSK CEO Diego Gutierrez explained how Bitcoin and the blockchain will revolutionize the way we transfer value over the internet. According to Gutierrez, blockchain can succeed in doing this because it offers something totally unique and innovative.
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Internet: The History of Evolution in Transferring Information
Gutierrez explained to the audience that the internet brought about a change in the way we transferred information.
Before, we traded information through analog means, such as sheets of paper and ledger books. This method created barriers that prevented us from communicating with each other based on things like geography and a person’s status in society.
But with the internet, we became able to transfer information in a way that included a much larger portion of the world. The internet, Gutierrez said, enabled the formation of the global society we live in today.
However, even with the internet, the way people transfer value is still very similar to old methods, complete with the old barriers. As a result, we have left billions of people without access to the global economy. This has left them in poverty and confined to transacting in their local — and often broken — economies.
According to Gutierrez, the systems we have for transfering value — although digital — are not fully interoperable with other systems around the world. This lack of interoperability has created inefficiencies that ultimately exclude many people from the digital economy.
Additionally, these systems often create incentives that lead their administrators to enrich themselves rather than serve the interests they represent, making the excluding effects even more severe.
Bitcoin: Breaking Down Inefficient Systems in the Modern Age
While explaining the flaws of current value transfer systems, Gutierrez said, “if you asked me about [these systems] ten years ago, I would have said, ‘yes, that’s how things work.’”
However, he added, a new technology emerged almost a decade ago that will change how these things work. That technology is Bitcoin.
Before Bitcoin, the internet did not contain a way to securely transfer and preserve value at the same time. Stored as digital files, valuable pieces of data can be replicated infinitely, which would destroy any value they originally held.
Thus, you could store valuable data and record its ownership on a database, but you could not prevent it from replicating and losing value.
Gutierrez used the rise of online piracy as an example of this problem. When record labels began distributing music online as MP3s, people copied the files and shared them for free. This practice resulted in massive financial losses for both the labels and artists.
Consequently, record labels had to change the way they managed digital music. They kept the files in private databases and only gave consumers access to music if they signed up for a subscription service, or used a streaming application that displayed monetized advertisements — like Spotify.
Bitcoin changed the game by solving the replication problem with its blockchain technology. The blockchain, Gutierrez explained, acts a public database that stores and records ownership of data, but also prevents replication.
As a result, people can publicly trade data on a blockchain while its value remains intact — thus solving the problem the music industry had during the height of online piracy.
And this ability goes far beyond currency.
Blockchain: The Internet of Value
And so, Gutierrez said, the blockchain can and will usher in a new era of online communication.
The blockchain will achieve this based what boils down to its essential parts:
- A public database
- A Proof of Work consensus algorithm that creates economic and technical incentives to stay honest when recording and transferring ownership of valuable data
- A decentralized network protected by consensus-based rules, making it essentially impossible to hack
These essential parts work together to create an immutable database. A technology with the ability to revolutionize essentially all online systems. A technology that cannot be hacked or manipulated by people wanting to destroy digital value.
Thus, with the blockchain, Gutierrez said we will eventually see what he called “the internet of value.”
What will this internet of value look like when it is fully developed? What uses will the blockchain have beyond currency? Watch Gutierrez’s full presentation at the World Blockchain Forum to find out.
Image via Tedx Rio de la Plata