Blockchain: Fad or future?

Blockchain underpins Bitcoin and other cryptocurrencies

David Baddiel Tries to Understand is a BBC Radio 4 series. David investigates a topic suggested by someone then plays back his understanding to them. This week’s post should, perhaps, be called Phil Tries to Understand Blockchain. This technology came up in conversation, over a family dinner, where it became apparent that we did not understand it well. Hence, here’s my attempt to play back what I’ve learned about Blockchain. I will explain what blockchain is, its uses to-date, pros and cons, and its potential future. Radio 4, here I come.

What is blockchain?

The 3 epochs of the Internet: 1. Web, 2. Mobile, 3. Blockchains - Naval Ravikant

Blockchain is a distributed database that is shared among the nodes of a computer network. It is a secure, transparent and tamper-proof way of storing information. Each block in the blockchain contains a number of transactions, linked to the previous block in the chain. This creates a chronological and immutable (unchangeable) record of all transactions that have ever taken place on the blockchain.

In 2008, Blockchain was released by the anonymous creator of Bitcoin, Satoshi Nakamoto. Bitcoin is a cryptocurrency that uses blockchain to track the ownership of digital tokens. Since then blockchain has been used for a variety of applications, including supply chain management and healthcare.

Uses

With Bitcoin trust is no longer a matter of faith in institutions, but a matter of code and cryptography. - Arif Naseem

In addition to cryptocurrencies, Blockchain has been used for:

• Financial transactions: Monitoring financial transactions, e.g. payments, loans and investments. Transparent transactions help reduce fraud and errors.

• Supply chain management: Tracks the movement of goods and materials, improving traceability and preventing counterfeiting.

• Healthcare: Manages medical records. This improves care quality and makes it easier for patients to access their records.

• Voting: Secure and transparent voting system which enables remote engagement.

• Intellectual property: Tracking ownership of intellectual property, e.g. patents and trademarks, preventing piracy.

Pros and cons

Blockchain advantages include security, transparency and immutability. Blockchain is a secure technology, using encryption and distributed networks. It is difficult to hack. All transactions that take place on the blockchain are visible to everyone on the network. Once a transaction has been added to the blockchain, it cannot be changed. This makes it very reliable for storing important data.

The disadvantages of blockchain include complexity, cost and energy consumption. Blockchain is a complex technology so can be difficult to implement. The cost of setting up and running a blockchain network can be high and it is energy-intensive.

Future

Blockchains will replace networks with markets. - Naval Ravikant

Blockchain is a fledgling technology which has the potential to revolutionise many industries. Potential applications include:

• Smart contracts: Self-executing contracts used to automate transactions, e.g. payments, loans, and insurance.

• Decentralised applications (DApps): Applications that run on a decentralised network.

• Internet of Things (IoT): Secure and manage IoT devices which prevents hacking and data breaches.

• Government: Improve efficiency and transparency, e.g. track spending and storing public records.

As the technology develops, we can expect to see more innovative applications. Hence, I believe blockchain has a bright future and is not just a fad.

Other resources

Blockchain facts by Investopedia

Blockchains are the future interview with Naval Ravikant

My 5 Step Learning Process post by Phil Martin

In our celebrity crazed world, I tip my hat to the enigma that is Satoshi Nakamoto. Our future may be shaped in ways they could not have imagined. I wonder if Satoshi and Banksy know each other.

Have fun.

Phil…

Blockchain: Fad or future?