Blockchain: A Gamechanger or a Passing Fad ?

Blockchain is being widely viewed as a highly disruptive technology that is likely to impact  both industries and  governments alike in the near future. The Blockchain (and Bitcoin) technology was invented by Satoshi Nakamoto in 2008. Interestingly, even to this day, no one truly knows the real identity of Satoshi Nakamoto although an article published a few days ago argues that Satoshi Nakamoto was in fact computer scientist  Hal Finney who passed away in 2014! 

So what is the core idea behind blockchain ? Well if a picture is worth a thousand words, a video must be worth many more. I would like to invite the reader to view the following short video tutorials to get a good conceptual grasp of blockchain and related concepts.

1. What is Blockchain ?   [ Also This video ]
2. What is a smart contract ?
3. 19 industries that the Blockchain is likely to disrupt ( this video has names of startups that you can further explore on the internet) 
4. What is Bitcoin ?

Blockchain holds immense promise to fundamentally redefine our ideas of money, economy, business and society opening up possibilities to create entirely re-imagined  workflows leveraging the full potential of global collaboration mediated by digital networks. Don Tapscott and Alex Tapscott, authors of the book Blockchain Revolution, describe Blockchain as follows:

"Blockchain is a vast, global distributed ledger or database running on millions of devices and open to anyone, where not just information but anything of value — money, but also titles, deeds, identities, even votes — can be moved, stored and managed securely and privately. Trust is established through mass collaboration and clever code rather than by powerful intermediaries like governments and banks".

The disruptive nature of this technology is due to the fact that it is immutable i.e. it cannot be tampered with because it is decentralized, is in full public gaze and has no single central authority and therefore no single point of failure. Most importantly, it creates a transparent trust mechanism for unknown people to interact with each other without an intermediary. Reflecting on this trust mechanism, Professors Dirk Baur and Niels Van Quaquebeke explain[1]:

“The blockchain does not create or eliminate trust. It merely converts trust from one form to another. While we previously had to trust financial institutions to verify transactions, with the blockchain we have to trust the technology itself. When you make a traditional money transfer the bank will first verify that you have sufficient cash, and then debit your account and credit the recipient. Think of the blockchain as a decentralized version of this process. Rather than all of this information being held and verified by the bank, it is done on an open public ledger”.

Many believe that Blockchain holds immense promise in transforming Government services. An interesting article published by the Wharton Business School explains this in some detail.

Blockchain and Bitcoins are sometimes confused. Someone has nicely elucidated the difference by drawing and interesting analogy: Blockchain is the operating system, Bitcoin is one app running on that operating system.

So are blockchains and bitcoins going to live up to the above promise and change the world? As always, there are skeptics. Paul Ford, entrepreneur and technologist in an article titled Bitcoin is Ridiculous. Blockchain is Dangerous differs. There are also concerns about the negative impact of blockchain and bitcoin technology on the environment particularly due to the amount of electricity required to 'mine' bitcoins. It has been reported that Iceland uses more energy to mine bitcoins that it uses to supply power to its households. A recent article in economic times titled How is the growth of bitcoin affecting the environment? also highlights this issue. Many Governments around the world are opposed to the cryptocurrency idea.  The Reserve Bank of India (RBI) last year banned cryptocurrency in India and the matter is currently being heard in the Supreme Court of India.

Skepticism aside, I would like to conclude on a positive note with a sanguine quote from Don Tapscott:

"The first generation of the digital revolution brought us the Internet of information. The second generation — powered by blockchain technology — is bringing us the Internet of value: a new platform to reshape the world of business and transform the old order of human affairs for the better".

 What say reader ?