Why Blockchain Matters
This article will explore the potential use cases of Finance, Censorship and Document handling.
But, first let’s begin with what “blockchain” actually means.
What is a “Blockchain”?
Blockchains are networks storing immutable records, protected by cryptography. The result is a “trust mechanism” without human intervention. Ok, great. But what does all that mean?Networks
– Connected Computers (Nodes). Verifying transactions, using a range of consensus (agreement) mechanisms.
Immutable records
– Cannot be changed. Previous entries cannot be deleted or modified; they can only be added to.
Cryptography
– Data is encrypted using a Public Key and Private Key. One-way Cryptography makes traditional hacking impossible.
Banks for example are a “trusted third party” who verify data and maintain a ledger of transactions. Blockchains perform the “trusted third party” process using cryptography, hence the term “Crypto”.
The first industry to experience the impact of Blockchain technology at scale is Finance, in the form of Bitcoin, Cryptocurrencies and DeFi.
Finance and Blockchains
The potential of Blockchains is clearly demonstrated in the success of Bitcoin.Bitcoin is now the world’s third largest currency, when measured by market capitalization of currencies in circulation…behind only the USD and EURO. This is a significant achievement in only a few years.
Bitcoin is now being accepted as legaltender is some countries. This will lead to widespread acceptance. No one wants to be first and then no one wants to be last. People can transfer value to each other avoiding the traditional finance system altogether, which is why big corporations are paying attention and investing large sums to develop this technology.
Companies like Visa, PayPal and Goldman Sachs to name just a few are pouring billions into this emerging technology, lest they go the path of kodak inventing digital cameras and thereby inventing their own demise.
“…filmless photography…that’s cute – but don’t tell anyone about it.”
Blockchain products (DeFi) in the world of finance are growing at a dizzying pace. Everyday banking transactions like deposits, transfers, lending, borrowing and even financial derivatives are among the first “real world” use-cases for Blockchain technology.Kodak management – New York Times 2008
DeFi (Decentralized Finance)
Users in the DeFi space own the platform through tokens and receive fees for providing liquidity to the system, or “staking” and transactions like peer-to-peer payments, lending, borrowing and financial derivatives.Instead of funds sitting dormant in a “savings account”, interest rates of 10-30% are readily achievable in DeFi. (Not financial advice – please consider risk).
“Finance” is slowly being turned into “Defi” and people are paying attention.
Anyone can now become the bank.
Web 2 vs Web3 Networks
You may have heard the expression “Data is the new Gold”.The profits generated by companies like Facebook, Google and Twitter show how the personal information we store on their database is sold and controlled to their benefit. This is the web 2.0 business model.
“If you’re not paying for it, you’re not the customer, you’re the product being sold.”
How about instead of being rewarded with a little heart or a thumbs up, you earn a share of the profits generated by the platforms you participate in? Blockchain offers a solution, a way for users to maintain data ownership and control through their private key.Andrew Lewis 2010
Ecosystems are now being built by users and developers who through their participation receive a share in the profits via tokens. This is the web 3.0 shared-business model.
These web3 applications are now being built and will form the foundation of the next internet.
Removing duplication duplication
Imagine a large company handling documents for customers, other businesses and the myriad of contractors they deal with. All these “touch points” for updating and handling documentation requires all parties to maintain databases, security systems and checks & balances to verify document and transaction integrity.Blockchain addresses this duplicity by maintaining one central document.
Users can access the document with their Private Key. The document can be modified, but previous versions cannot be modified or deleted.
Blockchains create a “custody-chain” which is always visible by all parties.
Final document status can be agreed to by all parties with private key verification.
Companies benefit with the reduction of staff, infrastructure and complex systems.
Blockchain future
Blockchain is disrupting traditional industries and will create as yet unseen opportunities.Bitcoin with a market capitalisation over $1 Trillion and daily transactions over $30 Billion has demonstrated trust and reliability in blockchain technology.
SocialFi platforms like Torum are growing rapidly. Web3 technology is providing a mechanism for users to reclaim their data, remove censorship and reward users and developers for how they choose to engage with a platform all while maintaining privacy.
The next evolution of Blockchain is “Smart Contracts” like Ethereum. They take the concept of a simple ledger (Bitcoin) and instead allow for complex contracts and computer code to run on the blockchain. These Decentralized Apps are already gaining traction in the gaming an NFT space.
Blockchain is here to stay… watch, learn and listen… you may just figure out a way it could streamline your business operations and position your product ahead of the pack.
Nobody wants to be first, then nobody wants to be last.
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