Bitcoin started the talk about cryptocurrency, which continued to evolve through Ether, Ripple, etc., and has become a pretty hot topic by now. There probably isn’t anyone who is not trying to figure out how to make money by investing in cryptocurrency, but serious developers and entrepreneurs are diving even deeper – into the use cases and possibilities of blockchain, the encrypted database technology which stands behind the creation of Bitcoin.
In simple terms, blockchain can be described as a digital and decentralized public ledger. Its main purpose is to track record transactions across computers, so it’s able to disrupt all subsequent blocks in the network if the certain record has been altered. This means that every transaction leaves a permanent record, so, in theory, all remains in the ledger and nothing is ever lost. Let’s see the impact of this on our economy and the way we do business in the future.
What is The Integrity Made of?
As its name suggests, blockchain is, at a very high level, a chain of blocks which exists in a database. Each of these blocks contains batches of transaction which are hashed and encoded. Each of them also includes the cryptographic hash of the prior blocks in the chain, which enables the linking of blocks in this chain. Basically, this is what forms the integrity of the system, meaning that the chain can be easily traced to the original block.
Since all the blocks are bound together by encryption, the alteration of one block essentially alters the others down the chain, so it’s easy to detect if someone has tampered with the information. The data within is also replicated on every computer within the network, so it’s easy to verify it for each block. This all leads to a shared database which is transparent and protected from revision, tampering, and deletion. Even contracts can be embedded upon this database, so the possibilities for building on this technology are quite endless. It has the potential to disrupt multiple industries, alter our social and economic systems, and essentially transform the way we do business.
The End of Corruption
If blockchain is used as a bookkeeping platform, it would be able to completely transform finance and politics. The technology behind this financial leger is completely transparent and incorruptible. Therefore, it’s a perfect tool to put an end to institutional, political, and financial corruption. It is also able to reduce errors in payable and receivable accounts due to its automated verification and encryption. Data associated with any given transaction is secured, date and time verified, and all the participants identified. Of course, this will not completely eliminate the need for accountants and bookkeepers, but it will automate processes and enable monitoring in real time, which will make easier for them to stay abreast of issues or changes.
No Financial Stand-between
The impact of blockchain going mainstream will undoubtedly be the biggest in the financial industry. The reason is quite simple – it will basically eliminate the need for any financial institution to stand between two parties who are looking for financial exchange. Since the database is essentially a giant ledger, there’s literally no need for a bank account – all you need is a smartphone. This is not important only because of the fact that there would be no more bank fees, but also because some industries still surrounded by heavy controversy will have more freedom in doing business. If you take a look at the legal cannabis market, you’ll see that all those medical marijuana programs are available more than ever before precisely thanks to cryptocurrency. Basically, no banks will mean more flexibility and freedom in many business areas.
Contracts Without The Middle Person
Blockchain also offers the road to smart contracts, since it eliminates the need for a middle person to execute the contracts, enabling the exchange of services and goods to be automated. Not only these smart contracts will automate the delivery of any payments associated with them, but both parties will still be held completely accountable due to the fact they exist in the ledger. So, once both parties have fulfilled their end of the bargain and the deliveries have been received, the contract is completed. Of course, some complex agreements may still require professional legal input to write and execute so lawyers won’t become obsolete, but as far as simpler agreements are concerned parties will be able to work with each other simply and directly.
Easier Management Without Analytics
These smart contracts also make the blockchain a great tool when it comes to project management. Every project plan could be executed using the series of smart contracts which make up what’s needed to complete the project. It would also be quite an improvement in executive reporting since it would essentially eliminate the need for analytics such as calculating the earned value or percentage complete.
As you can see, a common thread among all these use cases is the elimination of intermediaries. If the records and transactions would be kept and monitored within the blockchain, this could lead to an end of the institutions of investing and finance, banking, and law.