The BlockChain: Why does it matter?
This is a Blockchain discussion designed to move the conversation back to the business view… seeking to enable readers to better understand the return on that investment to their business. In this case: just what is the blockchain; why and how does the blockchain matter to business; and to separate blockchain, contextually, from Bitcoin and other cryptocurrencies.
Does the Blockchain Matter?
First things first: a definition. The blockchain – which by the way pre-dates bitcoin by a good many years – is a mechanism – or system, or protocol, or set of rules – which enables “trustless transactions”. These are automated transactions that are contractual, guaranteed, secure, legitimate and which do not require human intervention and which, due to the inner workings of the blockchain, cannot be altered… it is a single, trusted, fconsensus version of the truth.
A Single Trusted Version of the Truth – derived by consensus considering the perspectives of all users of the system – is one of the ‘holy grails’ of info and data technology… and the blockchain moves things up to an entirely different level, enabling cross-sections of inter-related order to the chaos that the sheer masses of big data have introduced.
Blockchain-based solutions, architected correctly, will create the opportunity to develop big data value chains and interconnects: data that could impact the precision, reliability and delivery of services across industries. So, from my almost-forty-years-in-the-industry p.o.v. I would easily rank blockchain in the top 5 most critical computing inventions / advances of all time: yes… I do think that the blockchain matters.
BlockChain the Mechanism v. BitCoin the Product
Broad awareness of the blockchain has come to the forefront due to Bitcoin (which uses a public blockchain to secure, map, validate and audit virtual currency transactions). But cryptocurrency is only one type of “scarce asset” (or zero-sum properties) to which a blockchain is ideally suited. These are unique items, digital or legal digital representations of physical elements (for example, an electronic property certificate of ownership, or my personal medical records)… something that, by definition, is “proof that I have it, which proves that nobody else has it”.
Each transaction related to that property is stored in a block, with each block linked to every other transaction related to that “asset” (past and future). With real estate as an example, the blocks would range from land surveys, building blueprints and planning approvals through to records of mortgages, tax and insurance – and every contract along the way.
This video from IBM (https://youtu.be/MKwa-BqnJDg) provides a solid, not-too-technical (and surprisingly non-commercial) overview of both… which goes to prove my point: it is non-commercial because while they want to help you on your blockchain projects but they just don’t know what they are yet… and neither do the customers!
So, it is quite easy to differentiate Blockchain from Bitcoin: blockchain is a delivery vehicle providing security, accuracy and veracity of data whereas bitcoin is a rather hyperactive cryptocurrency which uses blockchain to securely control, manage and validate all transactions.
Another way to express it is that without blockchain there would be no bitcoin, but blockchain doesn’t need bitcoin. It is a clever approach to data management and sharing that can solve a myriad of business and government problems, with or without a token / cryptocurrency element… even if those solutions haven’t yet been realised, let alone considered.