Why is Blockchain Such a Big Deal?

• Toshendra Kumar Sharma
• May 16, 2018

There is no doubt that Blockchain and Cryptocurrencies have received a ton of media attention over the last few months because of the incredible profits that people have seen in their investments. Blockchains come with the promise of more efficient and self-propagating systems that will form the basis of a new market economy. To that end, Blockchains can help eliminate mediators and save transactional costs due to their decentralized nature. Therefore, Blockchains are expected to become major disrupting forces in industries like the supply chain industry, finance, and banking. Let’s take a look at the most significant advantages that Blockchains have to offer.

Blockchain: A Brief Summary

As most people now understand, a blockchain is at its core, simply a decentralized database that resistant to tampering. Network participants are collectively responsible for securing the network and for making sure that the network functions efficiently. The collective computing resources of the network participants help prevent Bitcoins from getting hacked. The amount of computing power required to conduct a successful attack on the Bitcoin network requires so much capital that it is simply unviable for any person or corporation to accomplish. For the first time in human history, this has enabled a trustless way for people and institutions to transact with each other without going through trusted intermediaries. Eliminating these intermediaries not only brings down transactional costs but also prevents against devaluing of currency from excessive printing as in the case of fiat currencies.

For example, the maximum number of Bitcoins that will ever exist was established at the time of protocol creation to be set at 21 million Bitcoins. This makes Bitcoin a good store of value because it has a fixed supply. By comparison, all of the fiat currencies are inflationary by nature and therefore lose a lot of their purchasing power over time. $100 could buy only about half as much products in 2018 that what they could have purchased in the year 2000. This is a big problem for countries with a large percentage of older populations who have their life savings in fiat currencies. In countries like Venezuela, which have seen close to 9000% inflation in recent years due to their Bolivar debasement, Bitcoin has been a compelling store of value that many people have turned to for acquiring even essential commodities.

The Power of Blockchains Beyond Finance

The decentralized nature of the blockchain makes it an tamper resistant truth ledger. That means that its implications exceed just that of a shared ledger of transactions to that of a source of truth that people from around the world can agree upon. Real estate deeds are one such area that benefits the most from employing this benefit. The current process of clearing a land title is slow and expensive and requires the hiring of a professional to facilitate the process. Blockchain-based land title solutions which are currently in the works could save home buyers millions of dollars every year and also make sure that the paperwork is immaculate.

Second generation blockchain platforms like Ethereum added the functionality of Smart Contract which is a piece of code that can be executed in a decentralized fashion. This has enabled for the first time in the world to have ‘programmable money.’ Since its inception, Ethereum has seen a massive amount of development everywhere from fair betting games to prediction markets, decentralized computers, and distributed oracles. Some of the prominent Ethereum based projects include:

Bloom – Bloom provides several of the traditional banking solutions like identity attestation, risk assessment and credit scoring for the blockchain economy. The entire protocol is built on Ethereum and therefore does not rely on a central figure to do the processing for it.

ETHlend – ETHlend is one of the first blockchain based projects that provide blockchain backed loans and creates a secure financial marketplace for peer to peer lending agreements using Blockchain and Smart Contracts. Cryptocurrency assets make for some of the best collateral assets as they are very easy to assess and securely hold.

Civic – Blockchain based ID services that bring down the cost of services like Know Your Customer (KYC) and allows for greater control of users personal information.

Golem – The world’s largest decentralized supercomputer that will allow individuals to use and rent out their computing resources to get paid in the Golem Network Token.