Blockchain: Myths and Realities

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A couple of years ago, the world got introduced to Bitcoin, i.e. peer-to-peer money. Its underlying fabric is distributed ledger technology based on blockchain. The world is asking the question whether blockchain is the greatest technology or the biggest hype. Let’s see, what is actually happening in the world of BItcoin. Is it the greatest innovation since mobile Internet, even beating the Internet or the largest load of hype ever arranged around an innovation in the history of technology. The point to be noted is ‘this happens with the advent of any new advanced technology’.

If we closely observe blockchain, it is at the crossroads where the Internet was in 1992 with respect to technology, deployment and adoption patterns. But the hype is comparable to Internet of 1998. So what happens next; are we going to face the biggest shakeout? When the storm settles down, we may get a clearer picture.

The current moment is strange when the underlying fabric truly is massively innovative and disruptive. We are converging towards realizing the dream of the largest civilian deployment of public key cryptography ever, i.e. bitcoin. If you ask in the cryptography world, nobody thought we would be leveraging Schnorr signatures and advance elliptic curve applications. Add to it, ring signatures and range proofs of confidential transactions. To simplify, we are building a whole new world based on cryptography.

Let us break one primary myth, i.e. blockchain is the only technology behind bitcoin. The four foundational technologies which came together are blockchain, proof of work, P2P network, and cryptography. The essence of public blockchain is the ability to operate in a decentralized way without the need to trust anyone. With this essence, one can run a decentralized, trust less system that does not rely on anyone as an intermediary of trust. So blockchain is trying to re-architect trust as a concept. And this is the disruption! The same disruption is leveraged by Ethereum also for the application of smart contracts. The smart contracts will only work if one does not have to trust anyone for the execution of smart contracts and is directly proportional to participation of everyone in an open manner with access to consensus algorithm and enabling verification of information independently.

Remember these keyword while defining blockchain ‘open, borderless, transnational, neutral, censorship resistance ‘.

The exciting part of blockchain is the possibility of fundamentally changing the way we look at trust on this planet. It is opening up the ability to collaborate, transact, and engage on a global level with everyone. For example, simply by downloading an application one can become part of giant platform of trust that does not consider conditions such as who you are, where you come from, permissions to participate. So tomorrow, a teenager with great Java skills may have the same influence as of the biggest investment bank of the world.

The market is examining the potentials of blockchain. At this time, the market is able to grasp sometimes and in some moments they confront darkness. When we have a brand new technology, one cannot see the margins. This is the dark room of business. When the doomsayers were writing against Internet in 1997, somewhere, Larry Page and Sergey Brin were building the world’s biggest search engine.

As an evolving species, we need to remember that mass adoption of any new revolution takes time. For the first 15 years of Internet, the application was email, not everyone had it. The second layer only came when market saw the critical density of adoption. Blockchain is suffering from the same fate. In future, may be we stream money as we today stream content in the contemporary era of Internet. Give it time!

Join us at DSCI’s Best Practices Meet 2018 to discuss more on the past, present and future of distributed ledger technologies. Click here to know more.

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