No doubt you have heard the term “blockchain” and are seeing the hype. In the last 3 decades, we have seen similar exuberance with other technologies. Some of them mature to a point where new business models are created that change the way the world works. Many of them become a step in an evolution. Some will simply fade away.
If you’re feeling a bit behind, don’t worry. It’s not too late.
So what is blockchain?!
At its core blockchain is not new technology. It is a mash-up of technologies that have been around for years. It is commonly referred to as a “distributed ledger technology”. It can encode trust and authenticity in software systems in a way that can fundamentally change the way business systems work today.
Blockchain is the underlying technology of many cryptocurrencies like Bitcoin. Bitcoin coincidently was created during the 2008 financial crisis where corrupt parties violated the trust of its stakeholders.
Cryptocurrencies significantly reduce or eliminate financial intermediaries and allow parties to exchange value directly. This reduces an overhead. More importantly, it reduces the need for trust because it implements trust within the technology through a public ledger.
A blockchain is a chain of blocks. Each block is a transaction or record. This chain is a ledger, a system of record, that is distributed across potentially thousands of computers worldwide and uses cryptography to make it almost impossible to hack.
Cryptocurrency is just one way to use a blockchain. There is a lot of hype around it, it does have the potential to fundamentally change how we interact in business and transact in our personal lives.
Blockchains can be used wherever you have many intermediary parties and the need for trust & record in an ecosystem, like:
- Trusting that a skilled trade contractor is reputable (Reputation Management)
- Ensuring title to assets like real estate, automobiles, or .mp3 files (Authoritative and Immutable Ledger)
- Knowing the history of a product’s supply chain like organic food (Provenance of Goods)
2017 Negative Hype
Leading into 2018 the Gartner Hype Cycle for Emerging Technology showed blockchain on the negative slope of hype, heading into the trough of disillusionment. Typically this happens when there are issues with the technology or impediments to adoption. This is the case with current blockchain initiatives.
Great promise and escaping the trough of disillusionment
There is a lot of start-up activity and business models are still being tested. At some point, a critical mass of success stories leads to a tipping point in which a technology makes it out of the trough.
Some indicators to watch for include interoperability of blockchain solutions, business federations forming, and legal issues working through legislation.
Some initiatives worth keeping tabs include:
How to get started!
There are a lot of good sources to begin your blockchain journey. Here are is a good list of places to start:
- How does a blockchain work
- 19 Industries The Blockchain Will Disrupt
- How the blockchain is changing money and business