Why Blockchain and Cryptocurrencies are creating headlines?

If you are here, I assume that these buzz words i.e. Blockchain, Cryptocurrency, Bitcoin, Ethereum etc. have already tickled your curiosity buds somehow and you have stumbled here to seek more information on these terms. Don't worry. I will try here to explain the concept in very plain and simple English with minimal use of technical jargon. (pardon me if you are not a newbie and have already investigated a lot about this technology and may not find it of much use.)

So, without much ado let me start answering the very basic questions which might be arising in your mind about this “The next big thing- The Blockchain”.

WHY do we bother about Blockchain:

Imagine yourself currently in 1991 (when WWW came into the picture) and what if I would have told you about how the Internet is going to be an integral part of your life and suggested you to be an early bird to reap benefits out of it to transform your professional, financial and social life. How interesting it would have been now. Missed it, huh??

Nope, My friend. The blockchain is here with another chance as many arguably consider blockchain as the next generation of internet.

Although the internet has opened the doorways to utilize sharing economy and transacting money, data, content, services etc. in an innovative way, yet it is missing the most important factor: TRUST.

Blockchain can enable you to trust even strangers. It can enable you to transact your money, assets, service etc. without worrying about the history and credibility of receivers and intermediary parties involved.

You already have heard a lot about Bitcoin (and possibly other cryptocurrencies), haven't you? But let me tell you that the cryptocurrency to Blockchain is just what email is to the internet. Cryptocurrencies are the first widely popular use-case of Blockchain technology. Since past few years, Blockchain has evolved a lot and elevated its scope of implementations tremendously. Furthermore, coupled with Internet of Things(IoT), cloud computing, BigData and artificial intelligence, it holds promise to truly transform our businesses, society, and individual lives.

WHEN did It all start- Are we late now?

Shortly after the global financial crisis in 2008, an unknown person (or group), called as Satoshi Nakamoto, came up with a whitepaper on peer-to-peer cash transaction system which allows transacting money in the form of a cryptocurrency known as bitcoin, the first proposed implementation of blockchain technology. After 2009, when the first block of Bitcoin was created, this cryptocurrency has seen a huge surge in acceptance and price (from few cents to $4000+ USD). Also, companies and technologists started realizing that the blockchain has potential far beyond bitcoins.

Cut to the second phase in 2014, we saw an introduction of Ethereum project, which is a blockchain platform with an ability to build the decentralized applications with the help of smart contracts. These smart contracts have truly unleashed the potential of blockchain technology and utilize it in a myriad of implementations.

Since then we have seen enormous growth in blockchain and cryptocurrency space. Just to see your awestruck face let me tell you, the market capitalization of Cryptocurrencies reached from $18B to $132B(as of 14th Sep'17) since Jan’17. Bitcoin price reached from $963 to $4000 USD and Ethereum from $8 to $280 USD. The almost same story is for other major cryptocurrencies. (see yourself at https://coinmarketcap.com/)

Anyways, It’s not about the price or market cap of cryptocurrencies but about the potential of blockchain we should have faith in. And it’s still not too late to start recognizing blockchain and leveraging its potential to transform your business and interaction with technology.

“As for the future, your task is not to foresee it, but to enable it.” - Antoine de Saint Exupery

Cool... So, WHAT is this Blockchain all about?

If you are still here with me, you must be curious to understand the underlying concept of the Blockchain.

The underlying concepts and mathematics involved might be too complicated to understand here but to simply put the concept in plain English, “Blockchain is a continuously updated record of who holds what”. These records are split across linked blocks and then secured using complicated cryptography and mathematical functions to make sure that these records cannot be modified and hence providing automated trust. Copies of these records, also known as a distributed ledger, are distributed over the network among the participant nodes (or computer) to verify and store. This ensures that the record is un-hackable and temper-evident because everyone gets to know when a block is messed up with and does not match with all other copies and hence rejected by the distributed system.

In addition, these ledgers can be self-executing pieces of code (also known as smart contracts) performing automated operations as agreed by stakeholders.

“A blockchain is a magic computer that anyone can upload programs to and leave the programs to self-execute, where the current and all previous states of every program are always publicly visible, and which carries a very strong crypto economically secured guarantee that programs running on the chain will continue to execute in exactly the way that the blockchain protocol specifies.” — Vitalik Buterin (Founder of Ethereum project)

So, by now you must have an idea about what is it and might be asking for the next question.

Alright.. How is it fit for me?

Answer yourself.

Since blockchain enables you to trust in a trustless environment, you can utilize it to any business process and environment where trust is required among stakeholders to freely transact the service, asset, and money.

Furthermore, as explained by Dr. Adrian McCullagh, You should try to run FITS model against your environment to check if it can reap the benefits of Blockchain. FITS is an acronym for Fraud, Intermediary (middlemen or 3rd parties), Throughput(transaction/sec) and Stable data.

Using this model, the best use cases of the Blockchain implementation could be where:

1)     There is a high propensity, likelihood and/or history of fraud in various transactions involved. (This is why financial sector is the most viable candidate of using blockchain.)

2)     Multiple intermediaries involved to carry out operations and they do not truly provide value. (This is why average settlement period of assets can be reduced from few days to few minutes.)

3)     Distributed nodes can be leveraged to increase throughput

4)     Stability of data is required or you want the state of data to remain as it is for some time ( an example could include ownership of assets.)

Amazon, Bank of America, NASDAQ, IBM, Microsoft, HSBC, Barclay, Credit Suisse and many more giants have already invested heavily in utilizing blockchain. Governments of many countries have already started recognizing and backing this fabulous technology.

Its high time for you too to start familiarizing your self with blockchain(and cryptocurrencies). On this note, I leave you here to ponder yourself about blockchain, and I am positive that you have got some useful information above.

Thanks for the reading. Please feel free to provide your feedback on this. Your constructive opinions are always welcomed.

In my next post/article, I will try to explain the different type of Blockchains which you may find useful for your environment and businesses.