The blockchain and DLT space is among the fastest growing technology fields today and with good reason. Blockchain has already shown an immense promise and is considered by many to be one of the technologies of the future. This is certainly a bold claim, but one that we believe is entirely deserved. In the following paragraphs, we’ll be examining why this is likely to be the case and what makes blockchain such a cool tech. But before we get to the future, we first need to take a stroll down memory lane.
Bitcoin and the birth of blockchain
Let me set the stage. The year is 2009 and the world is still in the midst of the biggest economic crisis in decades. Governments and central banks are scrambling to bail out struggling banking giants that have become too big to fail. Public trust in the financial sector and the institutions overseeing it is at an all-time low. In this challenging environment, the release of one seminal white paper is about to change the world forever!
That might have sounded a bit overly dramatic, but it’s actually a pretty accurate account of the events leading up to the invention of Bitcoin, the OG blockchain. Published by the enigmatic Satoshi Nakamoto, the paper, “Bitcoin: A Peer-to-Peer Electronic Cash System”, proposed a revolutionary new payment system utilizing cryptography and decentralization to provide an alternative to the traditional financial system that didn’t have to rely on middlemen. The idea attracted a small, but passionate community that began working hard on making it a reality.
But how would such a system even function? Well, the short answer is as a network that has a shared transactional history. Now, for the long one:
Blockchain is a type of decentralized database that stores information in a way that makes it nearly impossible for hackers and other bad actors to penetrate a blockchain-based system. This database, which is also called a ledger, is distributed across a peer-to-peer computer network. Every blockchain protocol employs some sort of consensus mechanism that allows for network participants to agree on which version of the ledger is the correct one. A system designed according to these principles ensures a high level of transparency, security, and decentralization.
The distributed ledger originally proposed by Satoshi Nakamoto consists of cryptographically chained together blocks (blockchain, heh) that contain transaction records. A special type of network participants known as miners are responsible for organizing transactions into blocks and submitting those blocks to the blockchain. Each block must also include a cryptographic proof that allows its validity to be easily verified. For their efforts, miners are rewarded with
network-native tokens (BTC, in the case of Bitcoin), which provides the economic mechanism that allows for the blockchain engine to function.
These basic principles formed the foundation for not only Bitcoin, but also an entire generation of public blockchain protocols that all sought to power secure, transparent and decentralized payment networks. A few years later, along came Ethereum and showed that blockchain could also be programmable through smart contracts – self-executing programs that can perform set operations automatically if their triggering conditions are met.
Blockchain technology is cool
Ultimately, the aforementioned traits are what make blockchain such a fascinating technology. It can support large systems without centralized governance, ensure trust algorithmically, thus eliminating the need for overseeing institutions, keep immutable and transparent records of arbitrary data and execute operations and complex processes automatically. All this makes the tech extremely useful even at this relatively early stage of its development. But blockchain’s utility alone is not enough to call it a “technology of the future”. But if we consider the potential synergies with other emerging technologies like IoT and A.I., it becomes clear that blockchain is fully deserving of that moniker. In fact, futuristic scenarios start popping up quite readily upon exploring some of those potential synergies.
A base layer for the future
There is a reason why blockchain is widely considered to be one of the ‘Industry 4.0’ technologies alongside the Internet of Things, artificial intelligence and others. The world has been trending toward digitalization, automation and autonomy for a long time and, thanks to its signature properties, blockchain is uniquely positioned to support our ongoing efforts in that direction.
Autonomous cars are a great example of how multiple emerging technologies can work together to achieve great results. With the help of A.I., blockchain and sensors, in the future we could have entire fleets of self-driving vehicles, where each vehicle represents a node in a blockchain network. This will allow the cars to share information and interact with one another in real time.
Notably, this is not an isolated example, as blockchain technology can be applied to any complex and autonomous system. It could be used to facilitate communication between the different components of a smart factory or to connect the various systems in a smart city. Even more ambitiously, it could power a future machine economy, where millions of smart devices use blockchain or other distributed ledger technologies to communicate with each other and pay for services with crypto assets. Imagine a scenario where a smart fridge orders a carton of orange juice and then transfers some crypto to the friendly neighborhood drone to pay for the delivery of said juice.
But we don’t have to go so futuristic to appreciate how cutting edge blockchain technology is. One look at the rapidly growing ‘Gig economy’ is enough to realize how well suited to supporting this millennial- and GenZ-driven phenomenon blockchain technology is. In fact, our friends at Mycro Jobs are already working on utilizing the technology to create a new way of connecting job providers with job seekers.
This ability of blockchain to ‘be in sync’ with the latest socioeconomic and business trends is the strongest indication that the technology is future-proof.
Blockchain technology is transformative
Another example of this is how well blockchain can support the ongoing digital transformation of the business sector. More and more companies have in recent years been working on updating their legacy systems in order to better meet the demands of the Internet-powered digital age. Here, blockchain technology can be used to build a new generation of robust enterprise-grade solutions capable of supporting the digital transformation efforts of businesses from various sectors, such as supply chain management, healthcare and pharma, real estate and manufacturing.
But it goes even beyond that. A mark of every truly groundbreaking technology is that it inevitably outgrows its initial purpose and leads to the invention of products and services that could’ve never been conceived prior to that technology’s arrival. The best example in this respect is the Internet, which has risen from humble beginnings to impact all aspects of life in profound and often unexpected ways.
Blockchain is already showing signs that it possesses a similar quality. What started as an alternative payment system has grown to become so much more. There’s just so much to build and so much of it is only possible with blockchain and DLT. DeFi protocols and NFTs are some of the examples for blockchain-driven products and services that are already challenging the way we perceive financial services, digital assets and digital ownership.
The future is blockchain
The thing about truly transformative and groundbreaking technologies is that their potential is not immediately apparent. This is partly because of their novelty, but also because they need to reach a certain level of maturity in order to unlock that potential.
Some 20 years ago,I used to sit in my chair waiting anxiously to be transported to the wondrous world of the Internet by my trusty modem. Back then that world consisted of a few clumsily designed websites and an IRC client. Today, the Internet is everywhere around me.
Having seen how much blockchain and DLT have grown in just over a decade, I cannot wait to see what the next 10 years will bring.
Do you want to learn more about blockchain? LimeAcademy is starting on 18th of October. Learn more here.