MUSINGS OF A NESCIENT BLOCKCHAIN ENTHUSIAST

Blockchain is one of those new technology buzzwords that always seems to elicit a powerful reaction from people. It does not mean that Blockchain is understood well (or hardly as is often the case) but the topic initiator has the ability to project the initiator in an “intelligent” light. No thanks in any small part to the Bitcoin which has created the enigma as well as the momentum for blockchain.

Although, I have had the good opportunity to enter the world of blockchain since a few months now, I would still consider myself a dilettante in this field.

So, if I am a newcomer, then why this article on a topic as erudite as blockchain?

An article on blockchain is normally the preserve of an experienced mind on the topic. But that is precisely the reason why I chose to write this article. In another few months I would be more experienced (I hope), more knowledgeable (I really hope), maybe even an expert (am I dreaming here). But at this point, I still retain the initial untrained enthusiasm of a freshman, and I wanted to share my point of view on blockchain from an untrained perspective. This, with the expectation, that it may appeal to a wider audience who are probably in the same boat as myself (though I have learnt there are enough blockchain experts also ;-)). I have deliberately steered clear of the real technological aspects of blockchain (there is enough info on the internet today) focusing on general enterprise evolution / social aspects of blockchain.

Below are the key observations that I have noted on blockchain. Note that these observations are purely my own and can be “fleshed” out with further clarity by the experts. Needless to add, if any error or misrepresentation, it is again purely mine and mine alone.

For an understanding of different aspects of blockchain, please click on this link, https://coingeek.com/bitcoin101/

• Blockchain is more than Bitcoin

Bitcoin (the most important reason why people know of blockchain) is undoubtedly the most famous / notorious application of blockchain, but blockchain is much more than bitcoin. Bitcoin and variations of its denominations continue to be the basis of blockchain’s current glory, but it would be the enterprise uses that would lead the next wave of blockchain success.

• Democratization of blockchain is key

It is often stated that blockchain is a game changing technology like the Internet. If internet is the parallel here, just like the internet really took off with companies whose raison d’etre is internet proliferation (think YouTube, Google, Amazon). “Value Driver for Blockchain” Then the success of blockchain really is dependent on how its usage and applications could be dispersed to the maximum number of people – to really “democratize” the technology. Not just in the realm of high-tech or the complex world of fintech, but in everyday uses – when I track my shipment from an online purchase, when I want to authenticate the origins of my “bio” fish sandwich, when I want to transfer pocket money to my son’s account, to get better transfer rates, to register my property …. the list is endless. Getting it to the masses through universal applications and use cases is the key value driver. 

• Transactions would be the driver for blockchain value

When people think of blockchain they generally think of the bitcoin and its soaring value (and that is the glamorous bit). “How do blockchain transactions occur?” The underlying technology behind it (being very simplistic) is that a bitcoin is generated when a number of blockchain transactions are put in a package called a block (hence blockchain). A transaction does not have to be a transaction in the financial sense, it simply means a change of state that is recorded - an example is an alert when an intruder triggers an alarm, and this info is kept on blockchain. Each time a block filled with transactions is created, a reward which is a virtual currency of bitcoins is generated. The number of bitcoins as reward keeps on halving every roughly 4 years, and also the protocol makes the creation of a block more difficult if it detects more processing power (more entities and more computers) trying to create a block. What also happens in this process is that besides the reward the person / entity creating the block, also gets a fee (generally much smaller than the reward) for processing that transaction. As the bitcoin rewards become less and less (because of halving) and it gets more difficult to get bitcoin rewards, the transactions fee and subsequently transactions become the key driver of the technology. That is where industrialization of blockchain is key because more transactions volumes leading to a cumulative higher fee potential will drive the industrialization success of blockchain. More and more industries will adopt blockchain and newer user cases will evolve (are evolving) to make use of this technology. For the technological blockchain enthusiast, I have deliberately overlooked that there are a number of competing protocols. However, my view is that any protocol that allows the largest possible number of transactions at a competitive rate (nano transactions) would be the leader.

• Blockchain is here to stay

Many times I have been told that it is a buzzword. But knowing whatever little that I know now, one thing I know for certain – Blockchain is not just a craze or a buzzword, it is here to stay. What is true is that it is at an early nascent stage, but so was the internet a few decades back. And blockchain will disrupt (elevate) the world and its functioning to a whole new level. And we are still in the process of discovering all the ways that it will happen.

• Blockchain does not solve all problems

Blockchain is not the “Philosophers Stone” that will turn all of the world’s problems into gold. It is useful in multiple case scenarios - interaction between different entities, tracking timelines of information, removing intermediaries to make a process efficient, but at some level it will still have to rely on the external world to provide that info. External world input is crucial. If a meter is wrongly calibrated and that meter’s reading goes on the blockchain, then the info would still be wrong on the blockchain as an input from the external world. What will be immutable is the fact that that particular reading was created at a point in time on the blockchain.

• Blockchain is led by techies

This is true not just for blockchain, but for all new technologies. A lot of the blockchain discussions are still at a proof-of-concept stage. However, this will and has to evolve with new implementations to make the technology prevalent, and associated solutions in the business domain. What is also true is that given its newness, the expertise availability is still very limited on a technical level and so is the commercial understanding as well. So, there needs to be an evolution on both these axes.

• Interoperability would be great

There are different variations of blockchain by different organizations, entities, differing protocols all working on blockchain but with its own variation. What would be great (and I don’t think it exists today) would be the ability to interconnect these different blockchain systems and protocols. Take an example of Wi-Fi being used by mobile telecom providers offloading their customers to Wi-Fi - these are different technologies but have found a common middle ground. A similar interconnection needs to happen with Blockchain as well to create mass adoption.

Hope this gives people like myself some view of the blockchain as its stands today and its evolution for the future. Any errors or misrepresentations are obviously mine and mine only.

Till the next blog, take care and Ciao.

Personal opinions only

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