What is Blockchain Anyway?

During the last few months, I attended several conferences, events and meetups that were either directly or indirectly related to blockchain technology. Throughout these meetings, I have met numerous entrepreneurs working on technology projects that use blockchain as a critical part of a solution they have developed. Some of these projects target a very particular industry niche, while others offer tools for general public use via applications or the internet.

Though blockchain technology is still new to many people, even in the IT industry, experts believe that within 5 to 10 years we will start to see many blockchain applications that the average citizen would use on a regular basis. So, it would be worth it for anyone to at least start learning the basics of blockchain.

The blockchain buzz started when an unknown genius published an article about a new method that could be used to create electronic cash. The paper, published in December 2008 and titled “Bitcoin: a peer-to-peer electronic cash system,” outlines the technical solution of blockchain and how its security enables digital currency.

The thing that was most unique about Bitcoin was how it could be produced so that it was practically impossible to duplicate. The chief concern about accepting electronic currencies was that it could be infinitely copied,  and thus there would be no control over total available cash and individual ownership of that money.

Unlike almost anything else that is electronic, any Bitcoin balance has a unique way of protecting its identity and ownership so that its amount can not be changed nor can it be claimed by anyone other than its owner. The process of transferring Bitcoins from one wallet to another is also very secure, such that there is no practical way to claim a transfer unless it is approved by the sender through the very unique information that is only available to that sender. This is the core feature of Bitcoin, made possible by blockchain.

Blockchain is definitely a complex technology, but if I were to explain in simple, non-technical terms, I’d say it is a group of computers that each stores some information about the available balances and transaction history of different Bitcoin wallets (and a bit more,) and follows a validation process for any new claim for balance or transaction. So because the data, including the time of each transaction and history of transactions of each wallet, is stored on numerous computers and is always validated before being updated, it is practically impossible to cheat on the network and claim an incorrect balance or transaction.

What is so important about blockchain technology is its power of decentralization, which means that financial transactions and wallet balances can be fully monitored and managed by the blockchain network, without the involvement of any central authority like a bank or a government. In other words, blockchain technology eliminates the need for powerful entities that (are paid to) handle the problem of trust, because for the first time, within a matter of minutes, all parties involved can verify that money is transferred from one account to another, completely independently from any central authority. Think of it like the old days when people would buy and sell stuff with actual gold coins, except that with Bitcoin, you don’t even have to worry if the gold is real because blockchain does the validation for you.

Of course what is most exciting about Bitcoin is that it is completely digital, so it is inherently compatible with other technology driven products and services. Unlike your USD cash that needs to be deposited to a bank account before it can be used for online payments, your Bitcoin is already a digital asset and won’t need that extra step.

Blockchain technology was initially created for an electronic cash system, but it has the potential to be used for other applications. Because of its unique security capabilities, it can be used to store any valuable data that needs to be validated by others. Plus, the cost of validating data with blockchain is so low, and its compatibility with mobile app and website softwares is so great, that it can quickly become a better solution for many other ways we were handling our businesses in the past. It could even potentially replace some government agencies or private companies whose purposes are to verify information about ownership, finances or other sensitive data.

Still, blockchain is a new technology and like other technologies, it has its own challenges to which it must adapt. At the same time, innovators are sure to find new applications for blockchain to influence our daily personal and professional lives. New blockchain projects have already spanned a wide range of industries, from fintech to games to transportation, even service marketplace platforms like QuiGig. One of the most interesting of these new blockchain applications I’ve recently come across is Bluzelle.

Bluzelle is a decentralized data ecosystem that allows individuals and businesses to have full control over their data and the ability to monetize it. You may remember how Facebook’s allowance of third party companies to collect and utilize user data to influence elections created major headlines. Well, the truth is that not only Facebook, but many other websites and mobile apps collect a lot of data from consumers and use them for all sort of purposes. There is tons of data created online and offline on a daily basis and the privacy and security of that information has always been of paramount concern to Internet users. Bluzelle answers those concerns by harnessing blockchain security to allow individuals to limit access to their data and to earn an income when they allow that data to be shared.

I recently had the good fortune to speak with Pavel Bains, the founder and CEO of Bluzelle, to discuss both his company and the future of blockchain technology. I asked Pavel about when he thinks blockchain and cryptocurrencies will become a day to day matter for the average citizen. He told me the same thing I’ve heard from other experts in the field, which is that within 5 to 10 years, we will see almost everyone having some cryptocurrency wallet and becoming used to using blockchain tools to run everyday business. With the growing list of blockchain projects and applications, that estimate seems entirely believable.

Like any other technology, Blockchain and Bitcoin have had their share of skeptics. Especially after the decline in Bitcoin value in early to mid 2018, compared with its astronomical growth rate in 2017, many of those who invested in cryptocurrencies may have felt discouraged by or wary of this new market. But when I asked Pavel if he thinks the future of blockchain technology is still bright, including for investors in the field, he told me what I expected to hear and also believe: that this revolutionary technology will open the doors to many new and unique opportunities.

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