Intro to Blockchain: Modern Technology is A-Changin’
This article was authored by Melrose PR contributor Jesse Lucas.
Bob Dylan’s 1964 hit “The Times They are A-Changin” details the overwhelmingly fast pace of our world. Over fifty years later, Dylan’s words still ring true, but there is no reason to be afraid. Technology is A-Changin, and with new advancements come new solutions that lead to fairness, security, and financial opportunities that otherwise wouldn’t have been available. Those that follow mainstream technology publications may be familiar with the buzzwords blockchain, Bitcoin, and cryptocurrency. While the technical specifications of these are a bit much to devour in one sitting, the overall concepts are not as complex as you may think. The following is a broken down explanation of blockchain, and how it is transforming industries across the world.
What on earth is blockchain? And what exactly is bitcoin?
Blockchain is a digital ledger in which blocks of data are strung together in chains; with each block added brings a new set of recordings that automatically fact-check the previous blocks. Blockchain is most known for being the technology behind Bitcoin, the first cryptocurrency. Both were started by an anonymous, albeit infamous, man named Satoshi Nakamoto. This is likely a pseudonym, and sometimes, I like to imagine Satoshi is really a badass female coder assuming the identity of a man. On January 12, 2009, Satoshi published a white paper on his website, , detailing Bitcoin as ‘A Peer-to-Peer Electronic Cash System.’ Satoshi sent out a few more messages, then vanished in late 2010, turning the development of Bitcoin into a community project. There has been much speculation and accusations, of who Satoshi is, and what happened to him, but nothing conclusive. He generated about a million bitcoins for himself, so if he is out there somewhere, he is a billionaire, perhaps lounging around in the Cayman Islands.
Bitcoin is digital currency without any physicalities, just a long code on the Internet. While the idea of Bitcoin may sound absurd, consider the fact that only 8% of the world’s currency is physical cash. Similar to the way people can send friends money via Venmo, you can easily transfer bitcoin to someone’s wallet. Many have tried their luck investing in bitcoin, some of its early investors have made out with millions of dollars in profit. Although bitcoin is notorious for its volatility, it has consistently risen over the years, its current peak nearly $3,000 per bitcoin. To obtain bitcoin, you need to a wallet, which is either a website or mobile application that facilitates the buying and selling of cryptocurrency. Some financial experts have predicted bitcoin’s value to soar to as high as $1 million, while other experts firmly believe it will plummet to $0 in the near future. Considering there has never been anything like bitcoin, it’s all a guessing game, and, if you’re investing, a complete gamble.
How can blockchain revolutionize different industries?
While technology has provided innovation to many facets of finance, it is still archaic inefficient, taking up more time and money than necessary. If you need to transfer money, most methods take 3-5 business days and slap a hefty processing fee on top. Blockchain provides solutions to automate verification processes via smart contracts, which are computer protocols that verify specified agreements. In addition to speeding up this process, this would lower overhead costs, which may result in fewer fees for the individual.
But what if we sawed off some of the rusty limbs of the finance industry, and decentralized what could conceivably be run on blockchain? This would eliminate the risk of fraud (I’m looking at you, Wall Street) and provide accessibility to funding for all. Token Sales, often referred to as Initial Coin Offerings (ICOs), are a means to raise funds via cryptocurrency by issuing a percentage of tokens and have exploded over the last couple of months. The crypto community has become a gold rush, where entrepreneurs can launch an ICO campaign and raise funding for their coin. No longer do startups need to go through the process of seeking venture capitalist funding, and backers do not need to jump through hoops to prove their value via investor accreditation processes. The regulatory implications are unclear and are likely coming soon, but it’s been interesting to watch this transform the way early stage ventures are going about fundraising.
The advertising industry is also rife with fraud. Many digital advertisements are charged per click, causing some dishonest folk to inflate these numbers. According to the Interactive Advertising Bureau, $8.2 billion a year is lost to advertising fraud. Bots, which are software applications trained to carry out specific tasks, mimic human engagement on pay-per-click advertisements by ‘clicking’ on them, so the company can charge more. Adtech pioneer, MadHive, provides transparent advertising transactions that self-verify on the blockchain in efforts to eliminate fraud. The verifiability of blockchain provides security to companies placing digital advertisements, saving them a significant amount of money over time.
The boom and bellow of Napster, a peer-to-peer file sharing service launched in 1999, unleashed the demand for more power and options for collecting media. Along came Apple’s revolutionary iTunes, which gave consumers the option to purchase individual tracks for $0.99, rather than the hard copy album for $20. The digitization of music distribution has gone as far as PledgeMusic, a blockchain platform that allows for musicians to communicate directly with their fanbase to pre-sell, market, and distribute music, music videos and concert tickets. This restores power back to the artists, as they are able to release music and sell out shows without having to give the profits back to record labels. Fans are also empowered, as they can purchase content and experiences at a lower rate, with the confidence that their hard earned cash is going to the artist, not into an executive’s Swiss bank.
Think about all the personal information you have written down on forms in your doctor’s office. Is this data, most of which highly confidential, entered into a secure data storage program, accessible only through approved individuals? Most likely not, as many offices toss these manila folders into an unlocked filing cabinet. This provides issues not only related to security and fraud, but accessibility. How do you retrieve your immunization records from when you were three years old, especially if you went to a small-town doctor that has since retired? Healthcare data management company Gem uses blockchain technology to simplify the storage of records. Not only is it possible for all your health records to be securely stored on the blockchain, but you can assign certain keys to different people to provide them with only the necessary information. For example, your doctor needs to know your health history, but not your social security number and home address. Providing personal information on a need to know basis considerably reduces the risk of unnecessary information falling into the wrong hands.
If the idea of this new technology makes you skeptical, it may ease your nerves to know that many major corporations and executives are getting involved in blockchain technology. Deloitte, one of the leading auditing, consulting, tax and advisory firms, began getting their feet wet in 2016 when they launched the first of a series of Blockchain Labs. Virgin Group mogul Richard Branson recently announced that he was investing in Bitcoin wallet company Blockchain, alongside Google’s investment arm GV. Major corporate ballplayers including JPMorgan, Microsoft, Chase & Intel formed Enterprise Ethereum Alliance, a group that seeks to discover how Ethereum, a type of blockchain, can improve many industries. By connecting blockchain experts to Fortune 500 executives, real solutions can be formed to update antiquated processes that are holding back these major corporations.
Join the Revolution
All cryptocurrency controversies aside, blockchain technology has and will continue to disrupt many industries desperate for innovation. If you’re looking to learn more about blockchain, there are tons of resources available. Laura Shin of Forbes always entertains with cutting edge blockchain news, both in her articles and podcast. Reading Don & Alex Tapscott’s Blockchain Revolution book is an unspoken requisite to working at many firms in the blockchain space, Melrose PR included. For those intrigued by the idea of cryptocurrency, Nathaniel Popper’s Digital Gold provides a fascinating and informative narration on the history of bitcoin. Daring enough to invest in some cryptocurrency? Website and mobile app Coinbase is renowned for having an easily-navigable user interface, which is perfect for beginners.