⛓ Chaining Blockchain

Simplifying what is blockchain technology and how it has reduced the friction in the trust gap and how it is gonna drastically change the tech that we live in.

Clearing confusions...

When I heard the word Blockchain, even I was very much puzzled by what this fancy word meant. I started to research upon that and I was kinda amazed by the tech behind that. It sounded very much simple but it was complex to understand.

But first, let me make one thing clear. Blockchain is not spelt as B.I.T.C.O.I.N 🤧

So, if someone says that Blockchain is the tech behind Bitcoin, Ether, crypto. It is true. But it is like defining the Internet as the tech behind Email which is also true, but it does barely describe the Internet.

Irony of Inventions

The year I was born in 1997, the Internet was just a couple of dozens of computers connected together sending bits and bytes of information. Fast forward 25 years, and the Internet has grown rapidly. The thing about inventions and great paradigms is that you actually don’t know what it is the day it was made and where it is heading to. You later realise and you go “Oh I see what that it did 😮"

Headline from the year 2000

Likewise, it's kinda funny that when the internet was introduced in the 1990s people made fun and wondered if it was even a thing. That’s the irony of inventions. So the question is - if there was a paradigm sitting in front of us today that’s gonna change the world we live in 40 years later? And if that paradigm was probably Blockchain technology? What can we do now to take advantage of it so that we can be part of a great innovation 40 years later?

“Stop Hindsight, Start Foresight”

The Trust Gap

Right now, there is one big problem that requires a solution. TRUST.

Not just how we trust each other but more specifically how we trust in businesses. Now you would be screaming that “We trust in every business. We trust the news. We trust everyone.” But sorry, I’m being funny here. The reality is we can’t even trust our relationships or our partners. Trust in every business is critical. But we actually manufacture trust (artificially). Blockchain is the tech that is gonna break this artificial trust in businesses.

Empirical data states that 100 Trillion transactions are being made every year, and what if one of the transactions is being hacked, what if that hacked transaction has an amount of 1 Billion? So, we start with an assumption that the recipient or the counter-party can’t be trusted. And we need an intermediary who can maintain a central database of all the transactions happening. Examples of intermediaries: banks and credit agencies.

The main objective of these intermediaries is to build/manufacture that trust with the help of a ledger. But I should remind you that, we have been overtrusting these intermediaries and giving them huge powers which might turn out very hurting. (Remember the 2008 recession?)

Deep into Blockchain

Blockchain is similar to these intermediaries trying to manufacture the trust with the same ledger but the only difference is that each record or transaction has a unique key. You don’t need to understand cryptography/hash keys but just trust me that every record has an un-hackable key. Now you see how it is different from the crappy ledger that we use today. This ledger is immutable.

I am gonna give you a practical example. Suppose you wanted to buy a house that is 10 years and you have no clue of what renovations or changes have been made in the house. I bet you that you don’t wanna pay an extra penny for an unchanged chimney in the house. But what if the house is on the blockchain? Aha aha! You now can see whatever renovations were made in the house and who and all had owned that particular house. Voila! You have the real-estate blockchain. Soon, there is gonna be health care blockchain, industry blockchain, fintech blockchain and eventually creating a chain of chains.

Internet Vs Blockchain

Now, how does it work?

I really don’t wanna explain the cliche working of blockchain with the bank process which can make you understand the tech much better. But it is just that we always stick to bank transactions whenever we hear blockchain and we immediately spell "Oh! Blockchain is bitcoin". So, I am gonna explain with the same real estate example.

Remember that I said, blockchain has an immutable ledger and every record has an unhackable private key? So every record on the ledger is written and stamped by the trusted party itself who wrote the record. Assume the 1st record is written by the builder who built the apartment, feeds every detail about the building and outcomes a key. Now the 2nd record is being written by the owner who make a few changes and this 2nd record holds all the details of the 1st record and guess what, another key comes out of this 2nd record. You see, there is a heavy dependency on the 1st record for the 2nd record. A few years later, a buyer buys the apartment for X amount of money and this gets into the blockchain carrying all the information of the 1st and 2nd records and outcomes in another key. Eventually, there is a chain formed between all the records. Suppose some tampering has been made to the 2nd record by the buyer (probably he/she is a scammer and wants to portray that he/she is the 1st owner of the house), the buyer can’t simply do it. Because he/she will evidently break the chain and the 1st and 3rd records are not linked to anything and become stand-alone. There is a super crazy algorithm running behind blockchain which prevents the buyer from doing this.

Okay, I can read your mind and I know you are still puzzled. One more simple example. You go to a butcher shop to buy Chicken and you gotta buy fresh chicken or say organic chicken. The butcher convinces you that it is organic. But you don’t trust his words. Now, what if say, that butcher shop was on blockchain and you can just scan the QR code on the chicken packet to verify its authenticity? Uhm, now you start trusting the entire business of the butcher without having an intermediary.

“Almost every company is at risk of being cannibalized or face a severe competitive strain… from a blockchain version of itself”

- Richie Etwaru

Reducing friction

Now we see where we have landed. We had a trust issue or a trust gap among industries, and between businesses and we created a tech that helps in creating this trust. In fact, the trust gap is been increasing due to the fact that we are making businesses grow globally and the number of transactions is increasing exponentially.

Sign 100 papers for a single transaction. Waiting for weeks to send just 10k $. Verify if it is not a terrorist transaction. Also a lot of charges. We seriously need to reduce the friction between all these.

I am not saying Blockchain is the only tech that is gonna solve all these, but it is the only tech that is tangible now. And who knows, maybe in the future a more simplified tech may overtake the Blockchain.

😉 Bonus info: If you are too interested in blockchain and wanna witness real-time live transactions, check out this website TxStreet. (I just love their UI). See, this is the level of transparency blockchain can give you, which the banks can’t.