The mysterious black box of blockchain. Explained.
One reason that explaining blockchain is difficult is because, while it is a relatively simple technology, it enables an array of very wide ranging new opportunities.
Here is the first of my oversimplified deciphering.
Blockchain is a bunch of really small, encrypted files (blocks) that are linked together (chained) and distributed across the Internet. One of the biggest advantages of this new architecture is that digital files can, for the first time, be unique and decentralized. This combination of uniqueness and decentralization lie at the heart of why blockchain is enabling a powerful disruptive wave of innovation.
Blockchain developments currently fall into three loose categories: currencies, commodities, and tokens.
Cryptocurrencies are best exemplifed by Bitcoin, although there are numerous other altcoins. The best example of a cryptocommodity is Ethereum which is a cryptoprogramming platform upon which distributed applications (Dapps) can be based. The third category is comprised of a bewildering array of utility tokens that each exist for specific purposes. There are tokens for voting, advertising, property ownership, credentials, attention, and many more.
What makes blockchain exciting is that it enables opportunities that were never before possible: Digital money not controlled by a central authority -Bitcoin; digital voting immune from fraudulent ballots; smart autonomous contracts that execute automatically; multi-party supply chain functions shared by all parties; entirely new methods for distributing digital content such as text, books, music, images, and videos.
Like each previous disruptive technology wave, there is tremendous uncertainty. Large amounts of money have already be made and lost as we lurch forward investigating this new space and it’s potentialities. But like each previous wave (personal computers, Internet, and web services) entire new industries are being created while old ones will be destroyed.
My best advice to investors and entrepreneurs is to take many small steps and quickly reevaluate your course after each one (just like playing an adventure game from the 1980’s).
Think blockchain technology is no big deal? Think again Hammurabi!