Unless you’ve been living under a rock for the past couple of years. You’ve probably already heard about cryptocurrencies and the hype around blockchain. Everyone is talking about it.
But is this just a phase? Is Blockchain a fad proposed by some software development guys looking to work on something new? or Is this the greatest piece of innovation since the internet?
In this article, we will see if blockchain is really worth the hype and how you can identify a blockchain innovation from a Ponzi scheme (there are plenty going around – so you better be careful)
Finally, we will talk about the true potential behind blockchain and why you should start now (or shouldn’t) get involved. So.. let’s get started learning about blockchain!
So Here’s What We’ll Cover
- The Hype Around Blockchain
- What Blockchain Is And Isn’t
- How To Tell A Blockchain Innovation From A Scam
- The Impact Of Blockchain
- The Potential Of Blockchain
- Key-Takeaways
Understanding the hype around Blockchain
In terms of development and adoption patterns, bitcoins and other blockchain technologies are at a similar stage as the early days of the internet. – back when it wasn’t very good (if we’re being sincere) and only used by tech enthusiasts.
BUT the hype around blockchain is like the hype around the internet during the dotcom boom. Investors are looking for the next big thing to invest in and blockchain seems to be it. But most of the implementations of blockchain, except probably for bitcoin (and ethereum), are miles behind the hype around it.
This has created a market of lies being peddled as a blockchain innovation. A market of ponzi schemes and scam artists looking to steal money from unsuspecting investors.
“The hype around Blockchain is so great that if you go to Silicon Valley. Turn off all the lights. Stand in front of a mirror and say Blockchain three times, ten venture capitalist will jump out of the mirror and throw millions at you” – Andreas Antonopolous
Everyone thought the segway was an amazing way to get around. Venture Capitals all over the world couldn’t get enough of it. One of the top tech Venture Capitalists, John Doerr even predicted it would reach $1 Billion in sales faster than any company in history. Some went as far as to call it the greatest innovation since the internet.
But what happened? Almost twenty years later and the billions in sales never materialized. We still walk from place to place. The segway was just too expensive to be practical.
The web has a way of blowing things out of proportion and that same thing is happening with blockchain as well.
Let’s back up a bit
The technology behind blockchain is truly innovative. Although there a still a lot of problems with it, we are building a whole new world in terms of cryptography. Last year alone made more crypto-millionaires than any year before.
But there is also a lot of misinformation. So before we move ahead, let’s talks about what is the blockchain.
What is Blockchain?
For every system there is usually a ledger that holds the records of all the transactions in the system. Since the ledger holds the proof of all the transactions. The people using the system must trust that whoever is managing the ledger is again: trustworthy. Trust that they will not fake any records. Trust that they are neutral. Most importantly, trust that they will not vanish.
But creating and managing an organization you can trust is difficult. Even the most reliable banks have failed.
Blockchains remove the need for a central database operator, by allowing users to talk to each other directly. A common explanation is that “blockchain is the technology behind bitcoin”. This is an oversimplification and all in all, a very wrong one.
Saying the blockchain is the technology behind the bitcoin is like saying the network is the technology behind the internet. Blockchain is just one of the four technologies behind bitcoin (others being cryptography, peer to peer network and proof of work).
Together they make up one of the most powerful ways to ensure trust.
Fun Fact: Telephone companies actually tried to create private, regulated networks in the 90’s. Just like how big financial companies are doing with blockchain now.
A blockchain is a transaction ledger that is:
- Open: Anyone can access it, anyone can work on it, and anyone can participate. Irrespective of who they are
- Borderless: There are no countries, the network does not see the borders between nations.
- Neutral: The network does not care who you are. It does not serve the goals of any organization. Every transaction is equal in the eyes of the blockchain network.
- Decentralized. The blockchain ledger is not stored on a single central computer. There is no central authority controlling everything..
- No Third Party. No big brother approving your transaction, no middleman.
- Censorship resistant: Once a transaction is made into the system it cannot be revered.
Unless it satisfies all those conditions, the blockchain you are reading about is just a database. A cheap parlor trick to disguise commonplace business as an innovation.
The essence of blockchain allows you to trust NO-ONE. Not even the guy who is paying you. You assume everyone else is lying.
It allows you to make transactions without third parties, without someone watching over your every transaction. This is what makes it truly disruptive.
Blockchain or bullshit
Let’s say you have been invited to invest in a brand new startup. It calls itself a distributed ledger. So how do you know if the technology you are dealing with here is actually a blockchain or just something pretending to be one?
Here’s what you need to do:
First : Take a look at their developer team, are they credible?
What’s their portfolio?
Do they have others successful currencies to back them up?
Then: Read the document or website. If you can replace every occurrence of ‘blockchain’ with the word ‘database’ and it does not change the meaning. It’s bullshit. It means it is not decentralized, open, neutral, censorship-resistant. It is not innovation.
There are over 20,000 currencies based on bitcoin and the blockchain technology. Most of these currencies are scams. Only looking to enrich the people who created them.
Luckily, you know exactly how to spot them. So the next time you are evaluating a blockchain platform, ask yourself… “Does it fulfill the above requirements?”
The impact of Blockchain
Blockchain is exciting because it will disrupt the way we do business on this planet. It allows us to collaborate and transact with total strangers.
You might say: “This is something we’ve been doing through eBay for a while now, what’s the big deal?” By using blockchain to store and handle transactions will help E-commerce stores save millions.
This will lead to lower fees and cheaper goods and this is just the impact of blockchain in the e-commerce industry- Just by downloading an application.
You become a part of a giant platform of trust. A community, that doesn’t care who you are, where you came from. Where a 15-year old has the same power as Warren Buffet.
There is no membership fee and no middleman looking to take a cut. You don’t need anyone’s approval to participate or innovate on the network.
Potential of Blockchain
Every emerging technology has it’s naysayers. Even 90’s journalists’ complained about the failure of the internet. But while they were complaining that you cannot find anything on the internet. Larry Page and Sergey Brin were building stuff to fix this.
Any new technology is like a dark room. You cannot truly grasp it’s potential until it gets a little brighter. Money is just the first layer of the blockchain technology.
Somewhere in there is a billion dollar industry waiting to be discovered. Over the next couple of years you’re going to see tons of blockchain related startups.
Key Takeaways
Blockchain is incredibly hyped up, and most of it is just fluff from business owners looking to create a buzz about their product. (The journalist looking to ride the hype train certainly haven’t helped).
But when you look past the hype it truly is a revolutionary technology worth learning about. So what are you waiting for get started on learning about blockchain!!!