The consequences of blockchain technology as I understand them are fascinating, far-reaching, and centered on a theme of decentralization. In a traditional model, power and information are centralized in one place. This allows the governing entity to control access and maintain records in a way that ensures security and accessibility to whomever they deem to be appropriate users. To offer an example of this traditional model, consider the current status of our financial system. Capital is centralized in the hands of bankers, and then lent out to borrowers or “users” who are deemed fit recipients by a centralized panel of investment professionals. The reason we need banks in the first place is because, up until now, there hasn’t been a good way for people to lend money to each other directly; the risks and challenges of raising money from strangers and convincing individual people to trust you are often insurmountable.
A decentralized financial system, which is one of the most prominent and highly sought after applications of blockchain technology turns the current state of the centralized system on its head. By offering a secure platform through which people can interact directly with each other in a peer-to-peer environment, blockchain completely eliminates the need for a centralized institution such as a bank. This greatly reduces the cost and difficulty associated with raising money, reduces frictions in our economy, and expands the availability of the capitalist system. The final result of this fundamental change in the way our system operates is greatly accelerated economic progress and development.
The decentralized nature of the blockchain is an advantageous property, but also a key element of the foundational nature of the whole system. In the wake of more and more high profile digital attacks, such as the Equifax hack in the United States, which comprised the sensitive identity information of over 100 million citizens, digital security has taken center stage in an ongoing discussion about the consequences of the technological revolution. The question of security is solved by the blockchain via an elegant deployment of decentralized networks, which provide the foundational structure of the chain itself. Without getting too far into technical details (at least not yet…!), in the case of Bitcoin, the blockchain records are publicly available and held by hundreds of thousands of people around the world. Each one of those people has an incentive to maintain the integrity of the entire system, which essentially ensures the fact that no one person or entity will ever be able to gain the upperhand and “hack” the Bitcoin platform. The security of this setup is only reinforced by more and more people joining the system.
In conclusion, when considering the application of blockchain technology around the world, the first thing that should come to mind is decentralization. All systems currently rely on centralized sources of control and influence for the sake of security — voting polls, financial systems, cloud computing, military data, etc — could ultimately benefit from the security and elegance of an underlying blockchain foundation. With that said, where do you see blockchain being most useful in the future? Do you agree with the idea that the most important aspect of the blockchain is its decentralized nature?