In a time when cyberspace is increasingly present in one ‘s life, it comes as no surprise that innovation in this area only adds more value to the online environment. Governments, companies, individuals, everyone has a cyber footprint and the need to operate online. From work to entertainment and even medical services, most of our lives take place on the web.
On this platform which has become important for us all, a very interesting phenomenon is emerging, the blockchain concept. It is defined by Don and Alex Tapscott, authors of “Blockchain Revolution” as “an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” This invention of whoever is behind the pseudonym Satoshi Nakamoto seems to be at the forefront of cyber innovation. PC MAG explains how the process works:
“A blockchain is made up of two primary components: a decentralized network facilitating and verifying transactions, and the immutable ledger that network maintains. Everyone in the network can see this shared transaction ledger, but there is no single point of failure from which records or digital assets can be hacked or corrupted. Because of that decentralized trust, there's also no one organization controlling that data, be it a big bank or a tech giant like Facebook or Google. No third-parties serving as the gatekeepers of the internet. The power of blockchain's distributed ledger technology has applications across every kind of digital record and transaction, and we're already beginning to see major industries leaning into the shift.”
Many people have heard of the blockchain’s most famous creation, the Bitcoin, which “has been called ‘digital gold,’” and has a current value of $9 billion US. This cryptocurrency and others like it have taken the world by storm. Nakamoto explained the concept and necessity of these currencies in his 2008 white paper: “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network.” This is indeed an idea which gives financial freedom back to those engaged in transactions, eliminating third parties.
A Harvard Business Review article notes that it might be possible for the blockchain to “do to the financial system what the internet did to media”, observing that even in the case of the internet, years after it was creating, there were voices claiming that it was nothing but a passing trend. Yet, the reality was that it has changed our lives completely and continues to do so.
At the same time, the article states the importance of working on the blockchain infrastructure and putting in the necessary effort to ensure proper development:
“In the case of cryptocurrencies, we’re seeing far more aggressive investments of venture capital than we did for the internet during similar early stages of development. This excessive interest by investors and businesses makes cryptocurrencies fundamentally different from the internet because they haven’t had several decades of relative obscurity where noncommercial researchers could fiddle, experiment, iterate on, and rethink the architecture. This is one reason why the work that we’re doing at the Digital Currency Initiative at the MIT Media Lab is so important: It is one of the few places a substantial effort is being made to work on the technology and infrastructure clear of financial interests and motivations. This is critical.” Cryptocurrency is seen as a way to simplify the current complicated financial system, ensure against risk and make competition much better.
The applications for the blockchain, however, are numerous and not limited to Bitcoin or other cryptocurrencies. “Companies such as Microsoft and IBM are using their cloud infrastructure to build custom blockchains for customers and experiment with their own use cases, like building a worldwide food safety network of manufacturers and retailers. On the academic side, researchers are exploring blockchain applications for projects ranging from digital identity to medical and insurance records.”
Thus, the blockchain’s possibilities are endless. It is an important step in internet as well as financial freedom and security. Europe would do well to prepare for the future and not be taken by surprise by the development and success of such technologies.