Upon first glance, the primary solution that Bitcoin and Cryptocurrencies, in general, bring to the scene has everything to do with the economics of finance, wealth, and commerce. But a not-so-deep analysis of the Blockchain technology and its decentralized nature reveals a very powerful potential to decentralize everything central as we know it.
The group of people most likely to feel the revolution adversely is:
- The intermediary bodies (Quickteller, Paypal).
- Central bodies (Central Banks, Federal reserves).
- The adjudicators (Bankers, Judiciary) keep the financial and economic ball rolling in any geopolitical region.
This article will be looking at Blockchain technology and what changes it will bring to the economic sphere, with particular insight into its decentralized nature.
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Even though a good number of economic professionals, analysts, business personnel, and even governments are giving the nod to cryptocurrency activities and untapped wonders in the world of blockchain technology, so many others remain oblivious of its underlying potential, some others try unsuccessfully to hamper it. In contrast, others don't even have a clue that something as wonderful exists.
In 2014, when Bitcoin was still gaining steam globally, Forbes researched in the United States of America. According to them, many books were published, with Bitcoin being the main subject of discussion. All of them gave the same assurance to readers, promising to give them a better understanding of the technology and how they can monetize it.
When a survey was conducted on the citizens, it turned out that over 60% of them still had no clue what Bitcoin was.
Although the figures are looking a lot more different now that bitcoin and other coins have pulled a couple of amazing feats, a greater percentage still sees cryptocurrency as merely a digital legal tender or an alternative store of value. The true power of blockchain technology reaches far beyond currency and exchange values.
Until recently, many people have been overlooking the decentralized nature of blockchain in general and how it can be applied in several ways, which is probably the most amazing aspect that will bring about the socio-economic transformation discussed. A transformation as big as the world wide web did in the late 20th/ 21st century.
Having no central authority behind the processing of transactions and maintenance, the blockchain network relies on the Proof-of-Work (POW) mechanism. It's a public ledger, which contains every single transaction since inception, is maintained by various dedicated individuals, called miners.
Using this same uncompromising and decentralized nature of operation could lead to an entirely reconfigured operation system, not just in the world of finance and economics but also in day-to-day activities.
Owing to the build and mode of carrying out commands, the blockchain network architecture is pretty perfect for embedding "IF" or "AND" commands in automation. A good example can be seen in ADEPT.
ADEPT is the product of a combined effort by IBM and Samsung for smart automation and everyday appliances with Radio Frequency Identification (RFID). With this technology, smart devices can operate and run cycles independently without human intervention at intervals.
The way humans interact with things will take an obvious twist, probably for the better, in a couple of years. Sooner or later, we will learn how to live and interact with these "blockchain thinkers," as some would call them.
Understanding Blockchain's core components.
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Whereas some people may better understand the Blockchain network than total noobs, the knowledge may be very superficial. We will briefly look at some key terms that will be encountered throughout the article to understand the topic better.
To see where we look deeper at the functional mechanism behind Blockchain, click here [Link to blockchain article].
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- Bitcoin (with an upper-case); this means the entire system of the crypto exchange, including mobile or computer apps and programs, wallets through which people transact in bitcoin(BTC).
- Bitcoin (with a lower-case); refers to the actual cryptocurrency which people transact as currency for exchange. For the rest of the article, we will use the ticker symbol BTC.
- Cryptography is the discipline of encoding or deciphering encoded data for peak communication security within the blockchain network. Bitcoin makes use of two cryptographic methodologies.
The Blockchain is a publicly shared record of all confirmed and pending transactions on the Bitcoin (cryptocurrency) network. It can be browsed by anyone and even tells whether the transacted BTC has been spent after sending or not. It can also tell if the individual spending the BTC still actually owns the BTC they are trying to send.
With the science of cryptography, the system has a maximum level of maintained order in procession, and transparency is also upheld.
Transactions are completed in blocks, following the status quo of transparency and order, and after that, the reward is distributed.
If, in some impossible way, a block is modified by altering a transaction mostly, then any proceeding blocks would be considered invalid as well because integrity has been compromised.
This decentralized order and transparency are primarily what is most charming about Bitcoin.
The increase in value is also a direct result of this because who wouldn't want a non-central but highly secured means of transaction and value storage??
What else can be decentralized?
As technology in general moves forward, and with the introduction of blockchain technology, the most historic change in recent times will most likely be the evolution from centralized internet service to a decentralized one. From all viewpoints, this is imminent.
Already, there are different ways and instances that we can see the decentralized nature of Blockchain being applied and even make use of it. Gauging from that and how successful they have all been, we can't get phantom the limit to its future potential.
For example, suppose we should consider electronic mail (email). In that case, its background network is a chain of set rules, all interconnected to function automatically, and any singular entity does not own it. Even though the email providers regulate their companies, they are only limited to their company.
The same goes for the World Wide Web and its Internet Protocols. No one regulates it or what is built on it, but they can regulate their respective websites.
In the same way, Bitcoin prides itself in its decentralized nature. This can only be hampered if a large majority of miners decide to propagate some form of centrality, and that is virtually impossible to pull off.
Like Ethereum, many emerging Crypto have their proposed solution built of something more than being just a store of value. E.g., Bittorrent, Bitshares, Truthcoin, Maidsafe, etc.
If Ether, and similar coins, can go all the way through with their proposed solution of letting multiple industries build something tangible and decentralized on their network, just like the World Wide Web with websites. There is no limit to what can function under the decentralized network.
As we have stated, with proof, beyond a reasonable doubt, Blockchain technology will eliminate the middlemen we are accustomed to in most of our daily commercial dealings.
Eliminating credit card payment processors and their overpriced fees for transactions is probably most anticipated. A lot of other sectors will either evolve or die as well. Some of them include;
Banks
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Financial institutions and central banks will probably be first on the list to face a disturbance in usual activities and near extinction. Since the arrival of Bitcoin, and alternative coins (altcoins), they have already started facing their plight.
Countries like Ecuador even came up with their coins, and analysts predict the lifespan of fiat currency to only last a few decades now. With the recent pandemic and fear of close contact, fiat currency is even more dangerous. It is inevitable that some startups to propagate the crypto revolution are even given loans by the same banks they seek to overrun.
Bookkeeping and Management
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This is another area where workers are most likely to be affected faster than others. The blockchain ledger will so readily process and sort out any database record cheaply and with speed. Being an A.I, you can expect not to encounter human errors. This could extend to taking over a couple of administrative jobs.
Distribution chain and inventory management
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There are already talks of automated shelves that can tell when to order, pay for, and properly arrange inventory. It will also be able to take orders, package and make deliveries, receive payments without human help at any point, save the maintenance of the decentralized network.
With such technology, the production and sale of counterfeit and the theft of goods are greatly reduced to being almost impossible. The same goes for illegal or black markets.
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With the introduction of smart contracts, mediators' need, as a specialized service for brokering any legal agreement, is reduced heavily.
The gathering of evidence against related crimes will also be affected, for good, because everything is permanently encrypted on a public ledger. Related crimes will gear towards things like altering transaction blocks and hash frauds.
Legal practitioners will no longer bother with cases under categories like payment or property disagreement, extension or enforcement of contract execution, etc.
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A radically decentralized future is foreseen in a couple of years, and even the world of social media would have a fair share of revolutionary transformation. If a social networking app decides to ban or censor some of its users, it can go-ahead to create a social world of its own, with its own customs rules and no central authority.
Instead, the network is maintained by people like miners, helping to run the network for some crypto payment as a reward. Posts are transferred and registered on the public ledger, so trying to sensor or delete a post will be as impossible as overwrite or altering a successful transaction on the Blockchain.
As crazy as it sounds, such a future is coming in fast, where money and information are easily transferred at will.
A few decades ago, I wouldn't even have been able to cook up such an explanation with hopes of getting people to understand.
Music, Arts and Entertainment
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Another area where decentralization will have a great impact is in the entertainment sector, and how creativity is rewarded.
Already, you can see something similar in the web application of Zora.co. Pretty much like SoundCloud, Spotify and other music distribution channels, but it deals with more than just music.
Zora comes with an appealing twist in that it lets the content creators set the prices they want to sell their content, and also get to reserve all rights to it. Following in their footsteps, improved apps will be launched in the future.
Policing the executive
There are already a number of Dapps (decentralized apps) that are being developed for the service of citizens and ordinary people. A working example is "Sidekik", a decentralized mobile app meant to tackle and help bring an end to police brutality.
When having an encounter with the law, this app can be activated to start collecting useful data, like gps location, audio and even video recordings. This data isn't stored directly on the phone, but immediately stored to the decentralized platform of "Maidsafe"; a network for management of distributed and self-encrypting data. That way, even if your device is seized or r destroyed the evidence is stored permanently on a "decentralized cloud".
Electoral oversight
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If the public can surmount the main issue of trust, there is really everything to gain by involving blockchain technology in monitoring and overseeing election processes.
It will put true Democratic power into the hands of citizens and ensure transparency and reduction of the cost typically budgeted to conduct an election.
Blockchain is incapable of telling lies, and any manipulations can be easily pointed out. If that is the case, it will be impossible to rig the election successfully.
The universal truth is only possible if more than one body can lay claims to it. The thought of phasing out human intervention in "authentication" processes like that of the judiciary and electoral bodies is a giant step of faith for humankind in the modern world.
Are we heading towards a future like that of Skynet, where entrusted functions are stripped of human touch and handed over to machines?
Possible Issues?
Of course, the blockchain revolution brings an endless number of possibilities, but it is not without doubts and unanswered questions. This will include the following;
Will there be the need for a new means of governing, and overseeing a transparent environment, improved to what we have now?
Many functionalities that the blockchain world brings along are still really young at this stage and difficult for the majority to grasp. Are we to anticipate any unforeseen sources of risks in the future?
How will this advancement shape our future in terms of interacting with objects and even relationships with fellow humans (reality in general)?
Being on a public ledger, what does privacy mean within the DApps, in a machine-to-machine environment, owing to the internet of things.
Are there any future implications to the new decentralized way software is developed, and what methods will be adopted to raise software developers of the future?
Conclusion
One constant since the dawn of time is Change. With the turn of the technological centuries (especially the 21st), this Change has been rapid.
With the blockchain revolution, we will most likely see many that in years to come, although it will be a slow process in the initial phases, which is now. The awareness of Bitcoin has most likely not encompassed up to 30% of the world population as it stands, and far less than that are aware of its true potential. Quite frankly, that is the only hindrance right now to a total sweep of Decentralization within a decade.
Those who know can now build necessary alliances and look towards a brighter future where they can't be left out. A first step could be investment in DeFi (Decentralized Finance) coins or startup DApps with real solutions. Please take a look at our next article, where we talk extensively about them and how to invest.
