What is Blockchain, can someone give me a basic explanation, I hear you scream!
A simple definition of Blockchain.
Ummm, errr ok, it is a decentralized thingy that records your data on lots of computers, no hang on, that’s not correct. It is a distributed database that you raise money with, wait no, it is where Bitcoin comes from, sort of, right? Ok, now we have cleared that up for you we can move on. Here are some more definitions of Blockchain in case you are still confused.
This is what I would say, a Blockchain is:
Blockchain is a term Satoshi Nakamoto, the author of the Bitcoin white paper used to describe a public distributed transaction ledger that Bitcoin operates on. You can read a more in-depth article I wrote on Blockchain here.
Andreas Antonopoulos the great Bitcoin educator says:
“Blockchain is one of the four foundational technologies behind Bitcoin and it can’t stand alone. But that hasn’t stopped people from trying to sell it. Blockchain is Bitcoin with a haircut and a suit you parade in front of your board. It is the ability to deliver sanitized clean comfortable version of the blockchain of Bitcoin to people who are too terrified of actually disruptive technology.”
This is essentially the Bitcoin Maximalist standpoint on Blockchain. A Bitcoin maximalist is someone who thinks anything other than Bitcoin is a total load of crap, we have a couple in our team, I’m not so extreme but I agree with much of the statement but I also think we only move forward if we are constantly innovating. I think that whilst much of the work on many Blockchains is speculative, it is worth it, in my opinion. Right now the real innovation in the technology is Bitcoin and a few other key cryptocurrencies/platforms and I would advise you to understand Bitcoin and it’s blockchain before confusing yourself with the 1000s of other blockchain project popping up daily.
Blockchains can be Public and Private
Banking projects are also where much of the blockchain action is at. Much of this is private blockchains and that’s just boring to write about. At least that’s what I see and think. Many will strongly disagree with me. For me, decentralised public Blockchains are the future and whenever you are reading about or discussing blockchains make sure you understand the difference between public blockchains, Bitcoins, and private, a bank’s internal blockchain like JP Morgans Quoram https://www.jpmorgan.com/global/Quorum
The real issue and confusion often stem from people not grasping the basic’s and understanding the difference between a public and private blockchain. You basically are invited to a private blockchain whereas a public blockchain is there for everyone and at its finest is decentralised. Decentralised means no one controls it. Bitcoin is the only true example of this at this point in time.
Blockchain should be viewed as a buzz word in my opinion. The reason I say this is that it is too loosely used. I have spoken to companies who have run an ICO and are now in business. When I’ve asked them to explain their structure including their use of blockchain technology I get blank looks and they point to some smart-looking person and say ask him, he takes care of that. That is often the understanding of blockchain for people running blockchains, sad but true. Scammy, yes it is. A huge amount of capital has been raised but just using the word blockchain. The long Island Ice Tea company change its name to Long Island blockchain and the share price skyrocketed.
We need a blockchain apparently, find out what it is
The Digital Transformation Agency, an Australian government department appears less than impressed with blockchain’s current capabilities after it was given $700,000 in budget funding to investigate the technology.
They have come back after lots of head-scratching, some conferences, lots of lunches and said they don’t think it is able to offer them much at the moment. This is an example of a government department looking at private blockchains and in most cases, our current database technology is a better solution. The main reason is that a blockchain records every detail, EVERYTHING, forever. This makes them clunky and slow, some smart people are working on solving this problem. Riches and fame await the winners. They will be the new Amazon, facebook etc
So many people have been told to look into blockchain as part of their jobs and not had a clue where to start, I suspect the Australian DTA was no exception.
What does Blockchain currently offer us
Blockchain is a great piece of technology if you require censorship resistance. Its current use case is BITCOIN. This is just my opinion. This means you can transact value, Bitcoins at present, more coming soon, without the fear of someone taking your asset off you. You can also move your asset around this public blockchain very quickly. Millions of dollars can be sent in minutes around the world for very small fees. This leaves international money transfer via our current banking system looking very outdated. The fact that the information is stored on every computer on the blockchain makes it impossible to hack also.
Many Blockchains are just Marketing Hype
Now don’t get me wrong, I see Blockchain as something that could and most likely will change so much of our lives, but I still think people need to wake up to where we are currently at with the tech. Right at the start is where we are at. Bitcoin has only been around for 10 years and it is moving rapidly. Its has given us a perfect use case for it. Apologies to the multitude of Blockchain consultants if this affects your ability to charge huge fees. In fact Cointelegraph today says in a lead story:
Demand for Blockchain Engineers Has Grown 400% Since End of 2017, Report Says
This is lead by demand for tech giants. There is no doubt we will see some amazing innovation in this space. They go on to say’
The average earnings of a blockchain engineer have soared to between $150-175,000 per year, CNBC reported Oct. 21, citing Hired’s 2018 State of Salaries Report.
Far higher than the $135,000 average software engineer salary, the figure puts blockchain engineers in the same pay bracket as artificial intelligence (AI) specialists, as the pace of blockchain recruitment demand gathers pace.
I grew my first company very rapidly, in part because I could not keep up with the demand for the year 2000, Y2K, engineers, who were saving us from the Millennium bug. We were all very worried that our toasters might stop working at the stroke of midnight 2000 and I therefor put lots of highly paid engineers into roles to make sure people could have toast on the first day of the new millennium.
Never for a moment did I think we would be toast-less as we stumbled around with epic hangovers to start a new year and enter a new Millennium. I did pretty well farming out engineers and was ready to buy another toaster anyway, worst case. We fixed 1000s of computers too, but they may as well have been toasters, they were not broken. Much of the blockchain hype is trying to fix something that is not broken and is still better served by tradtitional database technology. This will change but beware the blockchain salesman. There are some super dodgy ones around at the moment.
I am going to have a real dig into what these jobs actually are and see if Hardforking should be working with Blockchain consultancy. Once again don’t confuse this statement with our 100% support and commitment to Bitcoin. The Bitcoin blockchain is real, many of these other blockchain projects are just not. They are marketing hype and a scammers dream.
Summary of Blockchain
Blockchain is already changing society, look at what Bitcoin is doing today. It will continue to do so and only get bigger. Just be wary of the person selling Blockchain as a great solution to everything. We will probably get there, we are just not there right now. And the next time someone says Bitcoin is rubbish but Blockchain is the future you can be certain you are talking with a fool.
Here is a good technical lesson on how blockchain works.
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