Last year, there was an economic phenomenon that took the global market by storm. Many of my friends were aware of it, some even invested in it. I’m sure many of you know by now what I’m talking about. Bitcoin. Bitcoin was, and to some extent still is, popular because it was an asset that was offered very high returns. In Bitcoin’s earlier days, people were focused on the money they could make off the product itself, so they didn’t really focus on the technology behind it, the blockchain.
In the past few years, however, individuals and corporations began to realize the value of blockchain, and now the technology behind Bitcoin is more valuable than Bitcoin itself. But first, a basic explanation of blockchain.
Blockchain technology is best described as a ledger that is publicly shared and publicly updated. In a hypothetical blockchain network, all of the members of the network have a copy of the ledger, and whenever someone makes changes to their copy, the changes are translated to all of the copies. This can only happen if certain protocols are met, and once they are the ledger is updated in all of the copies. In fact, it’s better to think of the ledger not as a multiple copies, but as one network that everyone co-owns. This means that no single user can control the ledger, and there is a very small chance of the failure, due to the fact that an error would have to compromise an entire network as opposed to a single user. If you’d like to learn more about blockchain, this is a great website that has a lot of information and expert opinion on the subject: https://blockgeeks.com/guides/what-is-blockchain-technology/
Using the blockchain as a ledger analogy, the economic applications of blockchain are obvious. Financial systems today like banks use closed systems to transfer credit, which is relatively inefficient. I’ll use an easy to understand analogy that I found in my research. Using conventional financial technology is somewhat like using Word documents instead of Google Docs. Word documents can be shared between users, but one user has to wait until the other has finished editing and sent them the new information before they can make edits. Blockchain is like Google Docs, where everyone can edit at the same time, and everyone’s edits are translated to everyone’s “copy” of the document instantaneously.
Entire countries could have financial systems built on blockchain, and this proposed concept is called a blockchain economy. It would have wide-ranging effects, the most prominent of which would be more efficient transactions. Blockchain isn’t limited to financial systems, either. Video games and scientific research are two possible areas where blockchain can be useful. It’s exciting to see where blockchain will take our society.
https://www.fxempire.com/education/article/how-blockchain-will-change-our-life-economy-and-the-world-449304
This seems like the kind of technology that could change the way we interact economically, but while a lot of people might recognize the word Bitcoin or blockchain, it still seems like it is relatively unknown. I think it also follows a trend that is more prominently seen in social media but also applies to the way economies interact in that our society prioritizes groupwork and interconnectivity as a whole, leading the popularity of a Google Docs style economy.
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