I’ve had the privilege to William Mougayar’s book The Business Blockchain, and I think it provides excellent insight into blockchain technology, how it works, and its use-cases.
Here’s the notes that I took on the book (P.S — you can find more notes on books I’ve read at the end of this article!)
What is the Blockchain?
- Business: Back-end database that maintains a distributed ledger, openly.
- Technical: Exchange network for moving value between peers.
- Legal: A transaction validation mechanism, not requiring intermediary assistance.
Blockchain will remain a semi-mysterious, semi-complex phenomena for the period 2015–2018.
The blockchain is changing how we write applications via a new form of scripting languages that can program business logic as smart contracts that are enforced on the blockchain.
A “hash” is a unique fingerprint that helps to verify that a certain piece of information has not been altered, without the need to actually see it.
The blockchain exhibits simultaneously the following ten properties:
- Computing Infrastructure
- Transaction Platform
- Decentralized Database
- Distributed Accounting Ledger
- Development Platform
- Open Source Software
- Financial Services Marketplace
- Peer-to-Peer Network
- Trust Services Layer
As cryptocurrency gains more acceptance and understanding, its future will be less uncertain, resulting in a more stable and gradual adoption curve.
The more open the core of a blockchain is, the stronger the ecosystem around it will become.
A strong contender to POW will be the Proof-of-Stake (POS) algorithm which relies on the concept of virtual mining and token-based voting.
How Blockchain Infiltrates Trust
The blockchain offers a degree of transparency and access to truth that can prevent breaches of trust.
On the blockchain, identity and reputation are the primary entry-level factors that effectively lock the peer-to-peer transaction in place.
Smart contracts help make the breach of an agreement expensive because they control a real-world valuable property via “digital means.”
Writing a simple contract is easy, especially if you are using a specific smart contract language.
Smart oracles contain a real-world representation of information, such as an identity, an address, or a certificate, and they could also have agent-like property that directs the smart contract to behave in a certain way.
Examples: Netki, OneName, BitID, Identifi.
Consensus in public blockchains is done publicly, and is theoretically subject to the proverbial Sybil attacks.
Web3 architecture includes: 1) an advanced browser as the client, 2) the blockchain ledger as a shared resource, and 3) a virtual network of computers that runs smart business logic programs in a decentralized way.
The World Wide Web’s original Hypertext Protocol is getting augmented by a new hypermedia protocol called InterPlanetary File System (IPFS).
Obstacles, Challenges, and Mental Blocks
The blockchain will meet resistance, be misunderstood and rejected, until it is widely accepted.
Popularity of certification programs, such as from the CryptoCurrency Certification Consortium (C4), will increase acceptance.
There is a lack of standards when it comes to the blockchain.
Crowdfunding by self-issuing cryptocurrency or crypto-tokens is also another funding option.
There is not a lot of difference with the Internet’s situation, back in 1997, when we knocked down all these barriers one by one, while some of them went away on their own.
Blockchain in Financial Services
Bitcoin’s vision is a globally decentralized money network with users at the edges of it.
The decentralization of banking is here. It just has not been evenly distributed yet.
Banks do not want to change banking. Startups want to change banking. Blockchain wants to change the world.
Lighthouse Industries and New Intermediaries
Blockchain infrastructures have multiple built-in redundancies, and are very resilient.
Soon, we will be able to get a “proof for everything.” The vision is this: trust checking should be a frictionless process, as easy as your searches on Google.
A DAO is a Distributed Autonomous Organization
There are many ways in which governments can use blockchain-based services
- Marriage Registration
- Property Ownership
- Motor Vehicle Registration
Blockchain’s capabilities are going to be a silver bullet that will fix the challenges with medical records and patient data privacy.
Uses of the blockchain in the medical industry include:
- Sharing our patient data in the aggregate, while anonymizing it to ensure privacy is maintained. This is helpful in research, and for comparing similar cases against one another.
- Recording and time-stamping delivery of medical procedures or events, in order to reduce insurance fraud, facilitate compliance and verification of services being rendered.
- Recording the maintenance history of critical pieces of medical equipment, for example, an MRI scanner, providing a permanent audit trail.
- Carrying a secure wallet with our full electronic medical record in it, or our stored DNA, and allowing its access, in case of emergency.
- Verifying provenance on medications, to eliminate illegal drug manufacturing
Implementing Blockchain Technology
It takes some time before a given issue (the blockchain) gains momentum and understanding
Some companies are funding a blockchain lab that includes software engineers who can get their hands dirty as soon as ideas come to the fore and need to be demonstrated.
Decentralized applications start by creating their own rules for ownerships, transaction requirements, and logic.
When evaluating a blockchain platform, it is important to keep the following key points in mind:
- Programmability. What specific programming languages are available?
- Scalability. How many nodes can the blockchain grow? Will there be upper limits?
- Upgradability. What is the track record of the developers for delivering enhancements and upgrades to the blockchain?
- Transactions manageability. Is there real-time transparency for all transactions?
- Visibility. Do you have a full view on the blockchain activity?
- Affordability. What is the cost of deploying that technology?
- Security. What is the documented confidence level in the blockchain’s security?
- Speed/Performance. What are the upper limits for speed in validating transactions?
- High Availability. What is the uptime’s track record?
- Extensibility. Can you extend the basic blockchain functionality with a variety of add-ons?
- Interoperability. Does it inter-operate well with other blockchains or related technologies?
- Open Source. Is the code open source? What is the level of collaboration and contributions from a variety of developers?
When creating for the blockchain, you must have the following:
- Education: Learning the basic functionality of a blockchain, and what it enables generically.
- Discovery: Identification of areas of opportunities by answering where does the blockchain fit, and what can we do with it?
- Design: What solutions functionality will we need to address the potential we saw in the discovery phase? How will it affect what we are doing, including the business process, contractual and legal requirements?
- Development: Software development, integration, and deployment of the technology.
- Management: Ongoing software maintenance, support, iterative evolution, new features, and updates.
Decentralization as the way forward
Decentralization does not mean anarchy or performing illegal acts. It means that an individual user is more empowered and less restricted. In decentralized systems, problems can be solved early and when they are small.
Going forward, this is metamorphosing into something bigger: a cryptotech-driven economy with unparalleled global value creation opportunities, not unlike the Web’s own economy.
With most enabling technologies, we typically begin by duplicating old habits, often by doing the same processes faster or cheaper. Then we start to innovate by doing things differently, and by applying new ideas that we could not see before.
Getting to decentralization is easier if you start from scratch. It is more difficult to transition from central services to decentralized ones.