Why Is the Blockchain Such A Big Deal?
Let me take you on a slight tangent in order for you to be able to understand why the blockchain is a big deal.
A little bit of history is important to understand the context.
Consider this picture….
Pretty self-explanatory. An event “x’ occurred and the diagram shows two timelines — one before the event and one after.
So hypothetically speaking, let’s think of the invention of the wheel…. historically an extremely pivotal event, and one that had far-reaching consequences.
But think about the day the event occurred, or rather, the days before the invention of the wheel.
About 12 laborers are ‘dragging’ vegetables on pallets from their farm to the village to sell, stopping every so many miles to take a breather and then dragging the pallets again (or if not dragging them, carrying them).
Such was life all throughout the world at the time: you either had to drag or carry things.
Then in some household, someone invents the wheel. The man (or woman) is ecstatic at his invention.
“This will change the world beyond imagination!”
He quickly gathers his children and tells them, and they can’t quite comprehend what their father has made. His wife doesn’t get it either.
Over the next couple of weeks, a few people understand the immense potential of this invention. There are a couple of village elders — futurists as they are called — and they get it.
Fast forward to today, and the wheels affect each and every human being on this planet. Everyone.
If you step back and try to imagine what must have been a very turbulent time and then this invention happens which springs up 100,000s of uses cases — correction, millions of use cases. All because someone decided to solve a problem, that affected every one of us.
I’ll repeat that: because someone decided to solve a problem that affected all of us.
Another example is…
The
- ( + ) plus sign
- ( — ) minus sign
- ( / ) division or divide symbol
- ( x ) and the multiply or multiplication symbol.
Imagine, if you will, this date. The man (or woman) must be jumping with joy! The four mathematical symbols that will change the world, and yet, what do you think the reaction would have been from the people around him? From his spouse, or coworkers or people working in academia?
I’m pretty sure, not many people got it. Certainly not the cobbler or the butcher or the stone-mason, yet in the years to come, all will depend on it. Even the sheepherder!
Historically disruptive events are hardly noticeable in the time when they are happening. Only in hindsight can historians go back and trace the genesis moment and say, “..that! right there — was when it all started.”
The four seemingly weird mathematical symbols changed the world. They are part of you, me and every person who is born, whether or not they are educated or not, they will invariably in some manner learn addition and subtraction.
If there was some way to show a time-lapse video of humanity, from the very beginning it would be pretty awesome to watch. Initially, you’d see patches of humanity living in nearly isolated regions, without much movement. With the invention of the wheel, that changed. The time-lapse video will suddenly show life springing up all over the place. Literally. Because the wheel had then allowed horse carriages to be invented and pulleys for ships; humanity suddenly expanded.
The same expansion of humanity and communities happened when trade became more possible, i.e. with the advent of money.
Money accelerated the trade and it was possible with a unit of wealth that was trade-able. This instantly led to the setup of exchanges around the world to trade various currencies and also to allow trade of various goods against various currencies.
Somewhere along the way, the printing press was invented which led to an even faster growth of humanity. Not only did we have accelerated growth, but now we had accelerated learning (because knowledge could be passed on from one person to another, from one generation to another).
Continuing on our time-lapse of humanity, you will notice better transportation led to better connectivity (ships, railways, planes) and then in the last century, the invention of the mobile phone and then the internet, which led to a society where not only was everyone connected, but everyone would also become a content producer.
During this time-lapse, whilst the population grew, dispersed, mixed and flourished, we had to govern and trust our wealth (amongst other things) with third-party intermediaries, i.e. banks and other related financial institutions.
Like many great inventions and discoveries that allowed humanity to flourish, the blockchain allows humanity to be de-tethered from the financial institutions. Not only can we freely travel, freely communicate, but we will now be able to freely move our wealth and trade with each other directly without being restricted.
It ends in many ways a long-standing trend that we had to rely on intermediaries to trade or trust. For hundreds of years, this is what we were doing, but now… no more.
Pundits and other experts (read visionaries) who have a better understanding of what a certain discovery, etc. can do for us (especially now that everyone is connected), agree, this de-tethering of wealth from established institutions to a distributed environment will bring about a monumental change in us and on how we are taxed, etc.
Almost every adult in the world today wakes up to earn a living. Those earnings are maintained in banks and/or other related financial institutions and they are monitored and taxed by the government. Movement of such wealth, especially across international borders is also severely restricted. I will separately publish another blog article that explains the Fragmented World of Payments.
The blockchain is a powerful concept. As trivial as it seems sometimes, it is powerful — because of what it can do. It can allow us to have records that cannot be refuted or altered nefariously. It allows the conversation thread to be intact for all to see. It allows transfer of value from one person to the other — no matter where they are in the world.
Here is a crazy thought: I can send almost every one of you an email, yet if I wanted to send money, I cannot. Some may not be able to accept the money I have, or their government might now allow it — or their payment system is not connected or even the bank is not connected. But with Bitcoin (which runs on top of the blockchain), I can send a value to anyone without a care of their geography, sex, religion, orientation, race, color, age, education, etc.
Think about it — we are living in a world where almost every adult human being is working for a living. That work we do, that wealth we earn — is subject to so much control — that it would astonish you. The blockchain is about to change all that. It is about giving you more control over your wealth. Where you park it. With whom you exchange it. Etc. but all done directly without the need of intermediary institutions.
That is a huge differentiator.
The ability to have trust in a trustless society.
As oxymoron-ish that sounds, that is exactly what the Blockchain achieves.
In their book, Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Alex Tapscott and Don Tapscott highlight some very interesting points about the blockchain.
In the past, some of the most profound inventions that changed humanity were the Joint-Stock Company, Double-Entry Bookkeeping and the Internet (with Information Transfer)
Today, if you were to ask, what could impact us the most, these technological inventions are at the forefront.
The promise of the blockchain is more than all of the above combined. Think about that! More than all of these amazing technologies and their networks effects — combined!
We are in the very early stages of the blockchain. In my opinion, the real magic is just around the corner.
Exciting times ahead.
About the Author: Faisal Khan is a banking / payments consultant specializing in cross-border payment system and a digital money evangelist. He is the co-host of Around the Coin, a weekly podcast on Payments & Fintech with over 18,000+ listeners. Mr. Khan is a talent scout for Series A & B financing for various fintech VCs/funds. He is also a frequent contributor to popular Q&A site Quora where he has been a Top Writer 5 consecutive years. His official website is at www.faisalkhan.com.
The views and opinions expressed in this article/post are my own own and do not reflect the views of the companies &/or organization I work for &/or advise.
