Researchers who study evolution and the history of human behavior believe that human beings always had the basic desire to live in a society, rather than living as individuals. Over the years, human beings established institutions such as the judiciary, banks, marketplaces, corporates, and governments to enable value exchange for a better lifestyle and society. Technology has always been the trusted aide along the journey, helping improve these institutional practices adding convenience, value, and security to human life.
The invention of computers and the internet further transformed the society and its needs substituting manual processes with automated systems with remarkable success. However, most of the technology we use today heavily depends on two key aspects:
This dependency gives rise to quite a few serious problems that we need to address urgently. Centralized databases are a huge security threat to people as individuals as well as groups. Moreover, the volume of digital transactions is increasing exponentially, and data management is becoming more and more difficult. In the recent years, there is a lot of research on challenges related to the central database. One of the recent research paper by Capgemini – Smart Contracts in Financial Services: Getting from Hype to Reality elaborately analyzes the demerits of central databases and middlemen in banking and financial services.
In a nutshell, the challenges that need immediate attention are:
But how do we overcome these obstacles and limitations to truly benefit from technology and effectively utilize its vast scope?
Blockchain is considered one of the “most important IT inventions of our age”, and it was first defined when the cryptocurrency Bitcoin was introduced in 2008. As the dust around the new digital currency settled, everyone started noticing the technology running the show and the discussion around this incorruptible digital ledger has not stopped since then.
Foundation of the fabric
Blockchain technology uses Distributed Ledger Technology (DLT) and runs on peer-to-peer networks. Each transaction is time-stamped, encrypted and packaged inside blocks, and hence immutable. Each block is linked to the previous one through linked lists and a copy of the blockchain is stored with both the parties involved in the transaction. Blockchain technology is built on six important pillars:
Though the arguments for blockchain technology are loud and compelling, a cautious approach is recommended. We must not forget that the technology is only in its nascent stage and needs some serious work before proper implementation. “Looks like all these areas are very weak. There is a lot of hype around it. The technology is not proven yet. Still, people are talking about it at a very high level. But implementation is not very matured,” notes global analyst firm Forrester. “Will the technology live up to the expectation”, wonders Gartner. Others ask will blockchain outlive the hype around it?
The fact is that the technology must prove itself on technical grounds to earn credibility among the user community. Analysts believe that it will take us another 15 to 20 years to get there at scale. When that happens, human beings will have a better life devoid of middlemen, central databases, and disputes; and technology will make our lives safer and dispute free.