Despite the negative pricing in the crypto market nowadays, I do not doubt that the future of blockchain is bright.
As a person born in the early 70s, I had a chance to experience all the late information technology advances. Although I do not have any expertise in computing, I have always done technology-related work throughout my banking career, which began in the 90s. I have experienced how changes in technology have affected business outcomes.
The 70s were a period when mainframe computers were popular, and as a child, I only saw computers in science fiction movies. In the 80s, the personal computer revolution broke out, and I took advantage of this revolution by playing a lot of computer games at home and writing small computer programs. In the 90s, the internet had become widespread, and in the 2000s, social media and mobile devices had become popular. I had the opportunity to personally monitor the impact of internet banking and mobile banking on business results. As technology developed and matured, people appreciated its value and began to use it first gradually and then in masses.
The emerging technologies of recent years are blockchain and artificial intelligence. Artificial intelligence is the subject of a separate article. In this article, I will focus on what blockchain technology promises and what it has achieved today.
I must admit that I have made a great effort to understand what the blockchain does. I think the potential of blockchain technology was understood when widespread applications of this technology emerged in 2016 and 2017. The price bubble that emerged at the end of 2017 was based on rational foundations, a move that was simply exaggerated and overpriced.
Although the internet, social media, and mobile have democratized information, a new problem has emerged. The information focused on corporate structures such as states, banks, and large technology companies. Access to information occurred within limits described by these institutions. Another problem of pre-blockchain computing technologies was collecting sensitive information such as money, personal information, land registry records on intermediaries. This allows corporate structures to dominate information fully, and these structures could use the power provided by information as much as they wanted. Contracts were made between users and intermediaries, but the parties that kept the information were profitable beyond the value they created from this exchange.
The Ideal situation was that information would circulate without intermediaries, and sensitive transactions would take place through platforms that served the public's benefit. The biggest obstacle to the realization of this ideal was the inability of users to trust each other. Users who could not trust each other needed third parties such as governments, banks, and large technology companies. Especially when it came to valuable assets such as money, financial transactions, and personal information.
Blockchain has emerged as a technology that solves the problem of trust between users. Using cryptography and distributed computing principles, this technology enabled the emergence of alternative networks to corporate structures.
The advantages of blockchain technology can be listed as follows.
Distributed Architecture
On the blockchain, data and transactions are stored on hundreds of separate computers. Keeping data in a distributed architecture is not a situation that starts with blockchain technology; it has a long history. Blockchain technology takes the concept of distributed architecture one step further, making it independent of companies. This makes the system more resistant to unwanted changes in data, forgery, and cybercrime.
Trust
The most important value proposition of blockchain technology is trust. Parties that do not trust each other can trade on blockchain platforms. Why is trust needed? Because blockchain is used to manage critical assets such as money, identity, art, title, patent, diploma. We need to make sure that no copies of these have been removed or used without permission. The trust problem is solved because the books in which the records of these assets are kept on many computers and traded in agreement on the blockchain.
Decentralized Structure
Blockchain technology eliminates centralized agents that keep records. In this way, the power that these central intermediaries get because they keep records decreases. We can give examples of central banks, commercial banks, intermediary investment institutions, Land Registry administrations, population administrations to the intermediaries we are talking about. Thanks to blockchain technology, it is possible to benefit from the efficiency caused by scale without being dependent on central corporate structures. The most important assets of big tech companies like Facebook, Google are customer data they accumulate on their servers. They generate revenue mainly by selling these customer data to advertisers. Retention of customer data on the blockchain will end the monopoly position of these companies on customer data, and control over this data will pass to their owners.
Smart Contracts
It is possible to safely operate contracts based on time or a certain condition on the blockchain. DeFi applications, which have recently become popular, have shown the true value of smart contracts to everyone who is not interested.
Of course, as with any technology, blockchain technology has weaknesses.
High energy consumption and long processing times are some of these problems. Over time, this problem has eased as consensus mechanisms other than proof of work have developed and been accepted. Blockchains using consensus methods such as Proof of stake or delegated proof of stake have become more viable at a reasonable processor cost.
Question marks about scaling also seem to have been overcome by advances in blockchain technology. Today, we can perform secure and cost-effective transactions on Steem, Ethereum, Binance Smart Chain, and Polygon networks.
The relatively complex nature of the system remains an important problem, and the lack of legal regulation is also a challenge. The price volatility problem has been eased through dollar-indexed cryptocurrencies. But since the value created by blockchain technology is obvious, these questions will surely be overcome over time. Larger masses will adapt over time, and states will realize that this technology does not disappear when they close their eyes.
In his 1762 book The Convention of Society, Jean Jacques Rousseau explained that a legitimate political system could only exist through a social contract. Those who made the French Revolution in 1789 were greatly influenced by this book by Rousseau. The excesses during the revolution and the subsequent failure to fully achieve social order led to the Republic's collapse established by the revolution in 1804. Rousseau's ideas were correct, so over time, the idea of the social contract was re-adopted.
As blockchain technology matures, states, regulatory agencies, banks, and large technology companies will continue to exist. On the other hand, I do not doubt that when an alternative such as blockchain strongly demonstrates its existence, they will carry out their activities more appropriately to the social contract.
Those who support the blockchain revolution will definitely benefit from this concept.
Thanks for reading.
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