These past few years we have been hearing the term “blockchain” being mentioned frequently. What exactly is a blockchain, and why is it so important for the future of the Web? While the two are often used interchangeably, blockchain is a foundational building block for Web 3.0, the next step of the Internet which allows people to transfer value from one sender to another without any intermediary party.

What is a blockchain? In its simplest explanation, a blockchain is a set of records that are exact redundant copies of each other. These records, or ledgers if you like, are kept in different servers globally that mirror each other. These servers are maintained by different parties or persons, hence the term decentralized. If it were just one company like Amazon or Microsoft that were keeping these servers, it would be the opposite. It would be centralized.

The reason it is called a blockchain is because the previous records are chained to the newest records. You can’t actually read these records because they undergo a mathematical process called hashing. So a record like “Bob pays Alice $200” gets converted into an unintelligible but unique string like 0x21ed45sugye345fh67ghe3. It is easy  to convert the readable string to the hexadecimal string, but the reverse is virtually impossible to do.

Now if you are already lost in the woods, don’t worry. That’s all you need to know for now. 

The important thing is, what is blockchain good for? What you need to remember is that almost everything we do is done through transactions. We buy or sell assets (like property, cars, land, etc), we borrow or loan money, and the like. 

When you put a transaction on  the blockchain, it is there for everyone to see. If Bob sells his car to Alice and that record is put on the blockchain, he cannot suddenly deny he sold the car and sell it to Susan. At present we do that with traditional contracts that are notarized, or bank records kept by our bank. With blockchain, all our transactions are kept by a global network of software on servers.

By putting those transactions on many servers, you cannot claim fraudulently that the verified transaction did not happen. Thus if your balance is only $100 to begin with, and you have already had two transactions where you paid $50 twice, then the system should not allow you to transact anymore because your balance is now zero.

Traditionally we have used what are called trusted third parties or intermediaries to help us with these transactions. If you want a loan, you go to a bank. If you want to sell your house, you hire a notary public lawyer to notarize a contract. And so on. While we cannot totally eliminate these intermediaries for complex transactions, for simple ones we already can. 

For example, while it is not a blockchain technology, when you buy soda from a soda machine, you are using pure hardware and software to execute the trade. There’s no cashier. Blockchain is simply an extension of that soda machine. The soda machine only has one sales record that the cola company can access later on. Blockchain replicates it in many servers globally.

One concrete example of where blockchain can revolutionize an industry is in the sale of real estate. In the Philippines for example, there have been cases in the past where land titles had been faked by unscrupulous government employees in the Register of Deeds of certain towns or municipalities. Sometimes a parcel of land had two or more titles being sold, and the buyers would end up having to find out who really  owned the land. With a blockchain system, there is only the land buyer and the seller. Once the buyer has completed the payments, the seller will complete the transaction on the blockchain, and the land ownership transfers to the buyer.

So bottom line, where can blockchain be useful? Anywhere you need to execute a transaction that requires a middleman or trusted intermediary, especially if the transaction is quite simple. Real estate, car sales, bank transactions, art sales, hotel bookings, etc.

Blockchain basically scopes almost everything we do. It’s that revolutionary.

Are you ready for it?

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