If anything has skated along on a pool of hype and general lack of understanding, it’s been blockchain. The technology gets touted as the answer to almost everything while also frequently being identified as synonymous with cryptocurrencies.
Time to dial back the hype and amp up reality and knowledge. Here are a few things to consider.
Blockchain is a (largely) immutable ledger
The reason blockchain receives the attention it does is the promise of transactions that are trustworthy because of their transparency. For a quick rundown without getting lost in the difficult math of prime numbers and cryptography, start with this explanation that Edward Snowden gave to his lawyer.
The short version is that a blockchain is a distributed way of securely storing information about a series of transactions by appending information to a ledger. Distributed means that multiple parties, including ones not party to the specific transaction, typically have copies of everything that has been done, which is the ledger.
By saying securely storing, I mean that information is generated that refers to the previous state of the ledger, making it incredibly difficult to manipulate records that already were recorded. And because new transactions are appended to the old ones—added to the end of the ledger—you have a record of how things have been changed. In a traditional database, it’s possibly for people to change the contents of a record, potentially altering values and redefining history.
Cryptocurrencies use blockchains
Cryptocurrencies, those forms of fiat money in which the value isn’t tied to something else that remains relatively constant, use blockchains. But they aren’t the same as blockchains. A cryptocurrency, like Bitcoin, has a distributed ledger blockchain so everyone can see the history of all transactions, even if they weren’t involved.
Blockchains can and do exist independent of a cryptocurrency, which is where their real power and value can be.
Much blockchain coverage is hype
There are too many people satisfied with writing about blockchain from the viewpoints of vendors or analyst speculations. Excessive amounts of hype have floated about. To follow blockchain in business journalism, it’s time to move away from the hype and ask two hard questions.
One is why blockchain is a better approach to any given problem than other forms of technology or practice. The second is to demand that anyone promoting blockchain point to actual uses outside of cryptocurrencies.
There are real-world applications already
Although in my experience it is difficult to find, there are actual applications of blockchain that make sense and that aren’t about a cryptocurrency as a vehicle of speculative investment. Kodak created one, paired with its own cryptocurrency used as an exchange token, to track the licensing of photographs. Photographers can use the system to license their work and have a record of the agreement, in case someone tries to expand a use without additional payment.
Then there’s Goodr, an innovative for-profit company that makes money by picking up excess foodstuffs like a waste management company would, only to deliver them to nonprofits that feed the hungry. And everything is powered by blockchain to provide several important benefits to the donors.
Time to explore your areas of coverage and see what companies are doing with blockchain while filtering out the hype.