Today more and more people get to know what blockchain is and the projects dealing with the blockchain technology, cryptocurrencies, and decentralized applications receive more attention nowadays. We know that big companies such as Microsoft or Amazon are working on blockchain-based solutions and blockchain companies successfully gather huge amounts of money for further development. So it’s not about the hype over the Bitcoin price. Serious people are already designing the future and future is blockchain. Not many of the projects are fully operative now, not many of them boast mass adoption so we still speak rather about the possible future than about actual changes in our lives, but let’s name one more time, why blockchain technology seems to be so important.

Code Instead of Trust

Probably the keyword for the understanding of the importance of blockchain is “trust”. When we make transactions using the bank service we have to trust the third party (the bank). It provides security of the transaction, it takes fees for this work, it dictates conditions, so if you don’t follow these conditions, the transaction won’t happen.

All decisions made by the banks are made by people, and not all of them are perfect. That’s why we can face some troubles when we trust banks. More than that, if the government sees you as a threat it can deprive you of the ability to make the transactions via banks. That reduces the opportunities of any person drastically. Such things happen in countries with repressive governments.

Blockchain replaces a human as a third party with a code (we thought that hard labor is usually replaced with robots, but as we can see blockchain can provide a lot of free time for other professionals). The middlemen, who can be greedy, or simply not accurate are not needed for the blockchain projects which use the algorithms to make sure that both parties of the transaction are not trying to scam each other. Smart contracts implemented for many post-Bitcoin projects guarantee that the transaction meets the conditions, and then it gets executed.

The code acts predictably and it controls the entire operation, it doesn’t lie, and people can’t scam or bribe the code. Trust is not needed in such transactions anymore. You can care about your business instead of guessing if your partner or bank won’t let you down.

Ledgers

The blockchain is a step towards peer-to-peer transactions. It’s almost the same as to hand something to somebody in person. The difference is that blockchain secures the transactions, so the person who must give you something in return won’t be able to run away. The fact of the exchange can be verified via the data in the public ledger (although some projects don’t support public ledgers and all the info about the transactions is known only by the participants).

Decentralization means that the project is not curated by the only person or group of people. The data is distributed among the network participants. They validate the transactions and keep a record of the ledger via producing blocks of information (transactions). No one can change the info in the ledger, it’s immutable, and it makes the info accurate and constant. The Bitcoin blockchain proved its efficiency with a decade of secure service (although the decentralization of projects using proof-of-work is arguable because it is believed that huge mining pools control most of the networks’ nodes).

Moreover, blockchain is not the only Distributed Ledger Technology known nowadays. There are many technologies that use similar ideas but claim to be more efficient than the blockchain technology.

Spheres Of Life That Will Be Changed Because of Blockchain

Many of us have already learned that blockchain projects deal with financial transactions, but the features of this innovation are good for other spheres of life, too. Distributed ledger technologies are good for storage, sharing, securing, encrypting data, keeping records, providing access to data, more than that it can be used as a way to delegate the computing power.

All these functions are good to automate such spheres of life as supply chains (nothing will be lost in the way), healthcare (patient data can be unified and held on blockchain safely), voting, distribution of music, distribution of electric power, charity (finally there will be a chance to see where does the money go), any kinds of contracts (real estate, for instance), and so on.

The removal of the middlemen will make things cheaper, faster, safer. People will have a chance to earn money via blockchain platforms because many of them are designed so that people can be paid for some actions they do (e.g. people can earn tokens for the creation of content). Although blockchain and other distributed ledger technologies are struggling with some challenges, it seems that the transition to blockchain is inevitable. The companies that won’t do that in time won’t be able to compete with others.