What is Blockchain Technology? A Step-by-Step Guide

Posted by Sneha on October 8th, 2018

Blockchain technology

Blockchain technology and cryptocurrencies like Bitcoin generated a lot of news this past year. It seems like every week there's another headline touting an upcoming revolution or downplaying this new technology as a fad with few long-term prospects. If you are unfamiliar with blockchain programming or are still building a point of view, let me make the case for revolution.

Recipe for Disruption

Let's start with why we trust doing business with a company. We trust our largest retailers to fulfill our purchases to deliver goods and services. We trust our banks will ensure our account balance is correct and transfers are verified and free of fraud. The systems these companies have in place build our trust. For example, regulations, anti-fraud systems, and services that verify transactions all play a role in ensuring the business is conducted above board. Credit card companies are a specific example of a 3rd party that charges a fee on each purchase to verify and settle consumer credit. Overall, each of these parties acts as middlemen and provides their services for a fee on each transaction.

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The number of transactions in our global economy is mind-blowing. Worldwide retail sales are more than trillion USD each year, and gross world product (GWP) is over 0 trillion. So enormous numbers of deals and transactions use middlemen and their verification services to run trusted businesses. As the cost of doing business, we accept that these intermediaries extract fees on many trillions of transactions to curb fraud and maintain consumer faith. Those costs creep into the economy, driving up living expenses and the prices for goods and services.

But what would happen if there were cheaper or faster ways to verify deals in our economy? If substitutes existed, the savings would be in the trillions of dollars. For example, online payment gateways earn many billions by adding more than 2.9% on each transaction. There's also the cost of lost time. Middlemen all add days and weeks of delays in real estate, loan approvals or license renewals. Cutting the costs placed on every deal and order in the economy would return incredible profits to businesses and disrupt the way we engage in commerce. Injecting savings in the trillions would kick-start growth in the global economy larger than what anyone government or company could do on their own.