While most people are learning about the blockchain just because of Bitcoin, its roots – and applications – go much deeper than that.
Blockchain is a technology unto itself. It drives Bitcoin and is essentially the reason * so many * new ICOs are flooding the market – creating an “ICO” is absurdly easy (no barriers to entry).
The point of the system is to create a decentralized database – which essentially means that instead of relying on similar “Google” or “Microsoft” data storage, a network of computers (usually managed by individuals) can operate in the same way like a bigger company.
To understand the implications of this (and thus where technology can take the industry) – you need to look at how the system works at a basic level.
Created in 2008 (1 year before bitcoin), it is an open source software solution. This means that its source code can be downloaded edited by anyone. However, it should be noted that the central “repository” can only be changed by certain individuals (so “developing” the code is not free for everyone).
The system works with what is known as the Merkle tree, a type of data graph that is designed to provide versatile access to data on computer systems.
Merkle trees have been used with great effect in a number of other systems; mostly “GIT” (source code management software). Without being too technical, it basically stores a “version” of a dataset. This version is numbered and thus can be loaded whenever the user wishes to call the older version. In the case of software development, this means that a set of source code can be updated across multiple systems.
The way it works – which is to store a huge “file” with updates to a central data set – is basically what drives the likes of “bitcoin” and all other “crypto” systems. The term “crypto” simply means “cryptographic”, which is the technical term for “encryption”.
Regardless of its core business, the real benefit of wider “chain uptake” is almost certainly the “paradigm” it provides to the industry.
There is an idea called “Industry 4.0” that has been around for decades. Often associated with the Internet of Things, the idea is that a new layer of “autonomous” machines can be introduced to create even more efficient production, distribution and delivery techniques for businesses and consumers. Although this is often covered up, it has never been accepted.
Many experts now see technology as a way to facilitate this change. The reason is that the interesting thing about crypto is that – as is especially proven by Ethereum-like ones – the various systems that are built on it can actually be programmed to work with a layer of logic.
This logic is really what IoT / Industry 4.0 has missed so far – and why many are looking for a “blockchain” (or equivalent) to provide a baseline standard for new ideas moving forward. This standard will give companies the ability to create “decentralized” applications that enable intelligent machines to create more flexible and efficient manufacturing processes.