Blockchain is much more than Bitcoin, Drew Miller, Ph.D Managing Director at Business Blockchain Consultants demystifies Blockchain
We saw blockchain technology and the explosive growth it was going to have as a way for us to get a lot more business and be a lot more relevant.
The first big blockchain application was Bitcoin and that’s good and bad. It’s nice that Bitcoin developed the blockchain. It’s kind of bad because 90% of people here, when they hear blockchain, they think of bitcoin and they think of cryptocurrency. Blockchain is much, much more than that. Furthermore, the best blockchains out there today, they’re not Bitcoin, it’s Ethereum, it’s Hyperledger, and other new blockchains that are coming.
Blockchain is a big distributed database but it’s not distributed in a normal fashion. Normally, if there’s a database out there, someone controls it and they have to protect it from hackers and other people who try to get access to it. You may be allowed to, you may not be allowed to. But that’s normally how information and data is exchanged. And blockchain is not that model at all. There is no central database. The databases on every computer that’s in the node running that blockchain, everyone has the ledger, are the database. And what happens is there is no middleman that says, “Here’s your new database,” you all, all the computers on the network generate changes in the database.
People call blockchain the second internet revolution, and I think that’s a good term. It’s gonna have as much impact as World Wide Web did.
Blockchain has been used by companies for years now, beyond Bitcoin. For example, Nasdaq, they’ve been using blockchain to keep track of private equity dealings for a couple of years now because it’s a great application for that. And there’s all kinds of applications, supply chain is just one example of how blockchain is just gonna be powerful. And there’s more examples of that. There’s disintermediation, letters of credit financing for doing all of this, escrow accounts. You don’t need escrow accounts when you’ve got a blockchain.
Ethereum blockchain; Two years from now, maybe Hyperledger, but for now Ethereum is probably the leading blockchain and it’s a public blockchain, meaning anyone can get on and use it. They invented something called smart contracts, which is very, very important. It’s almost another World Wide Web example of application. In a smart contract, you’re not just keeping information and ledgers on the blockchain, you have agreements on the blockchain. If this crate of poultry from Thailand reaches the Los Angeles dock and everything checks out and temperature, automatically your smart contract will say, “The amount that Walmart promised to pay this Thailand provider will get sent to them.” So there’s no bank, there’s no escrow, it gets handled automatically and not all this IT invoicing and keeping track of all that. The blockchain handles that via smart contracts. It can even issue payments in cryptocurrency or bank transfers.
Ethereum blockchain is gonna cost you a fee. It’s called gas and Ether. But it’s pretty tiny, it’s a pretty small transaction. Bitcoin blockchain is pretty slow. It takes 10 minutes to process a block of transaction. Ethereum blockchain is operating, in minutes so it can do stuff a lot faster
The Fortune 500, most of them are already in the blockchain. They’ve got big IT departments they’ve been studying. We’re dealing more with what we call middle market companies. I mean, if you’re a small little retail organization, you don’t really need to worry about blockchain, someone else will solve the problem for you. But if you’re a mid-sized manufacturer, a mid-sized retailer, a lot of different industries, you do need to be looking at blockchain.
Hyperledger is a whole family of largely private blockchains. When I say private blockchain, I mean that you can’t just say, “Hey, I wanna join Hyperledger,” and hook your computer up. Unless they want you to be part of the system, you can’t be in. So it’s a private blockchain. And businesses, I think, are largely gonna be using private blockchains. A lot of them using Hyperledger technology because it’s designed for business use that has smart contracts for example.
What do you think the biggest misconception about blockchain?
“The biggest misconception is that blockchain is Bitcoin and Bitcoin is blockchain and that’s all there is. Bitcoin, again, it was valuable to show the technology works, but the big power of blockchain has nothing to do with Bitcoin. As I said, it’s running on other blockchains, the smart contract innovation that Ethereum had was very, very important, and it just keeps getting developed and developed and developed.”
Bob Roark / http://businessleaderspodcast.com/
Drew Miller/ email@example.com