How Blockchain Impacts Going Global

What is Blockchain?

Recently, in the past few years, especially with the growing infamy of Bitcoin and other crypto-currencies such as Ethereum, you may have been hearing about blockchain, or blockchain technology. This is what we’re going to be looking at today, everything blockchain: what it is, why it is, its positives, its negatives and its future, particularly regarding the global marketplace. The first question when talking about this subject will always be: what is blockchain?

Blockchain is a constantly updating database that holds the history of transactions; buying and selling, dates, details and specifics that relate to said trade. Another explanation is that blockchain is a system of accounting that is managed and “owned” by the people, the users, because every single person who contributes to said blockchain has as much of an impact, understanding and knowledge as the person (block) before or after them. The theory behind blockchain is that it wants to be a persistent, transparent, public, peer-to-peer, append-only ledger. I know, that’s a lot to take in but we’ll be going into it more throughout this article. An important part to pick out and help us understand blockchain is the term “peer-to-peer”, this simply means from person to person, myself and yourself or a buyer and a seller. As a result of the concept relying solely on peer-to-peer, through a completely software-based system that cuts out the middle-man and provides power direct to the user, we see a lot of benefits coming out of this new technology. Efficiency, in that there are no elongated processing times caused by the middle-man, trust issues will be a complete non-factor when using a tried and true blockchain, and potentially cheaper, as no platform or marketplace are taking a cut.

Let’s dial it back for a moment, we know the bare-bones of blockchain, but, what exactly is it used for? As of right now the concept has been proofed in regard to trading, buying and selling of entities, from Bitcoin to diamonds. The idea works in all states and levels of trading, but we could use an example such as diamonds due to their expense, and therefore the process it takes to buy and sell such an item. Blockchain means that every buyer is connected to the network and holds an equal amount of power in regard to contributing information, as well as accessing the blockchain’s history of transactions. Each person who trades this product, be it a crypto-currency, a car, a diamond, will contribute to the blockchain, updating the database with their own unique block that will hold information relevant to their trade. Continuing the diamond example, information such as cut, clarity, size, and other details specific to the material sales will be uploaded to the database as you complete your transaction. This way, the next person to buy said diamond will be aware of its history, and the same goes for you if you buy another.

For a timeframe, blockchain technology is currently very much in the early days, there are instances of its success, but it’s also got clear room for growth and evolution. If we look beyond just crypto-currency, it could indeed be used to phase out the ideas of these huge middle-men of trading industries, for example online distribution platforms such as: Amazon or Ebay, stockbrokers such as DEGIRO or E-Trade who take a commission of stocks sold, even banking houses. Of course, these companies wouldn’t willingly incorporate such a revenue-altering method, the technology must start small, with other new concepts and smaller technologies willing to co-operate, and from there we’ll see if it’s truly viable.

The Hype

One thing that can be slightly troublesome with the blockchain concept is the fact it’s almost become a pop-culture buzzword that currently relates directly, for some, to crypto-currency. This comes from the new and exciting leaps we’ve made in crypto, and the fact that this is peer-to-peer, decentralised and doesn’t always rely on a middle-man. Here, we see our first instance of why blockchain is important and can be relied upon a scale that holds millions, potentially billions of US dollars. The issue here is that the hype can sometimes cloud people’s impressions, and some seem to link blockchain with crypto-currency, which is fair, and then further link those two to initial coin offerings (new crypto-currencies), getting rich or getting scammed. This is a problem, and not something that blockchain technology should be attached to simply because that’s where it made its start. Instead, it’s important to look at the positives of blockchain, the fact it’s peer-to-peer, decentralised and offers the ability to easily and securely transfer goods and services around the world in a more efficient, trustworthy manner. It’s a concept that will help newer, more experimental companies tackle the global marketplace, as they will be spending less money, energy and time on creating a viable worldwide distribution model, and in turn be able to work on more important areas, such as whichever product they may be working on.

The Worries and Comforts

Worries and comforts, pros and cons, they come with every new technology, and blockchain is no different at all. We currently see the technology working well in regard to crypto-currency, but even then, this can have some issues which we’ll come to shortly. First, let’s look at a comfort of blockchain: the fact that – in the evolved future where the concept is fully implemented – there will be no need for a brand, a middle-man such as Amazon or Ebay. This removal of a middle company already creates a lot of positives, for example: speed, processing times will greatly decrease when you don’t need to wait for approval or checking of the trade details. Instead, you rely on a tried and tested algorithm that gives you, the trader, seller, or buyer, as much control of the transaction as your trading partner. This may seem worrying to some, “Hm, if I have all the control, doesn’t that mean I have all the responsibility, too?” A great question, the answer of which is simply, no. Instead of the process requiring you to tend to all details and corners of the bureaucracy that helps a trade remain accurate and secure, it would work as any normal transaction through Amazon or Ebay. This time, with the added benefit of efficiency, authenticity, transparency, and the knowledge that there’s no industry fat cat taking a percentage of the money.

Looking past this comfort that efficiency and fairness are the nature of blockchain, we come to a concept some people struggle with. There’s an important mind-set to remember when thinking about the implementation of blockchain, which is as follows: you do not need to trust the other party in which you are buying from, selling to, or trading with, you simply have to trust the relaying process between yourself and them. Now, that’s a scary idea to consider, understandably, but what’s important to remember is, that idea isn’t new in any sense of the trading world. My question to you in regards to the idea of trust in the system, not the participant is: how many times have you bought something from Amazon and not even thought about the person you’re buying it from, simply because Amazon is the top-dog in online sales? Just because it goes through Amazon doesn’t mean it is Amazon, but, because it’s on their marketplace, means that we trust them (the system) to vet every person using it. The same goes for PayPal, a stock broker such as DEGIRO, or G2A, an almost peer-to-peer marketplace where users sell their unwanted codes for video games. You don’t need to trust whether or not that person will or will not: give you or take your money/where that stock came from or if it’s real/if the video game code you just purchased works, because the middle-man does it for you. When we look to blockchain technology we are told to trust the system, and not the participant. Some may find this worrying, but in reality, within the modern-day world, we’ve already been doing this for decades. So, in my own words, that would be a box checked in dismissing one of the many worries associated with blockchain; as long as it’s tried, tested and researched, what is there to worry about the system for?

Another worry is security, we can use Bitcoin as an example. In the past, the integrity of some blockchains has been questioned, particularly with hacks and the somewhat shady movement and fluctuations behind some coins. However, I feel it’s unfair to base our impressions of such an innovative and world-changing concept on small hiccups early on in the technology’s life-span. As with anything, the new technology requires education, understanding, and many different theories before we are able to fully implement it into the modern-day world.

The Future and Globalization

Ultimately, when we look at blockchain, we see a new, innovative, most importantly growing potential of technology that really could change the landscape of our economy, as well as trading and financial industries around the world. We see integrity, privacy and efficiency wrapped in a concept that has so much room to grow, on a global scale that could very much help stabilize many forms of sale. Even if we take the concept as it is now: a ledger that can be added to and not edited in a negative way, to make sure every user knows just as much as the next and no one person stands at the centre or top of the chain. That sounds desirable enough as is, but when we look deeper, into perhaps customization or personalization, imagine users who are able to set a preference. What types of people they do or do not want to trade with, as the history is all out there, the details of, say, someone who failed a payment or who tried something shady will be available too. From there, you open up even more possibilities, and I believe that’s what is so important about blockchain; the strong possibilities and evidence for changing trading around the globe.