Although most people only start learning about “blockchain” because of Bitcoin, its roots and applications go much deeper than that.
Blockchain is a technology unto itself. It powers Bitcoin and is the reason *so* many new ICOs flood the market – creating an “ICO” is ridiculously easy (no barriers to entry).
The goal of the system is to create a decentralized database – meaning that a network of computers (usually controlled by individuals) can operate instead of relying on companies like Google or Microsoft to store data. in the same way as a larger company.
To understand the implications of this (and thus where the technology could take the industry), one needs to look at how the system works at a fundamental level.
Created in 2008 (1 year before Bitcoin), it is an open source software solution. This means that its source code can be edited by anyone. However, it should be noted that the central “repository” can only be modified by certain individuals (so the “development” of the code is not a free-for-all).
The system works with what is known as a merkle tree – a type of data graph created to provide versioned data access to computer systems.
Merkle trees have been used to great effect in a number of other systems; especially “GIT” (source code management software). Without getting too technical, it basically stores a “version” of a data set. This version is numbered and so it can be downloaded whenever the user wants to recall his old version. In the case of software development, this means that a set of source code can be updated on multiple systems.
The way it works – by keeping a huge “file” with updates to a central data set – is basically what powers 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” adoption is almost certainly the “paradigm” it gives the industry.
For several decades, there was an idea called “Industry 4.0”. The idea often associated with the Internet of Things is that a new layer of “autonomous” technology can be deployed to create even more efficient manufacturing, distribution and delivery methods for businesses and consumers. Although this has often been requested, it has never been adopted.
Many experts are now looking to technology to facilitate this change. The reason is that the interesting thing about “crypto” is that – especially the likes of Ethereum – the various systems built on top of it can actually be programmed to work with a single layer of logic.
This logic is really what IoT / Industry 4.0 has missed so far – and why many are looking to “blockchain” (or equivalent) to provide a base-level standard for new ideas. This standard will enable companies to create “decentralized” applications that leverage intelligent mechanisms to create more flexible and efficient manufacturing processes.