While most people only started 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 essentially why *so many* new ICOs have flooded the market – creating an “ICO” is ridiculously easy (no barriers to entry).
The point of the system is to create a decentralized database – which essentially means that instead of relying on Google or Microsoft to store data, a network of computers (mainly run by individuals) can act in the same way as a larger company.
To understand the implications of this (and therefore where the technology could take the industry) – you need to look at how the system works at a fundamental level.
Created in 2008 (a year before Bitcoin), it is an open source software solution. This means that its source code can be downloaded and edited by anyone. However, it must be noted that the central “repository” can only be modified by certain individuals (so code “development” is basically not a free-for-all).
The system works with what is known as a merkle tree – a type of data graph created to allow computer systems to access versioned data.
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 dataset. This version is numbered and therefore can be loaded whenever the user wants to recall its older 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 storing a huge “file” of 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 basic operation, the real benefit of the wider adoption of “on-chain” is almost certainly the “paradigm” it provides to the industry.
There’s been an idea called “Industry 4.0” that’s been floating around for a few decades. Often confused with the “Internet of Things”, the idea is that a new layer of “autonomous” machinery can be introduced to create even more efficient production, distribution and delivery techniques for businesses and consumers. Although it was often objected to, it was never adopted.
Many experts are now looking to technology as a way to facilitate this change. The reason is that the interesting thing about “crypto” is that – as Ethereum in particular testifies – the various systems that are built on top of 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 to the “blockchain” (or equivalent) to provide a ground-level standard for new ideas moving forward. This standard will give companies the ability to create “decentralized” applications that empower intelligent machines to create more flexible and efficient manufacturing processes.