The foundations of economics are built on the fact that humans have traded goods and services since the dawn of time. Trading of goods for consumption and services for functionality were the basis for this trade between humans and as time passed, between nations and organizations as well. As such, there was a need for centralized bodies to facilitate and moderate these trades.
“Institutions have been devised by human beings to create order and reduce uncertainty in exchange.”
How does Blockchain fit into this evolution?
Predictably – while institutions were built to reduce uncertainty, as they have grown larger and larger, they have also attracted increased levels of weariness from consumers. Questions like “why are my fees so high?” or “where does this percentage go?” start to prop up.
“The first generation of the digital revolution brought us the Internet of Information. The second generation—powered by blockchain technology—is bringing us the Internet of Value.”
The Blockchain Research Institute
Enter, Blockchain – a peer to peer method of managing records of transactions that enables consumers to conduct trade directly, without having to be dependent on systems such as legal tender or pay institutional fees.
So what is Blockchain exactly?
Essentially, Blockchain is a series of records (known as blocks) each connected to the previous starting from a “genesis block”. These blocks are connected through a process called hashing. These records exist in a decentralized network made secure through cryptography – in the form of one “common trusted ledger” – or “distributed ledger technology”.
Check out this TED Talk by Bettina Warburg