Although most people have just started learning about the “blockchain” because of Bitcoin, its roots – and applications – go much deeper than that.
Blockchain is a technology unto itself. It runs Bitcoin and is basically why * so many * new ICOs have flooded the market – creating an “ICO” is ridiculously simple (no barriers to entry).
The point of the system is to create a decentralized database – which basically means that a network of computers (mostly managed by individuals), instead of relying on ones like Google or Microsoft, to store data. in the same way as a larger company.
To understand the implications of this (and thus where technology can take the industry) – you need to look at how the system works at a basic level.
It was created in 2008 (a year before Bitcoin) and is an open source software solution. This means that its source code can be downloaded by anyone edited. However, it must be noted that the central “repository” can only be modified by certain individuals (so “code development” is basically not free).
The system works with what is known as the merkle tree – a type of data graph that is created to provide versatile access to data in computer systems.
Merkle trees have been used with great effect in a number of other systems; most importantly “GIT” (source code management software). Without excessive technique, it basically stores a “version” of the data set. This version is numbered and can therefore be loaded at any time when the user wants to revoke the older version. In the case of software development, this means that the source code set can be updated on multiple systems.
The way it works – and that is storing a huge “file” with central data set updates – is basically what drives “Bitcoin” and all other “crypto” systems. The term “crypto” simply means “cryptography”, which is a technical term for “encryption”.
Regardless of the basic work, the real benefit of wider adoption “on the chain” is almost certainly the “paradigm” it provides to the industry.
There is an idea called “Industry 4.0” that has been floating for several decades. The idea is often linked to the “Internet of Things” so that a new layer of “autonomous” machines can be introduced to create even more efficient production, distribution and delivery techniques for businesses and consumers. Although it is often fabricated, it has never actually been adopted.
Many experts now see technology as a way to facilitate this change. The reason is that the interesting thing about “crypto” is that – as they especially prove like Ethereum – the various systems built on 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 at the “blockchain” (or equivalent) to provide a basic standard for new ideas going forward. This standard will provide companies with the ability to create “decentralized” applications that enable intelligent machines to create more flexible and efficient manufacturing processes.