What is the need behind blockchain? Why was it introduced?

March 29, 2018

All this talk about blockchain and all it’s benefits and earth shaking disruption future internet, bitcoin this and Ethereum that, what really is up with this technology? Why is blockchain so raved about and why are so many people on the internet and financial space raising an eyebrow to it? Why all the hype around something that is seemingly just another technology? What is the actual need behind blockchain? Do we really need blockchain so badly as a society and can we go on without it? The short answer in my opinion is yes. Blockchain is needed and it all boils down to how we as collaborating humans trust. If we talk about human growth and evolution, blockchain is all about doing the same things we are already doing but ‘better’ or in the least offering society an alternative option to the current ways establishment is doing things. So will blockchain actually better our world and why?

When it comes to transacting anything of value (like money), people and businesses have throughout history relied heavily on intermediary, central authority like banks and governments to ensure trust and certainty is maintained and enforced. These centralized ‘middlemen’ perform a range of necessary tasks that help to establish trust into the transactional process like authentication & status keeping. Unfortunately as a human species, many of us have problems regulating trust, and in order to establish trust between ourselves, we have extended this dependence onto individual third-parties. But overtime, this dependance has surfaced problems and this is the reason why we need the idea of blockchain. The issue of trust is something that can be bettered and prevented by blockchain utility. For example: Human unintentional or intentional error: IE, your bank teller transferred $1,000 instead of $10.00 and you have to wait weeks for them to figure this out and re-credit your account? or what if you account history of records from your accountant gets burnt in a fire? What if that centralized person/organization you trusted with your data was great with numbers but not so much with cyber crime prevention and they got hacked?

Blockchain allows us to take back some control through transparent and secure smart contracts that verify and confirm certain criteria without the need of a middleman. So lets look specifically at what is needed to transfer money from one to another. In the simplest form of money transfer, all that is needed is a registered transaction. Knowing this, then the better question may be: Could there be a system where we can still transfer money without needing a centralized bank? Is there a way to maintain a transaction log between staking parties instead of having some intermediary do it for us? Yes, it’s exactly what BLOCKCHAIN is made to solve. Currently, most people use a trusted middleman to make such a transaction, but blockchain allows consumers and suppliers to connect directly, removing the need for a third party.

Now that you know a care for the WHY behind blockchain technology, follow the Quantaloop educational portion of our blog for future articles on what is blockchain and how does it work? Who kept all the records and maintain these so called blocks? Why are they called blocks? How the verification takes place? and more.