Unraveling the Confusion About Blockchain Technology and Bitcoin

Over the past several years I have paid interested, but half-hearted attention, to the topic of Bitcoin and the Blockchain technology it is built upon. It has been very confusing to try and decipher, but seemed important enough to stay attuned to as we head into the future.

I recently bought a copy and read a copy of the book ‘Blockchain for Dummies’ published in 2017. A great book that is a must read for all managers who are going to be around for the next 20 years. The book finally explained and clarified for me, what Blockchain and Bitcoin are all about.

The following is a very high level management overview of Blockchain based on what I learned from the book along with selected links you might want to check out.

Blockchains are a novel approach to the creation of a distributed database that incorporates a number of existing technologies that can now be used in new, innovative ways by individuals and independent organizations to more securely create, transmit and store seemingly permanent records of a wide variety of data transactions.

The ‘Dummies Guide’ mentions three types of Blockchains: Large public blockchains like the Bitcoin network, permissioned blockchains like Ripple, and a growing number of smaller private blockchains typically used by a consortium of trusted members. All three types of blockchain solutions are decentralized peer-to-peer systems that make use of cryptography, secure wallets, smart contracts, protocols, tokens… To better understand the key components you’ll need to do some further study on your own.

Bitcoin – This term is confusingly used to refer to the public blockchain Bitcoin network, as well as to the cryptocurrency token used by the system to exchange value when a financial transaction takes place. Don’t get caught up in the ridiculous obsession about the value of the Bitcoin token.

The open source Bitcoin network was the first and most famous of the blockchain systems to emerge. However it has many limitations and several other prominent blockchain systems have emerged. The key ones include: Ethereum that has a built in programming language and uses a cryptocurrency token called ether; Ripple, that uses a cryptocurrency called ripples; and Factom Inc., which has built a variety of useful tools and apps.

Some of the major companies and organizations working on blockchain networks and solutions for industry include Microsoft, Cisco, Google, Hyperledger, IBM, Intel… and they are working with major financial organizations like Bank of America, Wells Fargo, and JP Morgan. They are also now branching out into the healthcare, insurance, real estate and many other industries – including the government and ‘smart cities’.

The coming decades are going to be very exciting as blockchain technology, artificial intelligence, robots, and the Internet of Things (IoT) come to pass. It will be interesting to watch what unfolds when governments finally focus on regulating cryptocurrencies.

Selected Links

Bitcoin Magazine Blockchain Alliance Blockchain University Blockchain YouTube Videos Ethereum Foundation

Factom Inc. Hyperledger OpenBazaar R3 Consortium RippleNet