The Internet of Value

The internet of information is turning into the internet of value: this new era of the internet is based on blockchain technology, which can also be called distributed ledgers. I'll explain. Or check out this informative video, I recently found on YouTube. This certainly is painting a very optimistic picture - and where would we be, if it were not for optimists, people with curiosity and initiative:

Recently I met a former boss and mentor, who told me he is finalizing his "masters degree in digital currencies". I was impressed and realized that when it came to bitcoin I was maybe too careful, not to make a mistake or waste time? Is cryptocurrency for real?! I found out it is much more than real. It is going to become huge. Like always the artform is to be not too early and not too late 'to the party'.

Normally you would expect young nerds to be into this - my former boss is a successful owner of multiple businesses and a leader in multiple associations. He opened my mind for blockchain. So what is it: He said "Bitcoin is to blockchain what email is to the internet. And in the analogy think of Bitcoin as just.a single email program. A single cryptocurrency.

So there is much more to it: In a traditional accounting environment transactions are recorded in one ledger on the vendor and another ledger on the client -side. Almost always a third party like a bank is involved. In the world of blockchain there is just a single ledger. It is encrypted and quasi public. On the website of the world economic forum I found this wonderful synopsis by Don Tapscott, considered to be one of five top futurologists:

Blockchain emerged in the wake of the global economic crisis, when a pseudonymous person or persons named Satoshi Nakamoto released a new protocol for “A Peer-to-Peer Electronic Cash System” using a cryptocurrency called bitcoin. Cryptocurrencies (digital currencies) are different from traditional fiat currencies because no government issues or controls them.

They’re not saved in a file somewhere; they’re represented by transactions recorded in a blockchain – like a global spreadsheet or ledger, which leverages the resources of a large peer-to-peer bitcoin network to verify and approve each bitcoin transaction. Satoshi’s protocol established a set of rules – in the form of distributed computations – that ensured the integrity of the data exchanged among billions of devices without going through a trusted third party. This new resource has seven critical qualities.

1) Each blockchain, like the one that uses bitcoin, is distributed: it runs on computers provided by volunteers around the world; there is no central database to hack or shut down. We can send money and soon any form of digitized value – from stocks and bonds to intellectual property, art, music and even votes – directly and safely between us without going through a bank, a credit-card company, PayPal or Western Union, social network, government or other middleman. Of course, this does not mean that middlemen will disappear. Rather the technology provides profound opportunities for innovative companies and institutions in the middle to streamline processes, increase their metabolism, create new value and enter new markets.

2) Blockchain is encrypted: it uses heavy-duty encryption involving public and private keys (rather like the two-kIn many cases, blockchain is public: anyone can view it at any time because it resides on the network, not within a single institution charged with auditing transactions and keeping records. No one can hide a transaction, and that makes bitcoin more traceable than cash. It is open-source code: anyone can download it for free, run it and use it to develop new tools for managing transactions online. Private blockchains have emerged that don’t use cryptocurrency for consensus.

3) Blockchain is, for the most part, inclusive. Satoshi imagined that the typical person would be interacting with the blockchain through what he called “simplified payment verification” mode that can work on a mobile device. Now anyone with a flip phone can participate in the global economy; no documentation is required to be trusted.Blockchain is immutable. Within minutes or even seconds, all the transactions conducted are verified, cleared and stored in a block that is linked to the preceding block, thereby creating a chain. Each block must refer to the preceding block to be valid.

This structure permanently timestamps and stores exchanges of value, preventing anyone from altering the ledger.Blockchain is historical. If we wanted to steal a bitcoin, we’d have to rewrite a coin’s or asset’s entire history on the blockchain in broad daylight. So the blockchain is a distributed ledger representing a network consensus of every transaction that has ever occurred. Therefore, we must preserve the blockchain in its entirety. That’s why storage matters. This is much more than the financial services industry. Innovators are programming this new digital ledger to record anything of value to humankind – birth and death certificates, marriage licenses, deeds and titles of ownership, rights to intellectual property, educational degrees, financial accounts, medical history, insurance claims, citizenship and voting privileges, location of portable assets, provenance of food and diamonds, job recommendations and performance ratings, charitable donations tied to specific outcomes, employment contracts, managerial decision rights and anything else that we can express in code.ey system to access a safety deposit box) to maintain virtual security. We needn’t worry about the weak firewalls of the US Democratic National Party, or rogue bank employees.

4) Blockchain is public: anyone can view it at any time because it resides on the network, not within a single institution charged with auditing transactions and keeping records. No one can hide a transaction, and that makes bitcoin more traceable than cash. It is open-source code: anyone can download it for free, run it and use it to develop new tools for managing transactions online. Private blockchains have emerged that don’t use cryptocurrency for consensus.

5) Blockchain is, for the most part, inclusive. Satoshi imagined that the typical person would be interacting with the blockchain through what he called “simplified payment verification” mode that can work on a mobile device. Now anyone with a flip phone can participate in the global economy; no documentation is required to be trusted.

6) Blockchain is immutable. Within minutes or even seconds, all the transactions conducted are verified, cleared and stored in a block that is linked to the preceding block, thereby creating a chain. Each block must refer to the preceding block to be valid. This structure permanently timestamps and stores exchanges of value, preventing anyone from altering the ledger.

7) Blockchain is historical. If we wanted to steal a bitcoin, we’d have to rewrite a coin’s or asset’s entire history on the blockchain in broad daylight. So the blockchain is a distributed ledger representing a network consensus of every transaction that has ever occurred. Therefore, we must preserve the blockchain in its entirety. That’s why storage matters.

This is much more than the financial services industry. Innovators are programming this new digital ledger to record anything of value to humankind – birth and death certificates, marriage licenses, deeds and titles of ownership, rights to intellectual property, educational degrees, financial accounts, medical history, insurance claims, citizenship and voting privileges, location of portable assets, provenance of food and diamonds, job recommendations and performance ratings, charitable donations tied to specific outcomes, employment contracts, managerial decision rights and anything else that we can express in code.

As the US representative of Datamolino and business partner of CISBOX we are working on becoming leaders in blockchain technology. We provide a payment solution, that streamlines payments for thousands of customers, primarily hotels, hospitals and restaurants. The future of financial applications looks exciting - let's make it happen.