"Imagine a technology that could preserve our freedom to choose for ourselves and our families, to express these choices in the world, and to control our own destiny, no matter where we lived or were born. What tools and jobs could we create with those capabilities? What new business and services? How should we think about the opportunities?"
-- Don Tapscott and Alex Tapscott, Blockchain Revolution, How the Technology behind Bitcoin is Changing Money, Business, and the World

Until recently, we've relied on trusted intermediaries to send information over the internet. In 2008, a pioneering payment method and cryptocurrency entered the market--bitcoin. The technology behind it, called blockchain, has forever changed both online payment and information sharing networks.

To learn more about this emerging business technology, I interviewed blockchain expert Jeremy Epstein.

Blockchain's claim to fame is its ability to fully encrypt personal data on the internet, allowing for the digital translation of assets and the elimination of need for a protective middle man. Essentially, this new cryptotechnology enables secure-funds transactions and ensures that data cannot be hacked by outsiders.

Epstein explained that blockchain is a "distributed ledger." It's not a database sitting in an office. It's a database that everyone can access.

"We're seeing decentralization and a paradigm shift of moving from institutions to ourselves. Power has been given back to the business owners, who no longer need to rely on the permission of banks and governments to send money electronically," says Epstein.

When you use a bank as an intermediary to transfer funds to another person by check, each person involved in the transaction has a separate record. The bank doesn't know right away that the person writing the check has a balance to cover the amount written out--there is an element of trust, and things can go wrong.

Epstein stated, "We've been built to have other organizations be custodians of our assets (like banks). However there have been more and more violations of our data--just look at the S & L scandal, 2008 mortgage crisis, and common accounts of fraud."

Conversely, Blockchain allows for privacy in the combination of records and the elimination of any intermediaries. Both parties can view the encrypted ledger and see any mutual transactions, but no one party controls it. Rather, each transaction is a block that is added to a chain once all parties affirm the block is correct. The chain itself is protected by cryptography.

Epstein asserts, "nobody can manipulate the system or go back and over-write it. It is chronological and time stamped." Overall, this technology is empowering people worldwide to push costly intermediaries to the side by giving them the ability to both authenticate and perform direct, immediate transactions with others.

Epstein explained that "Anything valuable can now become digitized. What's so powerful about blockchain is that everything we have seen with decentralization of data will now happen with assets."

With blockchain, data is split up and distributed in pieces, all over the internet. However, only one person is able to put the data back together--the owner. The control of the asset stays with the owner of the asset and all is done without third party intermediaries.

"Think of anything valuable you have - your car, house, jewelry, etc. These assets are not digital, but blockchain allows you to create a digital asset that represents that physical asset," says Epstein.

"With blockchain, everyone is able to clearly see who the owner of the asset is, but only the person with the right key can unlock the door of that asset.

Think about the title of the asset - it would be in your control. This is why people buy title insurance. Blockchain lets us buy and sell any asset without an intermediary. Additionally, the asset is programmable, so you can set up business rules and computational logic for each asset. For instance, you could put in place a rule that states, 'I can't sell this without others signing off.' Thus, the asset cannot be not sold unless business rules are met."

According to Harvard research, Blockchain also maximizes transparency and anonymity. Each transaction is seen by anyone who has access to the chain; however, since each node (or user) has a unique alphanumeric identifier, each user has the ability to decide whether to remain anonymous in the transaction between addresses. These transactions can also be programmed with algorithms that can automate transactions between users.

Why Blockchain Hasn't Caught On Yet

Trust Issues. Epstein emphasized the issue of believability and gaining trust of users. He said, "How will people get their head around this technology? Is it possible for individuals and companies to believe that they are safer having your money in their phone or computer instead of a bank?" Building this trust and credibility will take time.

Stigma. Harvard found that some industries may view blockchain as "disruptive" because it "can attach a traditional business model with a lower-cost solution and overtake incumbent firms quickly." However, they argue that blockchain is most importantly a foundational technology that can be used to create new business models and underpin business, economic, and social infrastructure.

Novelty. It will take decades for blockchain to seep into our economic and social infrastructure. The process of adoption will be gradual and steady. Esptein agrees, saying that, "it is still very, very early. Think Internet circa 1993."

Adoption. Epstein shares that the financial services market has implemented blockchain technology most. They're looking to improve efficiencies with cross-border transactions. Bitcoin is the most well-known blockchain application.

Essentially, "Email is to the internet the way bitcoin is to blockchain. There are multiple apps, just like there are multiple blockchains," says Epstein.

Blockchain is still in its early stages, and new cryptotechnology applications and advancements are regularly occurring. We expect big changes over the next few years, as over $1 billion has been invested into this tech by venture capitalists.

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