Blockchain Basics 1 – Why Do We Need a Blockchain?

carusovc/ November 10, 2017/ Blockchain Basics

Introduction to Need

Throughout history, civilizations have been built on two economic pillars: Scarcity and Supply/Demand. Scarcity will always exist because humans have unlimited wants yet limited resources. This causes the value of certain resources such as food, computers, or even the U.S. dollar, to increase or decrease in value according to the law of supply and demand. The consequence of these economic principles is a society built on ownership and value. These social standards govern the way we interact everyday and have lead to the rise of what we call Third Parties.

Third Parties

Today, in November of 2017, if I am trying to transfer money to a friend, I have to use a medium such as Venmo, Bank of America or Fidelity. Even if I would like to transfer this money as cash, we both need to trust the value of the United States Dollar and the buying power it holds.

The need for so-called “third parties” makes sense. There has to be someone else, who both of the parties of a transaction must believe in, to make a trade or transaction safe and trustworthy. If I attempted to sell my house directly to a stranger, I could hand over the deed and never see a single dollar of the amount we agreed upon. Even worse, I could sell my car for a check worth $5,000 and once the stranger drives away, discover that the check bounced, leaving me completely out of luck. This new technology called blockchain utilizes the power of computers, coding, and consensus to create a world where we, hopefully, will no longer require these third parties to trade resources, value, and information. Blockchain is an example of a decentralized system, and its changing the world.

The rest of the 4 part ‘Blockchain Basics’ series will be dedicated to the basic understanding of blockchain technology, its structure, and its impact on the world of today and of tomorrow To continue reading, click here for Blockchain Basics 2 – Breaking Down the Blockchain. For a greater understanding of cryptocurrencies such as bitcoin, please visit our cryptocurrency section.

Thank you!