It was all about the other applications this technology will unleash within the next 5 to 10 years,” Catalini says. “When The Economist put blockchain on the cover in 2015, it wasn’t really about its use to support a digital currency anymore. While a lot of media attention has shifted from bitcoin to blockchain, the two are intertwined. This is one step away from a distributed marketplace, and will enable new types of digital platforms.” How is blockchain related to bitcoin?īitcoin, with a market cap of more than $40 billion, is the largest implementation of blockchain technology to date. Every node that participates in the network can verify the true state of the ledger and transact on it at a very low cost. “Suddenly you can bootstrap an entire network that can achieve internet-level consensus about the state and authenticity of a block’s contents in a decentralized way. “The technology is particularly useful when you combine a distributed ledger together with a cryptotoken,” Catalini says. A block could represent transactions and data of many types - currency, digital rights, intellectual property, identity, or property titles, to name a few. Instead, copies exist and are simultaneously updated with every fully participating node in the ecosystem. The ledger is distributed across many participants in the network - it doesn’t exist in one place. On a blockchain, transactions are recorded chronologically, forming an immutable chain, and can be more or less private or anonymous depending on how the technology is implemented. This is what allows bitcoin to transfer value across the globe without resorting to traditional intermediaries such as banks.” The ledger is often secured through a clever mix of cryptography and game theory, and does not require trusted nodes like traditional networks. “Such ledgers can contain different types of shared data, such as transaction records, attributes of transactions, credentials, or other pieces of information. “At a high level, blockchain technology allows a network of computers to agree at regular intervals on the true state of a distributed ledger,” says MIT Sloan assistant professor Christian Catalini, an expert in blockchain technologies and cryptocurrency.
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