Blockchains are often compared to a database or a money transmission protocol, but they are neither. Rather, the technology is a tool that can be used for many purposes, most commonly for storing data in a decentralized way (a database) and sending values (cryptocurrencies or other tokens). To understand what blockchain is good for, it’s important to go back to 2008 when it was built to solve a specific problem during a global economic crisis. Blockchain’s first use case was running Bitcoin, which was intended to disintermediate how values are sent across the globe. With Bitcoin, a true peer-to-peer mechanism for sending values was invented and made available to the general public for the first time. And this mechanism was, and still is, both safe and trustless.
In very simple terms, a blockchain can be described as a network of (independent) computers, who communicate with each other through a specified protocol. Each of these computers stores a (complete) transaction history about every piece of data that is added or modified. They also record the current state of this data, which is the same on all the computers that participate in the network. This data is, in most cases, some form of accounting, or comparable to the data on the RAM in your computer. In the case of Bitcoin, this means knowing who owns how many Bitcoins. In the case of Ethereum, which can claim the title of first global decentralized computer, it is knowing the amount of tokens a person owns on their address (amongst other data).
The best way to describe the fundamental purpose of blockchain technology is as a decentralized receptacle of data. How this decentralized storage is kept synchronized, in a way that is tamper proof even though it communicates through such an unsafe communication route like the unencrypted internet, is the secret of the technology behind blockchain. This security is achieved through mathematics and cryptographic algorithms. Today, there are plenty of different blockchain protocols. Knowing the metrics of these blockchains is vital to judge whether a certain business case would benefit from the chosen environment or not. It is important to note that there is no such thing as THE blockchain. There are many chains, and the winner of this technology race has yet to be determined, and most likely never will be.
Today, it’s fair to say the technology has been very successful, and it is estimated that it will be the backbone of a multi-billion-dollar market over the coming years. Currently, companies are working on isolated use cases and on the infrastructures and foundational tech, just like in 1980’s when companies were delivering highly specialized software applications for the upcoming personal computer for a very limited target group and at a very high price.
Tomorrow, companies will build on these infrastructures and deliver value to their end-users. The estimation of market sizes is a matter of imagination. Depending on which business cases are realized on blockchain, the market size can change significantly. CoreLedger focuses on the tokenization market (4.2 Billion by 2025) and, by using Tokens as a tool to implement blockchain use cases, on a large part of the Blockchain Technology market with an estimated value of 23.3 Billion by 2023.
Keep in mind: Blockchain is just a tool, though a complex one, which must be applied properly to make a cost-effective solution. It is not a miracle; there are some cases where using blockchain would not make much sense, and others where using it would be revolutionary. Read more about blockchain’s strengths and weaknesses.
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