If the internet, for most modern authors, was the first native digital format for information flow, the blockchain became the first native digital format for valuation: a guarantee for a new means for defining the currency-value relationship.
The need for the blockchain comes from the intrinsic characteristic of the internet: non-deterministic, without guaranteed packet delivery, non-encrypted, traceable, interceptable and manipulated through nodes, known as routers.
Cryptography, in this sense, in the blockchain figure, manages to shield the information from being manipulated. Although it does not prevent data interception, it becomes useless to the interceptor.
Anyway, in the commercial process, looking not at the technical side, but at the qualitative side of commercial transactions, it acts as an accounting ledger, as well as a database written in a book, but digital, notary, sentinel and clearing, always by consensus.
Although the technology is still in its infancy, it has already given rise to a series of innovations in financial services, the most prominent being “smart contracts”, which consist of lines of code that mimic the logic of paper contracts: execution, fulfillment and payment guarantees – and where trust is built by consensus, not by banks, escrow agents, lawyers and courts.
The commercial revolution is precisely in taking the unreliable agent out of the process: the human being!
Encryption, therefore, guarantees the bulk and unattainability of the entire digital transactional process and that gives the blockchain a powerful guarantee tool.
From a commercial point of view, the characteristics of the blockchain would be:
-Decentralization: Applications and systems are executed in a distributed manner, through the establishment of trust between the parties, without the need for a reliable intermediary entity.
-Transparency and Auditability: All transactions recorded in the ledger are public and can be verified and audited. Codes are open, auditable, authored and verified.
-Availability and Integrity: All datasets and transactions are securely replicated in different nodes, in order to keep the system available and consistent.
-Privacy and Anonymity: Each user manages their own keys and each server node stores only encrypted fragments of user data. Transactions are based on the address of those involved in the blockchain, not names or social data.
-Immutability: Transactions recorded in the ledger are immutable. Once registered they cannot be refuted. Updates are possible based on the generation of new transactions and the realization of a new consensus. Also because the technology is serialized and cannot be returned to the point for any correction.
-Disintermediation: It is considered a connector of complex systems (systems of systems), allowing the elimination of intermediaries in order to simplify the systems design.
-Cooperation and Incentives: Offering an incentive-based business model, based on game theory. On-demand consensus is now offered as a service at different levels and scopes.
Looking at these characteristics, far more robust than any bank can offer, it is clear that cryptocurrencies have the potential, in the future, to gain the confidence and credibility needed to replace national currencies or even the entire traditional financial system.
But just like the traditional financial model, what spoils all trust is still human beings!
Right now, digital frauds involving cryptocurrencies and illegal activities are the biggest obstacle for this super monetary security system to have a safe and reliable status!
