Starting from 2009, the world of economics has changed. The existing traditional economy was created over a process hewed and fine tuned during thousands of years, and it was a system that served humanity very well, if somewhat unequally.
That economy has been joined by a new one called the “cryptoeconomy”, with a new field of study dedicated to it as cryptoeconomics.
It’s all about ledgers
Ask anyone what the blockchain is, and if they’ve heard anything about it before, they might tell you it’s a distributed ledger system. Ask them what that means, and it’s unlikely you’ll get a straight answer unless they have a good understanding of the real concept of blockchain technology.
Ledgers are usually books used to record financial transactions. That’s the first thing most people think of when they hear the word. There are more ways ledgers can be useful, however.
Keeping records of collections of things, for example. You can have details of who has ownership of what, and the value of whatever it is that is owned. Ledgers tell us about the connection that exists between individual items of data.
In the case of a financial ledger, we’re recording data that includes the date of the transaction, who the parties to the transaction are, the amount of the transaction, and other matters like that. Recording financial information in this way helps make it easier to make sense of a collection of transactions and to see the relationships that exist between the transactions.
If the ledger were instead an asset register, then the data would pertain to specific assets, the owner of the assets, and the value of the assets, along with other relevant data like the date of asset acquisition and/or disposal.
There are all kinds of other ledgers too. Security registers, voter registers, hotel registers. What should by now be evident is that the word “ledger” is practically synonymous with words like registry and database, because that is basically the function of a ledger, whether it is on paper or in electronic form.
Why blockchains provide a superior kind of ledger
The problem with traditional ledgers is that they’re vulnerable to being tampered with. They are inherently insecure, because it is relatively easy to modify or forge the entries in them, provided one has access the ledger.
An entry (“block”) in a blockchain can’t be altered so easily. Each block of data is secured by paired encryption keys, one of which is only known to the owner of the key.
The resistance of blockchains to altering of the blocks they consist of is what makes blockchain a reliable technology. It means data is both verifiable and permanent.
Information contained in a block may be superseded by information contained in a new block. A client system that uses the data for any purpose would need to analyze the block timestamps to understand which version of data is the most recent.
How you can use this
Because blockchains provide you with a high level of reliability, they provide many potential uses to business for any purpose that requires absolute data integrity. You can use that power to create autonomous actions in response to block verification that indicates a condition has been met.
This is a function of a Smart Contract, a special kind of computer program that can automate business functions by implementing and enforcing rules based on conditions and results.
For example, you could create a Smart Contract that divides the balance of an account between individual account holders when the balance of the account reaches a predetermined amount.
There are many other possibilities, and Smart Contracts can be simple or complex, performing just one task or a range of tasks, so you can satisfy practically any business need.
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