Blockchain Basics

The Internet has Come of Age

Since the late 90’s and the dot.com boom, the internet and the smart phone revolution has taken the world by storm. Now there are very few places in the world that do not have internet connections or the ability to surf the world wide web. Some of the early pioneers of the internet are are not around anymore. AOL, Netscape, or Alta Vista are long gone. Others like Yahoo, Ask Jeeves (now ask.com) are still around and even others like Amazon, Google, and Facebook have gone on to dominate their respective industries. Over the last 20 years, the technologies that went into forming the internet have matured and developed applications that not only improve our lives but have made the world more interconnected.

The dissemination, collection, and storage of data has become one of the largest industries in the world.  In 2017, The Economist magazine published an article entitled, ” The world’s most valuable asset is no longer oil, but data.” Over the past 10 years, Data Centers have become one of the hottest sectors of the commercial real estate sector. Companies like Google, Twitter, and Facebook have become so dominate in the collection, dissemination, and monetization of information that governments have considered breaking them up on anti-trust violations. 

Server Infrastructure of the 2000's

The Future of Information and Data Management

Even with improved efficiencies of data collection and usage, centralized server networks have not been able to eliminate many problems such as inaccuracies of the data collected, slow transaction time, waste and fraud.  Because of its centralized nature,  bad actors have been able to either monopolize the information or hack into a central server to manipulate or steal the data within the  systems that run those networks. 

 

Blockchain technology was first invented in 1991 by two researchers, Scott Stornetta and Stuart Haber, who wanted to create a system in which document timestamps could not be tampered with or manipulated. It wasn’t until the 2008-2010 Great Financial Crisis, that an application was launched that fully implemented Blockchain technology with the advent of Bitcoin. In 2008 in a research paper introducing the Bitcoin, a developer under the pseudonym Satoshi Nakamoto, releases a white paper establishing a blockchain protocol.

Blockchain technology is separated from the currency application (Bitcoin) and its potential for other financial, inter-organizational transactions is explored. Blockchain 2.0 is born, referring to applications beyond currency.The Ethereum blockchain system introduces computer programs into the blocks, representing financial instruments such as bonds. These become known as smart contracts.

The Next Generation Blockchain

  • Other blockchains include those that run the several hundred “altcoins” – other similar currency projects with different rules – as well as truly different applications, such as:
  • Ethereum: the second largest blockchain implementation after bitcoin. Ethereum distributes a currency called ether, but also allows for the storage and operation of computer code, allowing for smart contracts.
  • Ripple: a real-time gross settlement system, currency exchange and remittance network, based on a public ledger.
  • The roll-out of the digital dollar possibly in July 2021 confirms that the United States Federal Reserve is confident this form of payment is secure, reliable, and improves upon the current system. 

The Effects of the Commercial Real Estate Market

  • Blockchain technology is so much more than bitcoin. The applications that were born out of the cryptographic ist Item
  • Smart Contracts: Ethereum revolutionized the blockchain protocol when they developed smart contract technology. This technology will expedite title search, title transfer, buy/sell agreements, mortgage notes and finance agreements and much more. It is essential contract law written in to cryptographic code.
  • Tokenization: Once the smart contract is executed according to the terms of the agreement, the software alerts the blockchain that part of the contract is completed and payment is released.
  • Blockchain and International Transfer of Payments: This combination of digital smart contracts and tokenization of payments is being used for international trade and payments between governments and multinational corporations without the need of a trusted third party to facilitate the transaction.