Blockchain companies such as Block8 are a great way for new ventures to get started. But in order to understand what they actually do, it’s essential to start with the technology behind them.
Blockchain companies use distributed systems technology which documents, organises and verifies transactions (e.g. contracts, records and cryptocurrency). Rather than having a centralised platform that requires an intermediary to pass transactions over to others, this technology allows anyone connected to the transaction to have the whole record of it. It does this using peer-to-peer verification (a decentralised public network).
Blockchain companies use a global computer network to authenticate transactions and record it on a sequence of computer codes. This ensures that every detail of a transaction is recorded and viewable by anyone on the network.
This is revolutionary, as it removes the need for an intermediary such as a bank when conducting transactions and offers a new, transparent way of conducting business. It can save individuals and businesses time and money, reduce human error in the accounting process, prevent data from being tampered with and make it much easier to trace the origin of goods and purchases.
Blockchain companies aim to remove the complications associated with global transactions, liaising between intermediaries and channels, issues associated with contracts, transfers, and confirmation of identity and authenticity, and security management. This reduces the pressure placed on professionals such as accountants, administrators and lawyers. Blockchain companies eliminate bureaucratic vexations and instead offer a streamlined, transparent and open database.
Here’s a simple overview of the transaction process:
- A transaction is requested
- The requested transaction is broadcasted to a P2P network (“nodes” or computers)
- The P2P network validates the transaction and user status via algorithms
- The transaction is merged with other purchases to create a new piece of data for the ledger
- The new piece of data is added to the existing sequence in such a way that it cannot be altered and is permanent
- The transaction is complete!
A brief history of the technology
How did the history of all this begin? It started with the introduction of Bitcoin in 2009. When the new electronic currency was offered to the world, blockchain companies offered a solution to the issue of digital trust. New technology – a system – was created which allowed for data to be made permanent and secure and without the need for third-party authentication. Additionally, rather than just serving cryptocurrency, the new system was able to host a range of transactions.
The realisation of the vast impacts this new technology could have on the world led people across the globe to start investing. Over time, Bitcoin went from being worth $1 each to $5,556 each. It is now the most valuable cryptocurrency worldwide at $170 billion – Ethereum, its runner up, is worth a mere $45 billion in comparison. Around 15% of financial establishments are now using this technology.
How blockchain companies help new ventures
The businesses themselves aim to help raise funds to get new ventures established. This generally takes place over a period of a year and a half. The process involves:
- Designing and commercialising: The system’s design and token mechanics are finalised and technical sections of the white paper are worked on
- Developing a prototype: A functional prototype is developed; UI/UX design, mobile, smart contract and full stack development are provided
- Funding and ICO: The venture is introduced to the network of investors, or Initial Coin Offering (ICO) is provided
- Transitioning: After funding, additional development services are provided in order to preserve project continuity and momentum.