Everyone is talking about blockchain technology, but the reality is that very few people actually know what it is and why it is being used. Businesses from around the world are describing blockchain as the next big idea and that it has the potential to do much more than just being used for digital currencies.
Just look at some of the internet giants, such as Facebook, Uber, Google, Airbnb or Twitter – they all have one thing in common. All of these popular business groups or giants rely on the contributions of users to generate value on their platforms. In the last few years, the economy has moved away from the traditional business model. Until recently, the economy was dominated by centralized organizations, where large groups were responsible for providing services to passive consumers. But now we are in the age of decentralized organizations. In this new model, large organizations are aggregating resources of different people to provide services to a more active group of consumers. This shows the shift from traditional ideals and that you don’t need to have physical assets, offices, or even employees to run a successful business.
The problem with this new model, is that the value produced by the crowd is not always equally redistributed among all who are contributing to the production; profits are captured by the dominating or large intermediaries operating the platforms. Recently, a new technology came into the scene that is expected to change this imbalance. Blockchain technology facilitates the exchange of value in a decentralized and secure manner, without involving any intermediaries.
Blockchain technology is now considered a revolutionary concept that runs on software in a decentralized and secure manner. With this new technology, businesses no longer need to deploy centralized servers; now they can easily run on a peer to peer network. This new concept can be used to coordinate the activities of all individuals. Organizing them without a third party is now a reality and all of the credit goes to blockchain technology. Blockchain technology is a modern day means for individuals to coordinate, as well as, interact with people directly in a decentralized and secure manner.
Already a good number of applications have been employed on the blockchain technology. Instead of relying on any centralized organization to manage the network, all platforms are running in a decentralized manner. OpenBazaar is a decentralized market similar to Amazon or eBay, but it is operating independently without involving any intermediary operator. This platform is relying on blockchain technology to ensure that buyers and sellers interact with each other directly without involving any middlemen.
Several decentralized platforms are being created for the market, which is operating without a centralized operator, all because of this new blockchain technology. All these platforms are governed by a code that is deployed on a blockchain based system, designed to govern peer to peer interactions.
Blockchain technology is facilitating the emergence of new organizations that are all dematerialized, as well as, decentralized. The best thing about these organizations, is that they are not managed by any type of structure, instead, blockchain technology is administered by individuals who are interacting on a blockchain. Don’t confuse this concept with other traditional models where individuals contributed to a platform, but did not benefit from its success. Blockchain technology is completely different, where users qualify both as shareholders, as well as, contributors to the platform. As there is no intermediary, the value produced in these platforms is equally distributed among those who have contributed to its creation.
The Bottom Line
Blockchain technology is necessary for the shared economy, in the future, its importance will continue to increase. Now the concept of a true sharing economy is becoming a reality, individuals who are doing the hard work are rewarded for their efforts.