Yesterday, I listened to a talk from the CEO of Digital Asset, Blythe Masters, on the Blockchain. It can also be described as distributed ledger, decentralized database, or digital ledger.
I surprised to realize how little I understood about the Blockchain, the differences between Bitcoin and Ethereum, and how this technology transfer and reconciliation for assets between institutions.
Like most people around Thanksgiving, I was flooded with news about the skyrocketing price of Bitcoin. It’s not the first time I’ve heard about Bitcoin. Fred Wilson got me to open a Coinbase account years ago. One of my biggest regrets wasn’t investing more then the $10 dollars they gave me to open the account. That’s lesson or issue with investing: it’s always easy to look back in time to see what you should have done. It’s much more difficult to know what to do now or anytime in the future.
One of my problems with Bitcoin is understanding why you should invest in it. It has no assets. It’s really based on faith that it will become a decentralized current and become accepted by the mainstream as a store of value.
What’s the difference between the two currencies?
Bitcoin is basically a database of accounts that is available to the public. Blyth stated, “you could download a history of all the bitcoin transaction since it’s inception.”
Ethereum is a more sophisticated version of Bitcoin. It’s faster to complete transactions. The biggest difference is the implementation of smart contracts which is basically a standard business contract but written into the code. The smart contract will execute once the conditions are met.
Blythe mentioned the positive with these types of blockchains is there integrity, since you’re able to see all of the transactions. The downside, at least for many companies, is the lack of confidentiality since of the information on the Blockchain, including the details of the smart contract, are publicly available. This is a major issue for many companies, especially large financial institutions, where sharing consumer information can be questionable ethically and in some circumstances illegal.
My biggest takeaway was the idea of live reconciliation of assets. Reconciling assets is something that can typically take a significant amount of time in many different sectors of the economy.
For the past few years, I’ve been focusing on Data Science. I’m still all in on Data Science and Artificial Intelligence but I’ll also start working on getting more education about the Blockchain. Specifically, how the Blockchain can improve the flow of assets.
photo credit: WorldSpectrum