In an opinion post published on Pymnts.com, Market Platform Dynamics CEO Karen Webster takes a closer look at the ongoing hype about blockchain to explain why it isn’t exactly ‘just like the internet’ yet.
Blockchain refers to the distributed public ledger of bitcoin transactions, stored and verified by a network of computers solving complex algorithms in a process known as bitcoin mining. There has been a lot of interest in this technology nowadays, with several global banks and financial institutions teaming up in a collaborative project to explore blockchain’s potential applications in the industry.
Why Blockchain Isn’t ‘Just Like the Internet’
Among the applications being explored for blockchain are its uses for record-keeping, tracking data transfers, and trade settlement. Some say that this type of technology would disrupt Wall Street and possibly other established industries, likening its potential impact to that of the internet in the 90s.
However, according to Webster, blockchain is still far from being on the same level as the internet. She breaks down the infrastructure of the internet by describing the Advanced Research Projects Agency Network (ARPANET), which is the physical backbone that enables the delivery and of messages and data across servers to date. Since this venture was funded by the US Department of Defense and is handled by several ISP companies, the internet isn’t exactly government-less like the blockchain.
In addition, the internet has regulations imposed by four major governing bodies, including the ICANN which keeps track of domain names. In contrast, the blockchain network is still decentralized, with the Bitcoin Foundation as the closest thing it has to a governing body.
To top it off, the anonymity of transactions or entries on the blockchain can also prove to be a double-edged sword, Webster points out. “Today, if there’s an issue with a financial transaction, there is a person to talk to, an entity to stand behind it and a legal framework – if need be – to resolve any problems,” she wrote. “None of that exists today in the world of the blockchain, which makes it very, very different from how the Internet started and how it grew.”
However, Webster also points out that the development of blockchain technology could still hold promise. The challenge is that of separating the cryptocurrency from its distributed ledger, which she concludes is an imperative.