Why are blockchains valuable?
I want to know from you, why blockchains are valuable.
What is really making them special above all? How are they powerful or are they?
I want to know from you, why blockchains are valuable.
What is really making them special above all? How are they powerful or are they?
In my opinion blockchains are valuable because they offer an alternative. Bitcoin itself was born after/during global financial crisis of 2008 as an alternative to modern financial systems. Once there is an alternative then it is up to the people to choose if they want to give any value to the alternative, in this case bitcoin and blockchains in general.
Every human interaction, every choice in essence creates or at the very least assigns value. Most common choice is how to spend time: create something, go to work, watch tv, hang out with friends, spend time with family, engage in sports, travel, spend time on social media, learn new things, various hobbies, etc. One way or the other we try to give different value to different things at various times. I think it is all about options available and choices made.
For example, here on Steem value is not just created by posting blogs and exchanging upvotes, I think real values comes with people choosing to spend their valuable times in various communities, networking, building new things. Everything done on Steem can be done elsewhere, but Steem is providing alternative. Is it a better alternative that can go mainstream? Depends who you ask. Nobody knows. It will be determined by choices people make.
Blockchains have a great potential to empower ordinary people, yet these potentials aren't without risks. Best technologies are always the ones that are easy to utilize. I think, making them simple to understand and easy to use is where blockchains might be failing at the moment.
A blockchain is a chain of blocks. For most database applications, it makes sense to add transactions to the database immediately rather than wait to group them into blocks. Why then is the sacrifice of blocking transactions (from the perspective of a database user), a good design decision for the overall system?
Blocks are necessitated by mining, whereby an entity is awarded the ability to add a block and determine which transactions it contains (as long as all transactions are valid according to the protocol). The benefit of mining is that it enables distributed consensus and immutability. Proof of work and proof of stake are two different methods for determining who will mine blocks, but both strive to create decentralization and immutability.
Thus for what applications do decentralization and immutability matter? They are important for applications where there may be censorship or failure of centralized entities. In addition, decentralization can help with system reliability and robustness. Hence, money is a great application for blockchains. Arguably, social media is also a good applications as we've lately seen more censorship of social media.
Finally, public blockchains are open & permissionless. They have the advantage of allowing anyone to innovate. Whereas you need Facebook's permission to build an application on top of it, anyone can build a Steem application (like Steem Bounty and many others). Thus the pace of development is much more rapid for systems built on a blockchain, despite the underlying inefficiency of the data structure.
Tbh this does not fully explain its value to me. You have explains technical advantages, but danced around the core question of value.
Decentralized consensus i.e. trust is highly valuable. Blockchain is the mechanism of decentralized consensus. If it technically able + have a net effect it's truly valuable. Otherways it's potentially valuable and so can be speculated.
To me there are a few factors that create value. First off and maybe the most important to me is a transaction that can't be reversed which is nearly instant.
Picture this, a vendor is at a trade show. Customer comes up and purchases an item with a credit card. That customer (in the US) has 30 days from the date the statement is issued to dispute the charges for just about any reason. The second there is a dispute the vendor has the money taken from their current pending payout or taken from their checking account if there are no pending transfers. Until the dispute is resolved these funds are tied up and without very strong proof the credit card company will side with their customer, the buyer.
Same vendor sells an item for Steem and has an nearly instant transaction that is irreversible. Payment is done and is as good as cash.
Now this transaction really leads to my second point which is trust. The value of trusting that each transaction that is broadcast on the blockchain is there and can't be changed adds so much value to those who use it. When you can adapt micro payments for data pulls or license usages or so many other things and know that the payment is instant and final that trust gives so much value to the blockchain that can't be achieved in current billing/payment methods.
Not sure if this is what you are looking for, but as a vendor who has taken crypto payments, credit cards, paypal, and so many other forms of payment I can say Cash is and always will be King to me, but a payment processed instantly on a blockchain is right up there.
Thank you @knircky, entire amount from the bounty was powered up. Slowly, but surely I'm building up.
In my opinion I don't think blockchains are valuable without decentralization. From what I understand, blockchains are really slow and expensive data bases that should never be used if cost and speed are your main priorities. Without decentralization, blockchains are a waste. Now, I understand that true decentralization is very hard to achieve and there's arguments that no coins are actually decentralized, but blockchains are a marketing term buzz word to sell highly centralized company stock. So, what makes blockchains special is decentralization. Other than that, it's all hype with no substance. That's my understanding. :-)
Blockchain allows to create decentralized currencies, we don't need central banks anymore, it is the biggest revolution of the last century. Blockchain is a new tool, a tool does not create value by itself, the new products created with this new tools have value. @daan007 gave you examples of new products created with the blockchain which each have different value.
I think blockchain can be valuable because of the decentralized character. Which means that there is not 1 person or entity that controls the blockchain. And everything that goes into the blockchain will remain there and can't be changed. So you can always find the truth and nothing but the truth!
So decentralizion creates value by truth? I dont see how this creates value?
Poeh
I'm curious to see who can tell you what the advantages are.
Do you believe in it yourself?
I have a very strong conviction why they are valuable.
And did anyone already give a good or great answer? Or should I do a second attempt as bounty hunter?
I think it comes down to dezentralization and transparency. In a world of misstrust and negative feelings towards governments and institutions like banks or big companies it is something people love. The blockchain can help to reinstall the trust many people seek.
As a bonus an indirect effect, the new technology also applies pressure on those.
Look at germany f.E. - A few months after the big crypto boom, the banks suddenly install a system where near-instant transactions become available. If there would be no other options like cryptos, I doubt that mice would have been done that „fast“ as well.
U mention governments. But how is value created?
Trust is value
If you have a tool (the BC) that helps you to be trusted by people, this is really valuable itsself imo.
A company trusted by people will sell more.
A service being trusted will be used more.
A government being trusted will be voted more.
So I would say all of those rise in value due to increased trust. Blockchain creates trust. Trust creates value.
Data is value
Additionally, data and content is value. If people store theirs on your Blockchain, its’ value rises. Some of the biggest companies in the world are that big because of the data they have stored.
So I would say the Blockchain can be a useful tool for companies, applications and goverments to create value, which makes it a valuable tool itself.
I would like to give this a try as well, though many others have tried and seems like the right answer is still not there.
I feel Blockchains are valuable majorly because of the data and how you use the blockchain for that data. It is the way the data is stored and the amount of data that is being stored.
The way the data is stored make it valuable because everyone's data is on publically (there could be private as well though) accessible platforms, yet the integrity of the data is maintained. After several calculations and proofing logics, the data is put into the blockchain. There is a lot of effort being done in ensuring right data goes in right manner.
The humongous amounts of data it can store and the excessively large number of transactions that can happen in parallel make it valuable.
Finally it is important how we use blockchain for data. You can use it to build a chain of items but when you use it to implement a chain that is smart (smart as in smart contracts) and logical, it adds value to all data that is there and what it can deliver out of that data.
I think that public data set is a nice feature. But i do not believe it is the main driver of value.
Ie looking at steem, is the difference really the public data? Could that same value not be realized with a centralized sql type approach?
How does that make the platform more useful to its users then centralized platforms?
To me it seems there is something bigger at play here that generates value
With centralized systems, ownership is with the person managing the system, hence he is the sole owner of content and he only has the value from it ultimately. Just like Facebook having all our data and sharing it with others for benefits in return.
With a decentralized approach, everyone has access to data and no single person claims the ownership. Hence, everyone earns the value in return from it.
Yes I see that. But how does that translate into value or productivity?
With the above 2 approaches they add value to the data that goes into the system and can increase productivity in future.
Blockchains are valuable for a number of reasons, what really makes them special is the decentralized aspect of them. A decentralized and widely distributed blockchain is a very powerful tool for democracy, freedom of expression and information.
Blockchains are valuable because we assign them value just like anything else. They maintain their value because they are cryptographically secure and immutable. You cannot simple print more Bitcoin and must acquire it from someone else or mine it (Proof of Work) some other blockchains require Proof of Stake such as Stellar Lumens and other require proof of care or some hybrid. The worst blockchains have been premined and are for sale to the highest bidder. These favor the wealthy and the creators. They may have assigned economic value but they have little value to society as a whole as the aren't really decentralized and are consolidated in the hands of the few.
Many blockchains are clones, these should be avoided too because they will likely never be as valuable as the original. For example Litecoin will never be worth more than Bitcoin because it is a copy and isn't revolutionary. Ethereum is revolutionary because it is a smart contract, not just a representation of value like Bitcoin. EOS is similar to Ethereum in that it is also a smart contract but will probably never be worth as much because of first mover advantage Ethereum has. The childchains give Ethereum value and the decentralized applications which are powered by Ethereum because they create demand for it, improve it and make it more functional. EOS may never catch up to this as it is a couple years late as not as widely spread. NEO might become more valuable because of political reasons. I can go on and on about various coins, if you want a valuable one, go with XLM, mainly because it's extremely fast, as cheap as possible, backed by industry titans and it's being widely distributed for free. Ultimately adoption and acceptance will make a blockchain valuable.
As for the power of blockchains; having the ability to share and store information which cannot be edited by a third party is extremely valuable. We can use this to digitalize democracy, make accounting and taxes more transparent, make society require less trust and faith in big government, legal systems, banks, and other holders of information. This is revolutionary and blockchain could change society as much as written language. It's a form of communication that cannot be destroyed or altered.