Blockchain is the foundation for the next generation of money. This new money has fundamental advantages over traditional money that are so huge that it may eventually supplant all legacy money systems in the world. Blockchain will enable new business transactions that we can’t currently engage in and some that we haven’t even thought of yet. It will become a basic element in every application where immutability, integrity and security is needed, and will open up opportunities for more buyers and sellers enabling economic activity that wants to exist, but can’t under the current money system. This new economic activity may come to dwarf the size of the current economy, yielding tremendous opportunity.

Enabling Trust

Blockchain enables a level of trust that has never been possible before. Blockchain solves the problem of trust across networks by enabling complete strangers to transact business without risk. Blockchain allows varying degrees of trust to be built in at the transaction and communication layer of the infrastructure itself, and enables existing business transactions to be performed much more easily by decreasing the friction involved in doing business. Blockchain is called a trustless system because the need for a trusted intermediary is eliminated. With Blockchain you can do business with anyone and you can set requirements that need to be met in order for the transaction to occur. Blockchain enables mutual assurance of performance with a guarantee, and provides sophistication in the level of certainty.

Programmability

Programmability is what makes Blockchain truly transformational. Programmable Blockchains (such as Ethereum) are much more useful than non programmable Blockchains because programmers can actually write a program in a high level language (such as Solidity, and soon Java) that expresses the terms of a smart contract that is being carried out on the Blockchain. With full programmability, there are many many types of transactions that can be written to the Blockchain. Users can make their own types of transactions that correspond to programs called smart contracts. Smart contacts are the software programs that run on a programmable Blockchain with self-executing contracts with the terms of the agreement written directly into lines of code. These programs enable complex agreements stored on the Blockchain.

Implementing Blockchain

With smart contracts we will be able to reengineer and streamline business practices that have been around for centuries. Many types of transactions will become much more efficient, and in some cases will go from being impossible to easy. What’s new and incredible is that these applications can go beyond simply recording events that occurred in the past to actually transacting business in real time as dictated by the terms of the smart contracts. Blockchain has the potential to be as big a jump forward as the transition from the barter system to currency. The people who are involved in Blockchain now are defining the way the economy of the future will operate. Decentralized networks are already more powerful than traditional systems in many ways, and the technology is advancing rapidly. The scale of the opportunity is staggering.

This article was written by Margaretta Colangelo. Margaretta is Managing Partner of Deep Knowledge Ventures, a leading investment fund focused on the synergistic convergence of DeepTech verticals and frontier technologies. Investment sectors include AI, Precision Medicine, Longevity, Blockchain, and InvestTech. Margaretta is President of U1 Technologies and Co-founder of Jthereum.