InsightaaS: I’ve been working as an IT analyst for long enough so that many ‘new’ developments in technology appear as extensions to longer-term trends. Every once in a while, though – as with the title to this post – I catch myself thinking “I could not have imagined typing that sentence at any point in the past.”
What’s funny about this one is that the author of the O’Reilly Radar post, William Mougayar, is someone I’ve known for about 20 years. He’s living proof that it’s possible to evolve with the industry: he was at HP when I met him, and since then has worked as the head of his own consulting firm, as an author and analyst, as a corporate marketing VP in a global services firm, as founder of a couple of SaaS companies, and is now an advisor to startups, and blog author.
The post highlighted today shows why Mougayar’s opinion is valued in so many quarters. He starts by illustrating the differences between centralized, distributed and decentralized systems, and declaring that “decentralized applications are going to enable a decentralization trend at the societal, legal, governance, and business levels because there is a race to decentralize everything and give power to the edge of the networks” – a theme that I see echoing through InsightaaS’s new IoT section as well. Mougayar then breaks down and examines blockchains in terms of five concepts: decentralized consensus, the blockchain and blockchain services, smart contracts, trusted computing and proof of work.These building blocks will enable, Mougayar believes, four basic types of decentralized applications/services – currency, pegged services, smart contracts and systems linking decentralized autonomous organizations. This is really the crux of the post, and Mougayar helps illustrate it with a table demonstrating the scope, protocol user, frequency and benefits of each approach, along with some current examples. As a coda to the piece, Mougayar discusses three important issues that underpin all developments in this area: network effects criteria, ecosystem components and players and actors.
In all, this post isn’t really for the faint of heart or attention-challenged – it’s dense, long, and at least somewhat technical. However, it’s also forward-looking in a key area of the industry, connecting what is happening with Bitcoin today with what may happen with many other applications in the future.
Hat tip to Alex Sirota for passing this link along!
There is no doubt that we are moving from a single cryptocurrency focus (bitcoin) to a variety of cryptocurrency-based applications built on top of the blockchain.
This article examines the impact of the blockchain on developers, the segmentation of blockchain applications, and the network effects factors affecting bitcoin and blockchains.
The blockchain is the new database — get ready to rewrite everything
The technology concept behind the blockchain is similar to that of a database, except that the way you interact with that database is different.
For developers, the blockchain concept represents a paradigm shift in how software engineers will write software applications in the future, and it is one of the key concepts that needs to be well understood. We need to really understand five key concepts, and how they interrelate to one another in the context of this new computing paradigm that is unravelling in front of us: the blockchain, decentralized consensus, trusted computing, smart contracts, and proof of work/stake. This computing paradigm is important because it is a catalyst for the creation of decentralized applications, a next-step evolution from distributed computing architectural constructs.
But this is not just a computing phenomena. Decentralized applications are going to enable a decentralization trend at the societal, legal, governance, and business levels becausethere is a race to decentralize everything and give power to the edge of the networks. So, let’s get ready to understand these concepts.
- Decentralized consensus (on or off bitcoin’s blockchain): Decentralized consensus breaks the old paradigm of centralized consensus — i.e., when one central database used to rule transaction validity. A decentralized scheme, on which the bitcoin protocol is based, transfers authority and trust to a decentralized virtual network and enables its nodes to continuously and sequentially record transactions on a public “block,” creating a unique “chain”: the blockchain. Each successive block contains a “hash” (a unique fingerprint) of the previous code; therefore, cryptography (via hash codes) is used to secure the authentication of the transaction source and removes the need for a central intermediary…