When Haim Toledano, a typically reserved investor, begins to talk about blockchain databases, his eyes light up with passion.
“Blockchain is going to change the world,” he says forcefully. “It’s the key to a truly democratized global economy.”
Toledano has been around the block more than a few times. As a veteran of the high-tech scene and fintech community, he’s seen his fair share of technologies come and go. But he’s adamant that blockchain is here to say.
“Imagine your conventional businesses database,” Toledano explains. “You call up a support number, an employee types in your details, and the system – which really means the database – gets updated.”
“But that setup is very limited, logistically speaking. Your updating process depends on how many employees you have and how long they work, not to mention that you’re creating a potentially vulnerable silo of all that data.”
Blockchain is essentially a way of distributing a public ledger of all information that gets written to a database. Many different computers, rather than one administrator, manage the data, so you’re essentially spreading the workload, as well as the risk.
“It’s impossible to hack,” Toledano explains. “There’s no single point of vulnerability in the system. And nobody has the sole responsibility of administering the database, so changes can happen much faster than if there were a single, verifying party.”
The real genius of blockchain, however, is that adversarial parties can compete in a neutral environment. “In areas like finance, where large sums of money change hands constantly, trust is obviously essential,” Toledano says.
“If you don’t have faith in the referee of a game, or if he’s a competitor of yours, you’re not going to want to compete,” he explains.
“If, however, the database has no single referee, and all the players are jointly making the rulings, irrespective of their market interest, then everybody can feel confident enough to join in.”
But how will blockchain affect the online life of the man in the street?
“While Bitcoin was grabbing all the headlines a couple of years back, the smart money was already heading towards the underlying innovation – blockchain,” explains Toledano.
“The big banks and financial institutions have been on board for some time now. But I think the truly revolutionary applications will be in the fields of microfinance and crowdsourcing. The last decade has seen so much disruption – and creative destruction – in terms of start-ups taking on the big established industries. Now blockchain is going to be the key to ordinary people taking a real stake in new businesses and whole new industries. The next few years will be decisive and the big winners will be those who put their trust in the power of blockchain.”
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