Blockchain: The 2 most important things to understand

The over-exuberance about blockchain has reached staggering proportions. To put things in perspective using Gartner's famous hype cycle, we appear to be close to the "Peak of Inflated Expectations."

ZDNet and TechRepublic have been covering blockchain from every angle for the past few years and we've got a lot of resources to help you understand the technology, the thinking behind it, and the potential implications.

But if we had to quickly boil it down to two factors, here's what they would be:

1. It decentralizes trust

Trust is the commodity that powers the economy, stabilizes communities, and keeps society running in an orderly way. Today, that trust mostly resides in large institutions like governments, banks, and big corporations--because we have the confidence that they're not going to fail and disappear tomorrow.

The most revolutionary thing about blockchain is that it replaces trust in big institutions with public trust in a technology that enables radical transparency. That's why a lot of experts look ahead and predict that blockchain will decentralize power from big institutions to individuals and smaller groups.

SEE: Executive's guide to implementing blockchain technology (ZDNet) | Blockchain: A cheat sheet (TechRepublic) | Blockchain and business: Looking beyond the hype (ZDNet) | Blockchain Decoded (CNET)

2. It destroys margins

Jeff Bezos famously said, "Your margin is my opportunity." The idea is that if one business is willing to take a smaller profit margin to offer a product or service cheaper than the existing market leader, then it can disrupt the market. Many businesses are about making hard things easier for customers--even if it takes a lot of complicated steps on the backend that customers never see.

The technology and the transparency model of blockchain can take much of the complexity out of backend processes, such as banking, supply chains, and the delivery of electronic goods. That will enable lots of new--often smaller--competitors to undermine the profit margins of big incumbents and provide goods and services for less in order to disrupt the market.

Special report

To understand more about the future of this key topic, read our special report "How Blockchain Will Disrupt Business." You can read all of the articles on ZDNet or you can download them in one PDF on TechRepublic, available for free to registered users.

ZDNet Monday Morning Opener

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