Why is Blockchain Important


Summary

Yesterday at the IIW closing circle someone asked why blockchain matters. I gave an answer that felt right, so I figured I'd write it down.

Colorful Wooden Blocks Children's Museum Macro April 17, 20114

The world is full of directories, registries, and ledgers—mappings from keys to values. We have traditionally relied on some central authority (whoever owns the ledger) to ensure its consistency and availability. Blockchain is a global-scale, practical ledger system that demonstrates consistency and availability without a central authority or owner. This is why blockchain matters.

This is not to say that blockchain is perfect and solves every problem. Specifically, while the blockchain easy to query, it is computationally expensive to update. That is the price for consistency (and is likely not something that can be overcome). But there is also a real cost for creating centrally controlled ledgers. DNS, banks, and so on aren't free. Cost limits applicability, but doesn't change the fact that a new thing exists in the world, a distributed ledger that works at global scale. That new thing will disrupt many existing institutions and processes that have traditionally had no choice but to use a central ledger.