Blockchain and the Internet are often compared to one another as two technologies that pose the same potential to disrupt much of global finance and economics.
However, that is not the only similarity that these technologies share: In fact, blockchain can be considered a new Internet.
The Internet is a centralized system that involves many actors, without a unified consensus mechanism. Due to this, there are a variety of systems and components that do not communicate with each other; for instance, one’s identity on Github as compared to their identity on LinkedIn may be significantly different from one another.
The basic structure of blockchain is an address, often referred to as a public key. This mechanism allows users to transfer funds and coordinate with smart contracts or digital agreements. In comparison, the Internet runs on a server with a public IP address. This is the basic structure of the Internet. No public information about this address exists; it is merely a point to which one can execute certain actions and connect.
The most substantial difference between the Internet and the blockchain is in the number of services that they are required to operate. For example, the Internet requires a domain name, which is then assigned to the DNS and indexed in the search engine; an SSL certificate for the security of users; and functional content that is used directly. On the blockchain, any person or company can interact with only a profile rating reflecting some digital essence of trust, including the history of the transactions of the user — similar to a Google search history log.
In this record, users can link to the necessary “certificates,” such as pages on Github, LinkedIn, and Facebook similar to how SSL certificates are linked on websites. The new Byzantium update for Ethereum will make such links cheaper than purchasing a web domain.
Each profile will be a smart contract that will contain all of the user’s information in one single economic unit. This smart contract will be able to make deals with other profiles, arbitrage or be arbitraged, and most importantly, connect with different rating networks. Rating networks will be a blockchain representation of an organization and will contain a score based on a variety factors, such as job or academic performance. All users within the network will be able to see how successful another user is based on his rating.
Companies and organizations will be able to have ratings as well. For example, there could be ratings for various marketplaces or a political legitimacy rating. These updates will be pivotal in making democratic societies more transparent, open, and trustworthy.
Blockchain is still in the early stages of its development. As often as it’s been compared to the Internet, its main advantage is that its developers have an opportunity to start from scratch: to design anything they want and develop their own standards. By giving users the opportunity to work on their profiles within the blockchain network, they have the chance to create a full-fledged “digital passport.”
Each user, whether a company or individual, can carry out transactions with other individuals. In addition, they will having a informative, trusted, and immutable rating and history of their profile. The final rating of the profile will be more reliable than a work reference, tax filing, or credit history, mainly because it is impossible to forge. New projects will now have the ability to build the path of their own destiny in the age of a new digital economy.
With the development of blockchain and identities, marketplaces will also begin to emerge, in which buyers can initiate transactions on their profiles, with other profiles, where the seller has the ability to either accept or reject them. All meta-data within the transaction — including information about its state, amount, buyer, internal profile transaction ID, and transaction hash — are stored in inside the mapping of the user contract. The transaction hash become the unique ID of the transaction, which was created in the marketplace.
Marketplaces can store information about the entirety of a transaction, including its container, parameters, and duration, among other factors. The transaction will first appear on the marketplace, where its ID is then sent to a smart contract, and the seller receives a hash from it. Its compliance is then checked with the essence of the transaction on the marketplace and a final decision is made by the seller to accept or reject it. After the conclusion of the transaction, the reputation of the parties is amplified, if successful, or dropped in the event of a conflict.
While the advent of the Internet offered the possibility of increased global connectivity, blockchain has the potential to take this advancement to the next level: It can provide the world with a way to become entirely digital. When transactions and marketplaces are entirely digitized, the creation of a fully decentralized and trustless society becomes a very real possibility.