BLOCKCHAIN EXPLAINED

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By Samantha Yardley

 

Bulls, bears, NFTs, a shit coin with the face of a perplexed looking dog on it. To the Bitcoin virgin, the concept of a mythical blockchain can leave you clinging to the crumpled note in your back pocket for dear life wondering what on earth is on the horizon for the world’s economy. Luckily Muscle and Health scored a tête-à-tête with the Godfather of crypto himself, Fiorenzo Manganiello to break down the blockchain.

Italian-born Fiorenzo started his career as a successful hedge-fund manager but after a professor introduced him to the newly emerging world of decentralized currency, he spotted its vast potential immediately. Immersing himself in the concept of all things crypto he soon became world-renowned as the go-to blockchain expert. If anyone can break down the blockchain, it’s this man. With a side dish of Italian swagger.

“Let’s try to make things simple” starts Fiorenzo with a dulcet Italian accent, “blockchain is literally a decentralized database. So, it’s a technology that can be used mainly for transaction purposes.

“Take the example of Bitcoin, which is one of the first applications in finance for the blockchain, it’s now the largest bank in the world today. And it has no banker, it has no processes, no employees. It’s a fully decentralized organization, which is way more efficient than the traditional banking environment.

“The Bitcoin blockchain manages more than 13 trillion payments, and not one single payment in 11-12 years of history has been bad. When you compare the banking system, probably three percent of the total payments per year are actually wrong.” Okay, a cost, labor, and time-efficient means of processing payments that eliminates the element of human error that’s prevalent in the traditional fiscal system, copy that. But what’s the bigger picture for the financial sector as we know it?

“We are pretty bullish on this concept of decentralized finance, which is called ‘defi’ today,” explains Fiorenzo. “Finance is probably one of the last sectors that haven’t been through a big digital disruption. If you compare it to media, with the emergence of Netflix, and retail with Amazon, finance is still pretty standard. And it’s heading towards a big, big digitalization, where blockchain will play a key element.”

So, when it comes to finance, we’re all still taking taxis, waiting for that Uber shakeup to irrevocably change our inebriated journey home from the bar. It’s starting to make sense. The mind-blowing potential of the blockchain doesn’t stop with our financial system though.

“If you’re passionate about luxury automation, you can buy a token for 1,000th of a Ferrari.”

“If I could pick an industry where there are a couple of applications with large potential
I would say everything related to traceability. Luxury is a big one, many of the largest brands cannot trace what happens to their products in the secondary market, an expensive bag of $5-10,000 is a great example. Brands only sell that bag once, whereas usually in the secondary market, you may see a product resell every two or three years. So, it allows companies to monetize the world history of their products.

“Obviously, there’s also the outbound authentication side, by applying a specific tag to a product with an NFT (Non-Fungible Token), the authenticity of the product can be verified easily to avoid the counterfeit market. Traceability also applies to the pharma industry, where we get a huge amount of fake medication worldwide, especially coming from China.”

Now I’m starting to see the bigger picture- and a welcome end to the anxiety you experience when the logo on your new sneakers looks a little dubious. From real estate to cat food, it seems there’s a blockchain-shaped solution to all our outdated processes.

“Tokenization is pretty powerful too,” says Fiorenzo. “The blockchain allows us to tokenize the shares of private companies, buildings, real estate, any kind of asset. It allows the public to get access to a fraction of ownership of goods that they could not own outright. Some friends of mine are tokenizing luxury cars, so if you’re passionate about luxury automation, you can buy a token for 1,000th of a Ferrari.”

Having the option to own a fraction of a Ferrari or a historical painting opens so many doors for enthusiasts and investors who prefer to capitalize on tangible assets. Despite the irony being a digital platform, it was becoming clear that blockchain has exponential reach over so many aspects of our day-to-day lives.

“Finance is probably one of the last sectors that haven’t been through a big digital disruption.”

Naturally, governments have also started realizing its potential.

“The first governmental application is our digital identity; the benefit is that there is less paperwork and more efficiency. The concept applies both to individuals and companies.

“The second part is related to the voting process, which is an extremely painful procedure for governments. Today, they have an evolving blockchain solution that allows you to apply your vote as a transaction that is recorded on the blockchain. So that vote is pretty impossible to alter or modify.

“The last piece of the puzzle is related to land titling. Blockchain will allow you to take the map of your country and separate each title, with each piece going on the blockchain as a transaction. It’s also pretty easy to use that to create what’s called property e-auctions, where you have access to all information required, from the citizen’s identity to the ownership, in order to execute every stage of an auction smoothly.”

And so, the unicorn blockchain is well and truly elucidated, it’s basically just a digital ledger on steroids with a cherry on top. The concept itself is really quite simple when you’ve fought your way through an exasperating ocean of jargon and befuddled -looking doggy cryptocurrency. The potential applications of this decentralized database, however, seem to be infinite. Life, as we know it, has the potential to look very different indeed, and I suspect when it catches on, this science fiction-esque future will become a reality at a very rapid pace.

 

Interested in learning more- see AN INSIDERS GUIDE TO BITCOIN WITH MICHAEL HUDSON

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