Chapter 1: Introduction
Satoshi Nakamoto, the anonymous inventor of Bitcoin, created a piece of technology that many, including myself, view as the most important invention since the Internet.
That crucial piece of technology is called the Blockchain.
Bitcoin is built on Blockchain technology.
The Blockchain created a method to arrive at a reliable consensus in a decentralized way. It was the first technology to ever accomplish this feat.
Before the creation of the Blockchain, it was necessary to use a third party like Visa, PayPal, or a bank to record a payment between parties. Both parties to the transaction agreed that the records kept by this third party should be considered evidence of payment. In other words, there was a consensus that a payment took place because the third party said so.
Bitcoin allows us to bypass these third parties and creates a far more efficient method of consensus.
The potential for this technology extends far beyond its use in monetary transactions. Just like the Blockchain began a revolution in payments through Bitcoin, I believe the Blockchain is about to begin a revolution in many other areas as well.
For example: If I sell my Amazon stock to a buyer, right now we rely on a stock exchange like the NASDAQ to record that transaction. But in the very near future, we could rely on the Blockchain to do that.
If I purchase a piece of real estate from someone, the sale is recorded at some government office, but we could record it on a Blockchain.
If I buy the domain, www.bitshares.tv, currently that purchase is recorded at The Internet Corporation for Assigned Names and Numbers (ICANN), but it could be recorded on the Blockchain.
If we enter into a contract, we might record that on paper and each keep a copy. Instead it could be recorded on the Blockchain.
These are just a few examples of existing industries that can be revolutionized with Blockchain technology. However, because of the efficiencies of Blockchain technology, brand new industries are suddenly possible too.
For example: Let's say that I am an author and I want to write a book. I have to take a year off work to write the book, and I need the money to do that. I could pre-sell ownership rights to the book via a crowd sale recorded on the Blockchain, and all of my "shareholders" could receive revenues from the sale of the book once it is published. The terms of their shares can all be recorded and automatically executed on the Blockchain.
Because of the laws, regulations, and costs associated with an IPO on the NASDAQ, it is too inefficient to justify issuing traditional "stocks" on a book I was going to write. With Blockchain technology, this suddenly becomes possible. This is similar to crowd sourcing, but with greater protection and transparency for the investors.
In this book we are going to examine this exciting new world and find out where the most potential lies.
In my opinion, at the center of all of this potential is Bitshares.
Bitshares is a powerful open source business engine built on Blockchain technology.
The developers of Bitshares have made a number of innovations to the Blockchain technology as used by Bitcoin. These innovations solve many of the problems that Blockchain-based enterprises will face when entering many of the aforementioned industries.
As a result of these innovations I think the next few years will see Blockchain technology massively disrupt several new industries. But surprisingly, that is not the most exciting thing about Bitshares. In fact, that is not even what this book is about. I do go into these points in the bonus chapter at the end, but this book is about another even bigger potential.
All of these new industry disrupters built on Blockchain technology will need to be traded somewhere, just like Apple and Amazon stock are traded at the NASDAQ.
So the Bitshares team went ahead and built a Blockchain-based trading floor to be the "NASDAQ" for all future Blockchain-based solutions.
As you will learn in the remainder of this book, this decentralized trading floor has the potential to radically transform a wide range of industries, from the $700 trillion dollar derivative market to how we manage loyalty programs like frequent flyer miles.
The efficiencies that the Bitshares Blockchain can bring to the world in the next decade are mind blowing.
This book is an exploration of Bitshares potential. It is entirely possible that Bitshares could explode in value over the next few years, just as Bitcoin did before.
It is this possibility that has kept me awake for many months researching. I hope you enjoy the journey as much as I have.
To warm us up a little before we get into the real meat of it, check out this link to see the Bitshares short promo video.