The Blockchain Revolution

Here’s a sanitized version of the provided YouTube transcript:

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(dramatic music) – [Narrator] Blockchain is a term that has gained significant attention recently. It is the innovative technology behind cryptocurrencies like Bitcoin. Proponents argue that blockchain is a transformative technology, comparable to the internet, that will reshape the future.

– This technology is key to decentralizing and democratizing innovation itself. – [Narrator] Advocates claim it will enhance food safety, secure financial transactions, protect medical records, and ensure that our online identities are genuinely ours.

– Blockchain excels at managing transactions of information by securing them in real-time. – [Narrator] It has the potential to eliminate the need for banks, lawyers, and other intermediaries, reducing costs and bringing marginalized individuals into the global economy. According to IHS Markit, they predict that by 2025, 10% of the world’s GDP will be stored on blockchains.

– [Narrator] But is blockchain truly the revolutionary technology it is claimed to be? What implications does it have for you?

– The rapid pace of its development is concerning, and it is occurring in nearly every jurisdiction. (dramatic music) – [Narrator] Blockchain Revolution is supported by B. Riley Financial, which offers comprehensive solutions to clients at all stages of the business life cycle.

(gentle music) Trust is fundamental to society. When you receive a dollar, you trust it is genuine, that stores will accept it, and that banks will honor it. If you vote, you trust that your vote will be counted. When you buy an organic apple, you trust it is free from pesticides.

Consider any transaction or interaction that requires a level of trust; it’s challenging to find one that doesn’t. Unfortunately, the world is filled with counterfeit currency and misleading labels. The financial crisis of 2007-2008 highlighted the vulnerabilities of banks, which can be corrupt and fail, taking your trust and money with them.

It is no coincidence that the concept of blockchain emerged shortly after the financial crash. In late 2008, an anonymous individual named Satoshi Nakamoto published a paper proposing a system to replace traditional trust with a “trustless trust.”

– The white paper introduced Bitcoin, which is based on a decentralized ledger focused on financial transactions. This distributed ledger ensures that no single entity controls the record, preventing manipulation. Blockchain technology underpins this system. – [Narrator] To this day, Nakamoto’s identity remains unknown, but the blockchain concept has proven powerful.

A block is a piece of information, like a record of your financial balance. When you make a transaction, a new block is created and linked to the previous one, forming a chain. These blocks are secured with complex codes that are difficult to break, ensuring the information remains safe and trustworthy.

Additionally, instead of being stored in one central location, copies of the blockchain are distributed across thousands or millions of independent computers, creating a decentralized network. Each new block updates every computer on the network, making it theoretically secure and transparent.

If someone attempts to alter the blockchain, they must not only break the complex codes but also change the information across all computers in the network almost instantaneously. Unlike a compromised bank account, a blockchain cannot be tampered with in the same way.

– Now, there are numerous copies of each record, and as transactions occur, updates happen across all copies. This makes disputing a record nearly impossible. – [Narrator] Simple, right? Not for most people. Even blockchain enthusiasts admit that they don’t fully understand it.

(electronic music) Fortunately, the giant stones on the tiny Pacific Island of Yap can help illustrate how blockchain and cryptocurrencies function. These stones, known as rai, have been a symbolic form of currency for centuries. The blockchain that governs them exists in the collective memory of the Yapese people.

Their value is based not just on size but on the shared oral history associated with each stone. Since these stones cannot be easily transferred, the community keeps track of ownership by memorizing their stories and passing them down through generations.

– Essentially, it is a record of an asset’s movement and ownership. The challenge lies in who maintains that record. If I own the asset, can you trust me to keep an accurate record? This raises the question of whether we need a trusted intermediary to manage the ledger. – [Narrator] This illustrates another significant advantage of blockchain: it eliminates the need for banks and the associated costs and delays of trusting intermediaries.

When you consider security, efficiency, transparency, and cost-effectiveness, blockchain could potentially surpass the internet in significance, as its applications extend far beyond finance and law.

– We are beginning to see a shift beyond the initial applications of blockchain technology, which primarily focused on cryptocurrencies, to its impact on various industries such as supply chain, healthcare, and security. People’s understanding of blockchain is evolving. – [Narrator] If blockchains are tamper-proof, they could safeguard medical records, ensure accurate vote counting, guarantee that charitable donations reach their intended recipients, and verify the ethical sourcing of products like diamonds.

They have the potential to save money and lives. (electronic music) Consider how an organic apple reaches you. It passes through many hands, each creating records that can be misread or falsified. There are the farm, the pickers, the shipping, the processing, the packaging, the labeling, and finally, the grocery store.

What if you could tag that apple at the farm and create a blockchain to track its journey? Each time it changes hands, a new block would secure information about its origin and journey. You could trace it back to ensure it came from an organic farm, just as you could with fair trade coffee and chocolate.

– For organic coffee, you could trace its journey from a specific farm, at a particular elevation, during a specific time of year. This information travels with the product, allowing for verification if questions arise. – [Narrator] If a contamination issue arises, such as a foodborne illness linked to lettuce, the blockchain record would quickly identify the source, preventing widespread panic and minimizing waste and financial loss.

One example is Walmart’s challenge regarding mangoes. They found that tracing the origin of a package of mangoes took over six days with existing technologies. However, through a blockchain pilot, they reduced that time to just 2.2 seconds, allowing for rapid and precise responses to contamination issues.

– This means targeted remediation efforts can be implemented without affecting the entire supply chain. Recent issues with romaine lettuce highlighted the importance of speed in public health responses. – [Narrator] Beyond supply chains, transportation is another area where blockchain can provide significant benefits.

Autonomous vehicles are here to stay. (electronic music) These vehicles can communicate with one another, sharing information about braking and other actions. However, the challenge lies in how these vehicles perceive their surroundings and trust the information they receive.

The emerging scenario involves vehicle-to-vehicle and vehicle-to-infrastructure communication, where city infrastructure can inform autonomous vehicle decision-making. Blockchain could establish a chain of trust, allowing autonomous vehicles to rely on data from outside their immediate environment.

(electronic music) – [Narrator] This potential extends to the trading of renewable energy as well.

There is a project called Brooklyn Microgrid, which connects homes with solar panels, allowing neighbors to transact directly with one another. When a home generates excess energy, blockchain can facilitate transactions between participating homes, rather than relying solely on the utility company.

As renewable energy becomes more prevalent, utilities face challenges in managing the influx of energy. By enabling direct transactions between neighbors, blockchain can enhance the value of renewable energy deployments beyond what utilities currently offer.

– [Narrator] This adaptable technology is also addressing issues in personal identity. (electronic music)

Many individuals lack formal identification, posing challenges in various aspects of life. In developed nations, this is less of an issue due to established identification systems.

Blockchain offers potential solutions for establishing unique digital identities, enabling individuals to access financial services. For instance, a blockchain-based card with a digital identifier could allow people in underserved communities to open bank accounts and access financial resources.

This technology is decentralizing and democratizing innovation, fostering advancements at various levels within the blockchain space.

(electronic music) – [Narrator] Some believe blockchain can resolve many global challenges. However, it is essential to recognize that blockchain has its limitations.

The software behind blockchain must be flawless, which is often not the case. Coding errors can lead to significant financial losses, as has occurred in the past.

– This is often referred to as the “castle walls problem.” No matter how secure a system is, vulnerabilities can be exploited if not properly managed. – While blockchain networks are designed to be immutable, poor security practices can compromise entire ecosystems.

The issue often lies not with the blockchain itself but with the participants in the network.

– [Narrator] Additionally, large blockchains can be energy-intensive. Updating records across numerous computers requires significant time and energy. Some estimates suggest that Bitcoin mining consumes more energy than some countries, raising concerns about its environmental impact.

Moreover, scams exist in the cryptocurrency space, such as the OneCoin Ponzi scheme, which misled many investors.

Depending on whom you ask, blockchain may appear to be either a promising innovation or a source of failures. The reality likely lies somewhere in between.

– I believe blockchain is a revolutionary technology with significant potential. While it may not completely replace existing systems, it offers valuable tools for various industries, making it a unique asset.

(somber music) – [Narrator] Until the challenges are addressed, blockchain has yet to realize its full potential as a solution to fundamental questions of trust that have persisted throughout human history. Who can you trust? What can you trust? Can we truly eliminate trust from our interactions, and would we even want to?

Blockchain Revolution is supported by B. Riley Financial, which leverages cross-platform expertise and resources. B. Riley is positioned to provide comprehensive solutions to clients across all market conditions. Visit brileyfin.com for more information.

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