To put it in layman terms, at the risk of some repetition, a blockchain is a special ledger \u201cout there on the internet\u201d which no one owns or controls, which anyone can download (using a free client software) to view or create accounts, and to which anyone having an account can then broadcast a transaction to be added, and if a majority of the participating computers agree, it will be validated and added.\r\n\r\nWhat you can\u2019t do is delete or amend a transaction once it has been validated. Special computers (the miners) that facilitate this validation get digital reward tokens generated by the blockchain software itself for doing so. The more the tokens move between accounts, more are the transactions needing validation, and more new tokens get mined and rewarded to the miners, thereby increasing the digital tokens in circulation in a self-reinforcing loop.\r\n\r\nAs quoted in the book Squaring the blockchain circle, it requires deconstructing some of our existing social and philosophical constructs, such as how we trust each other and how we arrive at the truth and then record it. There are also our economic and commercial constructs, such as how we set up contracts and agreements and how we resolve our disputes.\r\nFor centuries, these assumptions have been the edifice of our commerce and have changed little, or not at all, over time.\r\nHow Blockchain Came Into Existence?\r\nThe move from paper-based systems to digital systems and then onto the cloud never challenged these assumptions, just enhanced our capacity to process ever-increasing amounts of data more efficiently. Up until about 2008, when the Global Financial Crisis (GFC) struck us.\r\n\r\nThe GFC and its aftermath exposed systemic flaws that brought the world economic order to the brink of collapse. Nations went bankrupt, currencies went into a free fall, the world\u2019s biggest insurers failed, investment banks collapsed and the central banks of the world faced a situation rapidly spiralling out of their control. If it all had to be summed up in one line, that would have to be \u2014 the collapse of trust.\r\n\r\nWhen trust collapsed, market liquidity evaporated. Blue-chip securities were suddenly unsellable. Bid-ask spreads went through the roof, and even then there was no guarantee that the markets would absorb supply. Deals collapsed even before the ink was dry on the papers. Financial business came to a standstill, and the Federal Reserve Bank became the lender of last resort holding the scaffolding and injecting liquidity through extraordinary measures.\r\n\r\nIt was against this background that in October that year (2008), forged in the smithy of the GFC, a person (or a group) called Satoshi Nakamoto published the Bitcoin white paper describing the concept of a cryptocurrency \u2014 bitcoin \u2014 riding on an underlying technology \u2014 the blockchain \u2014 which could provide an alternative way to build trust, record truth, secure transactions and create a decentralized network spanning the globe outside the purview of any authority.\r\nWhy Blockchain Is Not Successful Yet?\r\nThe innovative idea of Initial Coin Offerings or ICOs resulted in some twenty billion dollars worth of funds flowing into blockchain projects in a short time even as bubble indicators began flashing red all over. The success of bitcoin made blockchain into a household word and unleashed the power of human imagination regarding its applications. Bitcoin acquired the Midas touch.\r\n\r\nBut in the blockchain applications space, for all its frenzy and billions of committed project dollars, there is manifest blindness. Every industrial database seems to be a fit target for replacement by the blockchain, in a one-size-fits-all approach.\r\n\r\nA cost-benefit analysis is rarely demanded, and expectations ride sky-high. While I shall have no hesitation in decimating some of the half-baked and misconceived blockchain applications that are currently attracting funding and attention, I believe in its power. Just not in the same way that is being touted.\r\n\r\nBoth governments and corporations, where centralization is the mantra and anonymity anathema, have jumped onto the blockchain bandwagon as the next big thing. The stark contradictions in the strengths of the technology and its areas of application are being completely overlooked.\r\n\r\nGiven its potential and arguably Bitcoin success as global digital virtual currency, why did Blockchain not disrupt the world yet? Here are two reasons:\r\nICOs gave early exit to potential disruptors \r\nICOs were meant to help raise funds for good Blockchain projects with committed teams. Unfortunately, in the name of \u201cdecentralization\u201d, companies raised millions and billions of dollars, on the back of white papers, and did not have motivation left to deliver the projects. Early liquidity, also like in the case of dot com bubble in 1999, meant that true value of the projects and disruptions would take more time before it could be unveiled.\r\n(Mis)Use Cases of Blockchain\r\nI suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.\r\n\r\n\u2014Abraham Maslow in 1966 (as quoted in Wikipedia)\r\nAnything on Blockchain does not mean truth\r\n\r\nBlockchain achieves truth (transactions validity) in Bitcoin transactions with the help of 1000s of mining nodes, with up to 1000s of servers supporting each node. Miners are incentivized by Bitcoins to perform the mining exercise.\r\n\r\nFor any Blockchain use case, worth asking the following,\r\n\r\n \tAre all transactions going to be public?\u00a0(example, Banks Blockchain use cases won\u2019t like this)\r\n \tYou will allow decentralization in the workflow? i.e. Some consensus algorithm (say majority of miner votes), will make final decision in transactions validity\u00a0(example, Governments or any Central authorities won\u2019t like this)\r\n \tMiners understand and can help in validating transactions\u00a0(example in supply chain finance, how can miners validate any facts about fake invoices, workflows or multiple discount loans?)\r\n\r\n\u201cBlockchain is not the magic wand that generates immutable truth\u201d. It\u2019s just a means to an end.\r\nTransparency \/ Digitisation Is Best Achieved By Blockchain\r\nSeveral POC\u2019ed or Advocated use cases are nothing but digitization of some data. Examples below,\r\n\r\n \tLand registry on Blockchain\u00a0is done by several states, governments etc.\u00a0Whereas none of them has allowed for independent miner validations (i.e. only states can decide who owns which property and when they approve the transfers), so it just makes online record keeping instead of offline. Such processes by Governments and Companies have been digitized for decades, without blockchain, and more efficiently.\r\n \tInvoice discounting\u00a0If a supplier sends an invoice to a client, that gets accepted, then they can take say 70% loan against that invoice from a bank to develop the products, or get some cash-flow while the products are shipped (say from China to the\u00a0US) which takes weeks. Typically in such loan, supplier, supplier\u2019s bank, client and client\u2019s bank are involved in confirming the transaction and supplier\u2019s bank gives loan after that. This approval process can take days.\r\n\r\nThe challenge in this loan issuance is that there can be fake invoices, or companies can take bank loan from multiple banks against the same invoice, or that the counterpart client does not exist. Hence banks are cautious in giving such loans.\r\n\r\nNow independent miners are bank\u2019s risk departments who can help validate the authenticity of the transactions. And no bank will open their client data to other banks for validation (in fear of losing the client to other banks).\r\n\r\nSo all that can be achieved is that document transfer between the 4 entities, can be made faster from days to hours, by using digital signing and digital documents transfer. Such solutions exist and work well without Blockchain.\r\n\r\nMost problems advocated here are typical digitization problems that can achieve transparency by making the steps in the workflow public. Think about DHL or any other courier service tracking the package in transit, or Uber\u2019s car driver and trip details. People, who need to know, can know it online very easily, and without needing any Blockchain technology implementation.\r\nAll Crypto-Currencies Make Sense\r\nBitcoin is owned and run by the community. There is no \u201cknown\u201d majority Bitcoin holder. It makes sense for the community to adopt it as decentralized currency, as an alternative to fiat currencies.\r\n\r\nBut different countries like Venezuela launching their cryptocurrency, or centralized cryptocurrencies like Ripple make no sense. All they need maybe is a digital currency instead of fiat currency, or digital payment mechanism like Paypal, which has worked well for years.\r\n\r\nBut if the transaction validation is done by Government or one company like Ripple, its not decentralised and is not a cryptocurrency.\r\nSmart Contracts Are Perfect And Legally Enforceable\r\nSmart contracts on Blockchain maybe useful for achieving conditions based trigger conditions in the Blockchain. Some known challenges with smart contracts must be understood,\r\n\r\n \tIt\u2019s debatable whether such contracts should be coded within the Blockchain, or at the application layer on top of the Blockchain.\r\n \tMany smart contracts are poorly coded and hence end up hurting the use cases rather than helping them.\r\n \tVery few proven scaled up\u00a0the use cases of smart contracts exist till date. The most successful ones so far are ICO tokens and Crypto-kitties.\r\n \tIf smart contracts go wrong, good luck. And also, they are not legally enforceable in any jurisdiction so far.\r\n\r\nThe above challenges may be overcome over time, as the Etherium alike protocols mature improve and become scalable, making them more accepted widely. And smart contracts shall be more relevant as automation & Iot's grow, leading to more \u201cmachine interacting with machine\u201d scenarios.\r\nSo What's Needed For Blockchain To Work\r\nSo where might Blockchain work then? Let's take the most successful Blockchain app. How Bitcoin Blockchain REALLY worked, see below the key factors in its success.\r\n\r\nShared Beneficial Ownership\u2013 Bitcoin Blockchain is owned by the public, striving to build a decentralized financial system where trust is built in a democratic fashion.\r\n\r\nWhile Bitcoin was initiated by smart hackers, it was scaled by the tech community and eventually became mainstream, because it seemed to help the whole world and everyone had an equal opportunity to build their businesses around it (like all miners, bitcoin exchanges, etc.). Wikipedia, Linux and several other open and crowd-sourced platforms have scaled in a similar fashion.\r\n\r\nIndependent mining achieves trust\u2013\u00a0Blockchain does not create trust inherently. Several nodes independently validating all transactions, for some incentive, build trust in a Blockchain. If the Blockchain app did not have enough independent miners, Bitcoin transactions would not have been so trustworthy.\r\n\r\n \tTrue decentralization\u00a0\u2013 Bitcoin is truly decentralized. There is no central point of failure. There is no dependence on one person, one node, one company, one Ceo, one nation, or one leader.\r\n \tNo contract among transacting parties\u2013 While doing a Bitcoin transfer, payee and payer do not need to know each other. They do not need to have a legal agreement between them defining terms and conditions of their transaction.\r\n\r\nThere are other factors that need consideration, including, multiple parties executing the transactions, transparency of transactions acceptable to all parties, public or private blockchain, etc.