Blockchain Can Change The World
16th October 2017You might not have heard of blockchain as it is still in its infancy. However, you have probably heard of one of its most famous applications… Bitcoin. Blockchain is the underlying concept that facilitates the core ideas of Bitcoin: decentralisation, privacy and security, and it has the potential to change the world. This is not an overstatement. The array of industries which could be disrupted is vast, in fact, some are calling blockchain technology the next phase of the internet. In this article I will attempt to explain what blockchain is, explore some of its potential applications and unpack a few existing case studies. It is a complicated topic, however I will try my best to keep my explanations concise and legible.
What Is Blockchain?A blockchain is essentially a unique, decentralised, public record that is constantly up to date and shared through a peer-to-peer network. It is used to represent and store information regarding unique assets such as currency (in the case of Bitcoin). Around the world a network of millions of powerful computers are constantly logging transactions and updating the information on the public record, with a “block” being created every ten minutes. Each block is digitally validated, timestamped and encrypted via a process called mining, where the network of computers compete to solve complex problems in return for rewards such as digital currencies. This logging cycle creates a secure digital chain of blocks, hence the name.
One of the main advantages of blockchain over traditional systems is that it is virtually unhackable due to its decentralised, distributed nature. To hack the database you would need a computer powerful enough to solve the complex encryption of the desired block and all the preceding blocks in that chain simultaneously across millions of computers worldwide. All this would have to be achieved whilst the whole system is watching for interference, so essentially, it is extremely difficult. Contrast this with current centralised systems such as banks, which are hacked regularly and often have hugely inadequate security systems. With blockchain, digital security is an intrinsic part of the technology.
Another feature of blockchain which can be seen as both an advantage and disadvantage, depending on your interests, is that it has no central ownership. By definition it is a public database that is shared and owned by everyone who uses it, which gives owners and creators more power and control over their assets. Essentially, the technology bypasses a trusted “middleman” such as a bank in the case of a financial transaction. This feature of the technology has the potential to be highly disruptive in society as it may reverse the stranglehold of power held by large corporations (and even governments and banks). I will explore some existing applications which are already disrupting industries later in the article.
Blockchain represents a single, immutable and transparent source of truth. With a blockchain network all past data is locked yet visible, so if someone attempts to make a change everyone in the network can see where the change is and decide collectively whether to authorise it or not. This will allow ownership disputes to be resolved with ease, whilst the secure nature of blockchain will prevent nefarious alteration of information for personal gain.
Still confused? Don’t worry! Like the internet, we can make use of blockchain without fully understanding how it works. Next, we’ll look at the potential of the technology and some existing case studies.
Potential For ChangeCurrently we have an internet of information which contains vast quantities of data that can be infinitely copied and shared. It is a wonderful thing that has changed almost all facets of life. Blockchain technology facilitates an internet of assets, unique objects, titles and data that hold value and should not be copied under any circumstances. If I send you £100 from my bank account, it should no longer exist in my account. Information is copied and shared, assets are moved.
Blockchain lends itself to an internet of assets due to its secure and immutable nature. It has the potential to disrupt any sector which is involved with assets and value, which, when you think about it, is a hell of a lot of industries. Let’s explore some of the potential changes caused by blockchain…
FinancePerhaps the most developed use of blockchain technology at this point is in finance. Bitcoin is making waves in the industry and making a lot of banks and governments very worried. Whereas traditionally governments control the production of money and work closely with banks to create specific economic situations, virtual currencies such as Bitcoin are owned and controlled by everyone who invests in them. It will be fascinating to see how blockchain technologies change finance in the next 30 years or so, especially due to the growing mistrust of society in banks and governments to act in their best interests. To me the financial world is highly complicated, and this paragraph only covers a sliver of the whole situation. If you want to know more, this video does a great job of explaining everything.
Personal DataUnfortunately, a lot of our personal data is not actually owned by us. In the digital world we leave a trail of personal data behind us that can be exploited or sold for profit. When we want to do something with an asset, whether that’s buying a car or voting in an election, we sacrifice some of our personal data to the organisation that represents us. With a blockchain system, you represent yourself so you only have to give out the precise information that is needed to complete the transaction. With some transactions you may not even need to know the name of the person you are interacting with since trust is built into the blockchain concept. If anything did go wrong, there is an immutable record of what happened and access would be granted to allow the identity of the criminal to be revealed. Privacy is a right of a free society, and blockchain allows people to be in control of who knows what about them.
Intellectual RightsUnfortunately, in today’s market creators face a raw deal. Their income is controlled and their creations essentially owned by large corporations. These corporations have enough power to exploit artists, using their talent and work for the profit of the company whilst minimising the income of the original creator. The creators sit at the bottom of the income stream and are forced to accept the trickle-down conditions because they have nowhere else to go. Blockchain technology is a perfect resolution to this situation. If the creators own the blockchain, they will be in complete control of how much they charge for different applications of their content and will be able to receive all of the income. This innovation seems likely, especially in digital music streaming where there seems to be constant discontent from artists surrounding their income from companies such as Spotify and Apple.
VotingDemocracy is key in a developed, fair and well functioning society. For this reason it is vital that everyone’s vote is counted and equal. Whilst I think where I live in the UK voting is completely fair, in some developing nations elections are frequently rigged to favour a particular candidate. Using a blockchain system could eradicate this injustice. Since a blockchain is completely transparent and virtually impossible to alter without everyone knowing, it would prevent candidates from editing results.
The Sharing EconomyIn recent years there has been huge growth in the sharing economy with companies such as Uber and Airbnb. The idea behind this type of business is very powerful, and should allow an equal and fair distribution of wealth. However, unfortunately this is not the case. In fact, the biggest corporations in the sharing economy have so much financial success precisely because they don’t share. With a blockchain database, all those who operate under the sharing umbrella can own the company and reap the benefits fairly. This use of blockchain is especially relevant considering the sharing economy already operates almost completely online.
ContractsContracting covers a wide range of industries, so there is a lot of potential for blockchain technology to have a significant effect. Traditional contracts can be copied and altered relatively easily, often for nefarious purposes. As a result, development has already begun on the creation of smart contracts which make use of the blockchain concept and its advantages. These contracts, which are currently very simple, execute commands when certain conditions are met. They cannot be copied so forgery is almost impossible, and the transparency of the blockchain system will allow accurate tracking of changes relating to the contract.
Land OwnershipCurrently, disputed land ownership is one of the largest barriers to wealth creation in the developing world. With those in positions of authority often abusing their power in order to obtain land, it is vital that a system is developed to facilitate the issue and retention of accurate land ownership titles. Blockchain is ideal for resolution of this problem due to the unique nature of land ownership titles. A global system would allow more effective international communication and support, whilst the built in security offered by blockchain would prevent forgery.
Existing Case StudiesThe potential of blockchain is abundantly clear, all it needs now is some creative and intelligent people to adopt and make the most of it. This is already happening in a number of sectors with various organisations at different points on their development timeline. I’m going to outline some of the (relatively) most established start ups and how they’re changing their industry. here), Ethereum is a platform that allows developers to create and run any kind of smart contract using blockchain technology. It allows decentralised applications to be run through a network of millions of computers which prevents outages and hacking, and opens up opportunities for democratic, autonomous applications in a number of industries. Ethereum is more a tool than a company, and it will be exciting see how it is utilised in the coming years.
ConclusionSo that’s a very brief introduction to blockchain. Of course a lot of the ideas being discussed are speculative or in early development stages, however the sheer potential of the technology is very exciting and should allow it to flourish in the coming decades. Like the internet, blockchain could change the lives of everyone on the planet, it really is that significant. Crucially, blockchain allows the public to be in direct control of many services that are currently run by large corporations. Therefore it is vital that society are engaged in the use of the technology and do not allow it to be exploited by governments or companies for profit or power. The advent of blockchain is a fantastic opportunity to disrupt and improve some deep rooted traditions, let’s use it wisely and responsibly.