Will Blockchain Change The World?
December 18, 2018
“Experts believe that Blockchain has the potential to bring out a revolutionary change in the way business processes are being carried out.”
Among all the jaw-dropping technologies of the 21st century, one of the promising development is the start of the alternative transaction theory and the giant leap in the monetary system, the Blockchain technology.
The blockchain is not just another financial tool to manipulate exchange process more complexly; rather it is more than a meager common ledger system. It enables and immediately opens a decentralized database of transactions involving goods and services anywhere in the world. Thus, it also changes the notion for a third party involvement. But regrettably, many are still unaware of all the merits that are allied with putting blockchain into practice in the business.
Hence, it is the ideal time that people should learn the ability that lies behind the Blockchain backed solutions. With more and more people understanding and implementing it will enable blockchain to bring about a change in the world.
Blockchain for a layman
Blockchain in layman words is a system that allows all the stakeholders to have the clarity of transactions – financial or otherwise – without being monitored and charged by a central authority. The transactions and the system are highly secured because to corrupt a transaction the hacker needs to manipulate not just the transaction in question but also many linked records in real time, which will require multiple approvals. Such hacking is near impossible.
The system allows faster process at cheaper rates. Look at the technical description of blockchain here.
What gives an edge to Blockchain?
“Blockchain technology holds a lot of innovation in it.”
High security with encryption – The blockchain is a chain of records or blocks where each block is linked with its previous block using an encrypted address. So, to break the chain and force a malfunction, a record has to be manipulated in the real-time with its content and the address of its linked previous block, which is almost uncrackable. This kind of security makes blockchain highly trustworthy.
Decentralized system – The controls of a blockchain system is in the hands of peers of the participating network and not any centralized party like a government or a financial institute. This makes it an open network and the transaction happening directly between peers make it fast and more reliable. The reliability comes from the fact that every participant is reigning the control and everyone is equal. Hence, breaking the truthfulness of the system is like winning more than 50% of the participants to break it down – highly complex to do.
Time-stamped irreversible transactions – The exchange of goods, service or money in the blockchain is time stamped with the complex encryption system. Hash programs, which are the backbone, make a transaction sealed and unbreakable.
Transparency – Being 100% transparent as everyone can verify the details of the transactions anytime, transactions are unbiased and always in the scrutiny of participants.
Where is blockchain standing in maturity?
Gartner reports blockchain as one among the top five emerging technologies.
As per the Gartner Hype cycle of 2018 for emerging technologies, Blockchain has already crossed the peak of inflated expectation and has reached a trough of disillusionment. Blockchain has significantly shifted along the cycle from peak to the Trough of Disillusionment. That means in simple terms – Blockchain has delivered results, and investment is continued in the technology. The digitized ecosystem has moved from the ‘Peak of Inflated Expectations’ to this phase in just two years from2016 to 2018. In simple words, confidence in technology has solidified, and adaptation and investment have increased.
Gartner expects the time for the technology to gain proper maturity is somewhere between 5 years to a decade. And not just private sectors, the governments’ keen interest in the emerging technology would strengthen its mettle. The yearly report on potential technologies forecasts a major disruption in nonfinancial areas like voting, citizen identification, and energy generation.
If blockchain can change such niche areas, imagine the potential changes it can bring about in other sectors.
“Approach blockchain with a healthy dose of skepticism”quotes Gartner.
Some successful use-cases of Blockchain technology
Blockchain has spread its root into multiple sectors like Finance, Real Estate, Supply Chain, Industrial and Manufacturing, Education, Hospitality and Healthcare.
Blockchain paves a way to enter a land of opportunities for foreign currency trade, securities, loans and many more in the financial industry and builds systems that are more resilient yet fraud-proof.
Cryptocurrency being the breakthrough, the largest implementation of Blockchain theory is in the finance industry. Being foolproof to hacking and absence of a middle body, it has revolutionized the financial transaction with none to the negligible commission, faster processes, and solid security. No bank queues and no transaction fees during money transfer are exciting due to a peer-to-peer system not being run centrally.
The legacy system of foreign exchange has its limitations like governing laws of the country, national boundaries, high exchange rates and lack of trust. With the cryptocurrencies being global, the boundaries of nations are not a problem and do not levy huge fees. Also, the obligations of a central body are missing which makes the solution more robust due to its transparency for all the stakeholders. One of the biggest problem related to money called double-spend problem where the same money is used twice is challenged because each transaction is marked with the verification of peers.
“Blockchain is the tech. Bitcoin is merely the first mainstream manifestation of its potential.” – Marc Kenigsberg, founder of Bitcoin Chaser
Apart from many everyday usages of cryptos like hire-a-cab, buy a beer, pizza or burger, flight tickets and even buying houses, there has been a breakthrough in many areas with the introduction of blockchain oriented process which has seen success.
A novel idea of blockchain implementation in Supply chain is being used inthe diamond industry with De Beers being the pioneer in this. The problems related to blood diamonds or conflict diamond has been targeted where the militia or troops capture the mines and use them to fund the violent activities against the citizens. The reassurance that the diamonds being sold are legitimate and are not a result of conflict, plagiarism, synthesis or child labor will be backed by the blockchain system as the tracking from the genesis of mining to the final stage of selling the stones will be tracked by the blockchain ecosystem.
The idea is to maintain the complete journey of a stone from its birth to its selling using the latest of the technologies including blockchain. This Diamond time-lapse process devised in 2017 can record the mining, cutting, polishing and other aspects of the stones minutely and precisely. The real-time tracking through blockchain gives confidence to the manufacturers and sellers to boast their authenticity and legitimacy, and transparent, and fraud less system ensures complete satisfaction to the customers.
Many such innovations like Everledger and Fura Gems are counting on the blockchain. Transparency and decentralization of the data help track the journey of the stones, and any missing or suspicious block will automatically reveal, whether the rock is legitimate and conflict-free.
The land deeds in real estate, which are highly prone to frauds, can be cracked without hassles if blockchain is used. Since the transparency would not allow the stakeholders (individuals, firms, agencies, and even government) to play with the data related to the deal, especially the ownership and finances; the security will take care of any leakage, the deals would be clean. The time stamped irreversible transactions would be known to everyone and hence can be tracked.
Maintaining public records of the citizen for the government would not be a challenging task. The otherwise tedious data can be stored in a blockchain database that is tamper-proof, and secured. The government can also implement Blockchain based voting system to remediate the highly volatile voting process. Countries like Ukraine and Brazil have already tried blockchain in their elections, and many would be joining soon.
A few innovations underway
Imagine a society with no tax theft. Blockchain if implemented in a state or a country by the government to keep track of the taxation system of the citizens, it will help tremendously to fight the maligning of the tax dynamics. Chainalysis, with its compliance software backed by Blockchain, is helping to pinpoint the theft of bitcoins by identifying the connections among digital identities.
Blockchain can help in establishing the digital identities of the citizens. As per the UN report, 1.1 billion people in the world do not have an official identification, which devoid them of fundamental human rights and benefits. ID 2020 is one such alliance by UN, NGOs, and governments with the tech organizations to log the digital identity of the global citizens.
Project Protect is an initiative to hunt down the culprits in human trafficking using bitcoin. With bitcoins, the identities can be easily identified that has helped in Canada to pinpoint human traffickers and is still going on. The involved banks, tech firms, and regulators jotted the ways and patterns the traffickers often use in their financial transactions. Bitcoins based transactions of particular but small units came into light, which was suspicious and was the result of trade.
To avoid electoral frauds, Democracy Earth ideated ‘Sovereign’ using Ethereum blockchain platform and named it ‘liquid democracy’. In this, an open digitized system has been designed with the aid of blockchain so that any issue can be discussed widely by the citizens and voting out the mitigation will help towards a consensual solution. The system also allows the voters to pass on their right to someone else to opine on their behalf. The registered voters get some votes in their kitty, and they can participate in the discussion and suggestions and even vote more than once for their chosen solutions. The system had a successful dry run in Colombia last year.
Green Earth initiative
Brooklyn Microgrid serving the residents of Brooklyn, New York shook hands with LO3 Energy, which innovated a solar energy system assisted by blockchain for them and aided the residents to become self-sufficient in their energy needs. Using the blockchain, they can sell the surplus power they create to the needy in the system. The otherwise smaller group is a great start towards the eco-friendly technology supported living. Also, bypassing the intermediaries for energy needs will be highly cost effective. Power Ledger in Australia has also announced a similar system in the city of Perth.
This sector is one that has suffered the most due to counterfeiting and plagiarism. The songs if sold on a blockchain network will be the copyright of the legitimate owner. Neither can be misused by the public due to the smart ledger in place nor will be owned by the wrong claimant. The songwriters and musicians can have transparency about the consumption of their creativity and can be rightly compensated for their craft.
The challenges now and ahead
In the new coming-of-age voting system, the thorough transparency could be an issue. The actual status of the votes either in elections or on any subject can cause biasing, even untimely agitation and can quickly heat the situation.
To corrupt the blockchain system, the hacker has to be superfast to match the speed and efforts of other miners because the longest chain is considered the most relevant and correct. However, if 51%of participants decide to ditch the system by influencing, then the system will fall flat on its face, defeating the very purpose of transparency. This kind of treachery is not impossible.
Education regarding the technology to the users and implementers equally is a challenge. New technologies always have their share of speculation and skepticism besides resistance and blockchain is no exception. Underpinning, software should be sustainable and adaptable enough and have all the needed features for accommodating blockchain. Additionally, the energy required to build a new system is always massive, and blockchain is going to be even more perplexing.
Just because blockchain is a catchword, fitting its usability in an existing working system will not be ideal. The implementation should come out of the need not want. The technology is not scalable to a billion people’s reach at the moment due to its infancy state and limitation of resources. Blockchain needs a great deal of governance, in lack of which, it might smash to pieces.
Think of blockchain without bitcoin or any cryptocurrency! That would still leave a room for the government to monopolize the fiat currency generation and circulation and the blockchain applications will turn more tech-based improving the quality of life. However, in the absence of bitcoin, will there be any revolution apparent to an ordinary person? Guess negligible. Many blockchain systems need digital currency, but some don’t. But, in the case of latter, the investors would suffer from the lack of financial benefits. So, a blockchain without coins is still debatable.
Finally, the inevitable – will Blockchain change the world?
We cannot deny that it is a path-breaking technology which is not only up turning the financial ecology but also many other sectors. But in comparison to the hum that has been created with blockchain and bitcoin, blockchain has not reached puberty yet. It is right now evolutionary nor revolutionary, as some of the evange lists call it.
At the moment, saying that blockchain is progressing fast but the world needs to adopt it wisely beyond bitcoins and financial transactions would not be wrong. The nascent state is transitioning towards maturity, but it will take time as per the Gartner report too; however, we have already seen many fruitful use cases in the real time. It does make grand promises, which look feasible and exciting. In fact, to reap the benefit of any technology, the problem statement has to be clearly defined, and the technology has to suit. Blockchain should not be applied for the heck of applying or fodder the attention and interest.
Now the question boils down to ‘will blockchain change the world?’ to which the answer would be certainly yes but within limitations and feasibility. We have to be patient to wait and watch.
“As the values go up, heads start to swivel, and skeptics begin to soften. Starting a new currency is easy, anyone can do it. The trick is getting people to accept it because it is the use that gives the ‘money’ value.” – Adam B. Levine (CEO of Tokenly.com)