Blockchain is said to be the technology which will have the greatest social impact over the next decade, more so than social media, Artificial Intelligence, and Big-Data. Moreover, this effect will not only occur in the developed world, but also in the developing one. Hearing this, you’d be forgiven for being sceptical, forgiven for wondering how this unknown Blockchain technology will become the most impactful technology of the near future. Well, this article may not convince you that Blockchain will completely transform the world; however, it certainly should convince you that Blockchain has the possibility of playing a major role in the future of, well, almost everything.
First off, let’s explain what Blockchain is. Blockchain can be best thought of as an ‘incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.’
Blockchain was first created in 2008 and formed the technology behind the first ever cryptocurrency, Bitcoin. With the example of Bitcoin, we can explain how this incorruptible, transparent, and public ledger is created. In 2016, Bitcoin transactions averaged over $200,000 (US) per day; this, however, requires some form of record keeping in order to keep track of who sends what and to whom. Bitcoin records this by collating all transactions made during a ten minute window into what is known as a block. These transactions are verified and placed into a general ledger by people called ‘miners’ who receive bitcoins in exchange for verifying transactions. This general ledger is composed of an ever growing list of connected ‘blocks’, also known as the ‘blockchain’. When a new ‘block’ is created, it joins on the the end of the blockchain, creating a long list of every transaction ever made using the blockchain. This results in the vital property of transparency. All information held on the blockchain is on a shared, public, and online database. This database is stored on every single one of the millions of blockchain accessed computers worldwide, meaning that there is no existing centralised version of this information for a hacker to corrupt, making the blockchain truly public, easily verifiable, and essentially incorruptible. This has extremely large implications because it leads to a very important trust shift from institutional to distributed trust; The Economist has described Blockchain as being “the great chain of being sure about things” because the vast implications of Blockchain do not stem from the technology itself, but from the trust shift that this technology creates.
In July 2015, Vitalik Buterin created the Ethereum Blockchain. This introduced the game changing ‘smart contracts’ which, quite simply, guaranteed the execution and enforcement of payments. This means that anything of value can be easily exchanged with absolute trust, and that any centralised service can now be decentralised as it operates on the If-Then premise, thereby cutting out the need for a middle-man. This has immense implications. Musicians can now control the sale and use of their work, people wanting to hire a car or rent out their home no longer have to go through the centralised services of Uber or Airbnb, people can send remittances without having to go through institutions which take a 10% fee and take 47 days to process the money; the implications are limitless. Many people, therefore, see this as the beginning of a new decentralised internet.
“For thirty years we’ve had the internet of information and now we have the internet of value, it’s a peer-to-peer platform that enables anyone, anywhere to move, store and manage anything of value, from money to financial assets to titles and deeds and even votes in a way that’s trusted and where you don’t have to rely on an intermediary like a bank or a government or a credit card company or anyone else” – Alex Tapscott (Blockchain revolution).
“Blockchain solves the problem of manipulation. When I speak about it in the West, people say they trust Google, Facebook, or their banks. But the rest of the world doesn’t trust organisations and corporations that much — I mean Africa, India, the Eastern Europe, or Russia. It’s not about the places where people are really rich. Blockchain opportunities are the highest in the countries that haven’t reached that level yet.” – Vitalik Buterin.
However, although this may be the future of the internet, “a lot of it will just be a different kind of thing running in the background” says Irra Ariella Khi (CEO of aviation security startup Vchain technology), and that most of the initial changes brought about by Blockchain will be largely invisible.
The Ethereum Blockchain has, therefore, given us a glimpse of the future, where a “democratic autonomous organisation” can be a reality. This means that a computer program is able to run a company without human intervention, including holding and using money. The daunting realisation that the management of a company, what traditionally was the brains of the people in a corporation, can now exist autonomously in the cloud, means that, in essence, there would be no overarching human controller; it would run and be in control of itself. This frightening yet exciting reality will be the future whether we agree with it or not, the only question that remains is whether you are prepared to be a part of it.