We’ve talked about disruption and innovation – more specifically, how your organization can stay alive in a volatile landscape - in the first two parts of this series recapping Michael Sherrod’s workshop for Executive MBA alumni. But what’s the next big thing? Amidst the ongoing revolution brought about by the internet and the smartphone, what’s going to transform our society next?
It may be blockchain.
What is blockchain?
Blockchain is the technology behind digital currencies like bitcoin; basically a database of records (“blocks”) that are timestamped and linked in chains. This creates an internet that doesn’t simply distribute information, but transfers value. It has two main advantages:
- Blockchains are decentralized. Instead of existing on one server that could crash or be hacked, a blockchain exists across every server of every person who is accessing it – millions at once. The different servers are constantly checking each other for inconsistencies. Which means blockchain is very difficult – some would even claim impossible – to hack.
- Blockchains prevent copying. When you email someone a file, you’re not actually sending them the file; you’re sending them a copy. Blockchain prevents this same thing from happening with assets, so when you transfer bitcoins to someone, you don’t still have those bitcoins. Each bitcoin has a unique signature, and the system won’t allow two bitcoins with the same signature. This could be a powerful way to prevent fraud and piracy for other assets as well.
What are the implications of blockchain?
There are countless possible implications. Here are just a few.
- Identity and Privacy. Whenever you do anything online – search something, buy something, click on an ad – you’re creating a trail of information that constitutes your digital identity. Data companies can then sell that information to advertisers. Blockchain could be an easy and secure way to track and manage your own digital identity. You would decide who can see what, and even have the ability to monetize it for yourself.
- Finance. Blockchain allows peer-to-peer transactions, without the need for a third party like a bank to ensure each user gives and gets what they agreed on. Platforms like Ethereum do this through “smart contracts”: coding that withholds assets until all the conditions of the “contract” are met. So the average person could buy, sell and invest without a middleman taking a cut. This could be especially helpful for immigrants sending remittances to their families back home – which currently takes days and costs around 10 percent. A blockchain-based application called Abra takes only minutes and reduces the cost to 2 percent.
- True Sharing Economy. Because digital payments and reputation management are built into its inherently secure system, blockchain could create a true sharing economy wherein companies like AirBNB would be owned by their users rather than by corporations.
- Real Estate. Because blockchain creates an immutable timestamped record of transactions, it could be used to record and verify property titles, so when you buy a house, you’ll have a verified record of every person who owned that house before you. This could be a huge benefit particularly to people in third-world countries whose titles are claimed by totalitarian governments controlling the current paperwork.
- Intellectual Property. Piracy is a huge issue for ebook publishing, music, film and TV – to the point that musicians, for instance, rely on concert ticket sales rather than recorded music sales for profit. Blockchain would prevent piracy by giving each copy of a book or song its own unique signature, while smart contracts facilitate the purchase of those copies – with specific contracts for merely listening to a song versus using it in a TV commercial. Artist Imogen Heap is already doing this with a blockchain project called Mycelia.
- Healthcare. The industry has been trying to move toward electronic medical records (EMR) for a while now, yet you may have noticed you still have to fill out all the same forms every time you see a doctor. Blockchain may finally offer the security and privacy required by HIPPA to get EMR off the ground.
Somewhere at this point in the workshop discussion, hands started shooting up and questions started floating around: But who owns blockchain? Who controls it? Who created it?
Well, you could ask the same questions about the internet. An anonymous person or group with the handle Satoshi Nakamoto created blockchain around the time the housing bubble collapsed. No one really owns it or controls it except the users, as a collective. The real power is probably with developers who can write the code that lets us do all the wonderful things described above: The Ethereums and Mycelias may become the PayPals and iTunes of the world – but potentially in a more democratized system.
Is this really going to change the world?
Depending on whom you talk to, blockchain could democratize society by eliminating institutional middlemen and giving the power back to the individual. Or it could usher in a new authoritarian dystopia ruled by the technological elite. Or it could just create a more secure version of our current system.
Considering the current staggering price of bitcoins, the rise of the sharing economy, and the shift toward entrepreneurship, the technology is certainly something to watch.
Read the rest of the series:
Learn more about blockchain: