Trust will never be the same again – The role of blockchain
Legend has it that on the 3rd of January 2009, Santoshi Nakamoto released Bitcoin. We still do not know who this character is but his actions have galvanised a movement of anonymous transaction exchanges, and no government on this earth has the power can stop it.
Two of the buzz words on this topic are cryptocurrency and blockchain. Most people don’t even understand how actual paper money fundamentally work, which is in is short based on debt, thus I will only touch on the key principles of these technologies and their implication to society. I will show how we are digitising trust and that the value of trust has been changed forever.
When a bank conducts transaction they keep the record in a central accounting register or ledger. Blockchain is the underlying technology that allows a ledger to be distributed across a network of anonymous users. Using the internet, this network stretches across the entire planet.
Let me demonstrate some of the uses of blockchain.
As a digital currency, as of today, there are 1189 different types of cryptocurrencies, with a market capital value of over $160 billion. Of this Bitcoin is by far the biggest, holding over 60% of this market. In the beginning of 2011 one Bitcoin was worth $1, today it has a value over $6000. The wider adoption by the public and amount of coins in circulation is some of the factors that are contributing to this rise in value. Many prominent business people are supporting this movement. Bill Gates has said that “it is better than physical currency because you do not have to be physically in the same place”. With this in mind is important to understand that the currency is completely based on software, there is no physical equivalent for it. How much of these coins do you own already own?
For the next set of blockchain cases, I will look at smart contracts. In a smart contract, a protocol is used to facilitate, verify or enforce a legal contract. The idea of smart contracts is older than blockchain, but when this protocol is based on a blockchain it is known as a decentralised application or a dapp. One of the cryptocurrencies, Ethereum, is specifically designed to facilitate the use of smart contracts.
As the first example to smart contracts, when my scale and fridge is connected to the blockchain (or internet), they are known as Internet of Things or IoT devices. If I weight myself in the morning, my scale can monitor the progress on my diet and make sure that my fridge is stocked with the fresh produce. If it needs to make new orders on my behalf, trustworthy processes are required to ensure that a save transaction between the fridge and vendor is enforced.
This secure information sharing goes further when it comes to medical information on devices. Such information can now be more securely shared between medical service providers.
Another example is when you purchase a new house. A lengthy process was always required through attorneys and the deeds office to make your purchase official. Blockchain has the promise to significantly reduce this time period and save costs while maintaining trust between all the parties involved.
Finally, musicals and artists have the opportunity to break free from publishers and record labels, by issuing licenses for their products to the public on a blockchain.
As our lives become more intertwined on the internet, better processes will be required to ameliorate the cost, speed and most importantly the trust between all the transactions. I will trust blockchain in the future.