STORY INLINE POST
Every now and then we hear about new technologies with the potential to transform the way we do business. With Blockchain, I think we are just seeing the tip of the iceberg in terms of the transformational potential that this technology brings to the table. Think about “the capability to enable fully trusted transactions without a centralized entity that provides oversight.” Not having a centralized entity basically means that we can eliminate the cost — and sometimes unwanted complexity — of having one. The transformational impact in businesses is potentially substantial when we realize that a “centralized entity” can represent a company or a government entity.
Blockchain is a digital decentralized and transparent “General Ledger.” This General Ledger is basically a distributed database where all the records are visible to everyone in the computer network, the data is not managed by any single entity, and no one can tamper with the recorded data.
The key technology building blocks that are the foundation for Blockchain are the internet (and the fact that it has become pervasive), open-source technologies (such as communication protocols, databases, file transferring and the Linux operating system), and advanced cryptography. Based on these building blocks, Blockchain enables computer users in a network to execute fully trusted transactions; that is, transactions that are secured, transparent, with self-built redundancy, immutable and time-stamped so each transaction is assigned a sequence within a block in the chain – therefore the name Blockchain.
Currently everyone knows about Bitcoin, but few people know the basics of Blockchain, which is a more fundamental and transformational technology. Bitcoin is the application of Blockchain to execute transactions that now we call “cryptocurrencies.” When you add some business rules and boundary conditions to a type of transaction, then you get a specific cryptocurrency, such as Bitcoin or Etherum. But Blockchain can be used — and it is being used now — beyond Bitcoin and cryptocurrencies. Blockchain enables trusted transactions and, moreover, trusted application interactions (“smart contracts”), which opens new possibilities for exciting new applications across multiple industries.
So, imagine having trusted transactions without a centralized controlling entity such as a bank (e.g., cryptocurrencies), or a trusted network of car drivers that offer transportation services to passengers but without central management (e.g., Uber without Uber).
Currently, there are multiple exciting applications of Blockchain technology to enable trusted networks of transactions or smart contracts, and there are also some government entities and startups already working on many of them. Some interesting examples include:
- Supply-chain proof-of-provenance, to audit the state of a product at each stage of the process. You could eventually track product exposure to high/low temperatures, vibration and biochemicals (e.g., COVID) across the whole supply chain process.
- Enhanced personal identity verification, to securely transfer sensitive information between patients and doctors, and eventually having master healthcare records and access rights managed by patients themselves.
- Electronic voting with encrypted biometric security, to enable secure voting on a mobile device from anywhere in the world.
- Identification of original creators of art and the corresponding right holders, making it easier for artists and musicians to be recognized for their work and paid correctly.
- Instantaneous title issuance for real estate transactions.
- In general, the ability to share assets and resources like renting your home or room (Airbnb without Airbnb), sharing excess computer storage between users and companies, sharing internet bandwidth between neighbors and companies, and an online marketplace for trading energy across homes and companies, among many other examples.
While Blockchain is a much broader concept than Bitcoin, as it is the underlying technology that enables it, both concepts were introduced for the first time, in the same white paper published in 2008 by Satoshi Nakamoto. It is hard to believe that a single individual came up with both concepts and published them at the same time – by the way, it was during Halloween evening that year that the paper came out!
I was able to learn a little bit about how Blockchain works after I attended an Executive Graduate program on “Cryptocurrencies & Blockchain” at Rice University. Before, I would have thought that a group of very smart, brilliant, creative, and highly knowledgeable experts (in computer science, economy, and math) had come up with the Blockchain concept, and that a few years later, another group of smart individuals came up with the concept of cryptocurrencies – and eventually with Bitcoin. So far, Satoshi Nakamoto has been the presumed pseudonym of the person — or persons — who developed these two concepts and published the now famous and elegant nine-page paper in 2008, making it public. Two years later, Satoshi disappeared from the blogs and stopped all email activity.
Over the years, some people have speculated that Satoshi Nakamoto was a Japanese gentleman with that name (although with no intellectual background that could prove that), or the Anonymous activist group, and even Elon Musk or just a group of anonymous experts. Then in 2019, Dr. Craig Wright, an Australian computer scientist, publicly claimed that he was the real Satoshi Nakamoto. While this hasn’t been fully proven, just a few weeks ago, a jury in Florida ruled in favor of Dr. Wright, granting him ownership of some of the initial Bitcoins (supposedly from Satoshi) and worth around US$50 billion – although this does not fully confirm the identity of Satoshi Nakamoto.
I think this is a fascinating story, whether you are a cryptocurrency owner or not. But if you are interested in Blockchain and the transformational impact that it can bring to your business, it is time to look ahead and ensure that your business continues providing added-value and a competitive advantage. Blockchain is an opportunity for your organization to innovate and not a threat that disrupts your current business model.