Blockchain: More than a Platform for Cryptocurrencies

The rise of cryptocurrencies, such as Bitcoin, have made headlines worldwide. While cryptocurrencies have been in the spotlight largely due to their spectacular booms and busts, it is the technology behind them that is notable. Specifically, blockchain presents unique opportunities to revolutionize industries beyond finance. It has the potential to increase efficiency and transparency in areas from voting and intellectual property rights to supply chain management and food safety.

But first, what is blockchain?

Blockchain is an electronic database that stores transactions and agreements. It differs from traditional databases because it is decentralized (the database is shared among a large network of computers), transparent (any user in the network can see when a transaction has been made), immutable, and secure (every transaction is recorded on a block that is protected and connected to other verified transactions with a complex mathematical equation). All these characteristics make blockchain attractive to industries and governments alike.

How can blockchain benefit industries today?

Since the election of U.S. President Donald Trump, voting has been a hot topic in the media from voter turnout to voter fraud. Blockchain technology can address both issues by increasing voter turnout and improving the security of online voting systems. Specifically, blockchain gives voters the option to securely cast their vote from home, rather than requiring that they vote at a polling booth. The various features of blockchain make it virtually impossible to hack. While such a system sounds too good to be true, the online blockchain voting platform Voatz is currently being tested in elections at universities, labour unions, and town hall meetings in New England.

Blockchain can also be used to protect intellectual property rights, where pirating and a lack of ownership rights can prevent artists from receiving proper credit for their work. Through smart contracts, blockchain can empower artists and producers to determine how their product (e.g., a song) is licensed and can prevent people from undermining the contract. In addition, a smart contract can automatically distribute payments to all parties involved, ensuring that royalty rights are upheld. Imogen Heap, a best-selling recording artist, has spearheaded such a process and has been instrumental in the creation of Mycelia, an online platform that uses blockchain to “help musicians make money again.”

The diamond industry could also see the benefits of blockchain, as it creates a more transparent and efficient supply chain. Since 2015, the start-up Everledger has secured over two million diamonds on blockchain, providing transparency and provenance all the way from the mine to the final product. The technology mitigates fraud and provides assurance for banks, consumers, retailers, and other stakeholders that diamonds have not been used to fund violent conflict.

Blockchain also has the power to revolutionize food safety, which Walmart has already put to the test. Without a blockchain system, it would take the retail giant nearly a week to trace the origin of a food item in the event of an E. coli or salmonella outbreak. In the meantime, they would have to clear the shelves of all possible culprits, leading to severe economic consequences. Walmart has now partnered with IBM to test the use of blockchain to trace its food from farms to shelves. It now takes a mere two seconds to trace a mango’s journey from the farm to Walmart’s shelves.

What are the challenges of blockchain?

While blockchain has the power to revolutionize a variety of industries, there are challenges. For example, while politically corrupt states stand to benefit most from using the blockchain to increase voting security, they are unlikely to adopt it. A similar problem arises with supply chains; companies with issues surrounding the ethical origin of goods, such as diamonds, may have difficulty adopting the technology due to political and economic unrest in the countries from which their goods are sourced. Additionally, many people are hesitant to trust computers over institutions and people, so it will take time for trust and privacy laws to be developed. This is not to say that these limitations will prevent the technology from taking off, but rather that it may take years for blockchain to reach its full potential.

What might the future of blockchain look like?

With these considerations in mind, will blockchain be as revolutionary as the internet? I sat down with Zachary Skeith, Head of Strategy, Governance, and Global Public Policy at the emerging tech company Three Lefts, to uncover some of the mysteries of blockchain. Skeith explained that we will likely hit a breaking point in 5-10 years where the technology will either or not take off like the internet. Currently trust is an expensive commodity, as indicated by the fees we pay to lawyers, bankers, etc. to ensure the trustworthiness of our transactions. If blockchain were to successfully secure trust at a lower cost, it could be as revolutionary as the internet. In addition, Skeith explained that blockchain often challenges the power at the top, so the success of the blockchain requires buy-in from governments and big business to realize its full potential.

Blockchain has the potential to truly change the way business and transactions are done. However, to have a true impact, it will require the determination of those implementing the ideas to overcome the obstacles they will surely face. As Rachel Botsman stated in a Wired article, in the early 1990s people speculated about the future of the internet and now, over two decades later, it is hard to fathom what life would be like without it. In a sense we are sitting where we were in the early 1990s, but instead speculating about the possibilities of blockchain. While it may be years before we witness the full impact of the technology, if the internet is any indication, our system of transactions and agreements could be nearly unrecognizable twenty years from now.