When we consider the arc of human history, Blockchain may have been inevitable, seeing as it’s just a chain of trust. So is this chain leading us into a new generation of technology?
Have you heard of Blockchain yet? If not, you will! It may dwarf the sweeping changes the internet created, so today, let’s get ourselves up to date on what makes up this technology, and how it’s going to affect us.
I’m Guilherme Araújo, Executive Assistant to IBM’s Latin American General Manager, and recent leader of IBM Brazil’s Cyber Security and Artificial Intelligence divisions.
I’m in a good position to help EWC visitors understand some of the most innovative emerging technologies and I’m delighted to become a routine “guest writer” for Ever Widening Circles (EWC). You can check out my last article here:
Today I’m going to explain an amazing concept called Blockchain, in a language we could all use around the kitchen table with non-tech friends. You may have already heard of one of the earliest forms of Blockchain: Bitcoin.
Both concepts may sound complex and unrelated to ordinary life but actually, it’s quite the reverse! Blockchain will change everything for everyone on the planet.
Why is Blockchain so important?
Let’s start back as far as 100,000 years ago. At the dawn of human history, there were surely simple exchanges of resources–a piece of fruit for a handful of nuts–and it’s almost certain that routine friction between people began when the first stone tools were traded for glass beads.
Mistrust in transactions has been an issue for millennia. But Blockchain might be on the verge of improving that!
Think about it: the earliest failed exchanges most likely devolved from simple discords over value, to intentional scams. Then the epic opportunities for fraud that sprang out of the industrial revolution were only made more complex by the advent of the internet.
Now here we are in the 21st century, all a bit paralyzed when we consider the scope of what could happen when we enter into transactions on the web: getting ripped-off by sellers, our every move monitored, credit card fraud, social security numbers divulged, identities stolen, etc.
It’s a wonder that any of us do business online at all and yet most of us just hold our noses and blindly click “I agree” when the terms of service box pops up.
But what if the connectivity of the internet could give us the ability to eliminate fraud in most our exchanges?
Oddly enough, the internet may allow us to build a system that is likely to bring a revolution in trustworthiness!
Blockchain combines what’s good about the web–trusting peer to peer networks, the empowerment of “small players”, real-time feedback loops, and access to information–in a new way that allows us to leap into a new future.
Here’s something to give us a solid base on the subject:
How will Blockchain effect ordinary people around the world?
I could go into a long-winded explanation, but the bottom line is that all of us are paying a heavy price for “the middleman” to help manage manufacturing and transportation details, and then secure our transactions. The way things work now is that every exchange goes through a supply chain of handlers, then importers, banks, insurers, and credit card companies.
Each one has costly inefficiencies and takes a cut. And a 1% transaction fee may not sound like much, but through a 15-step process, it adds up in all our daily lives. Much of that goes away with the trustworthiness and efficiencies built into blockchain systems.
And then there is the forgotten 20% who will be able to join the global economy!
Did you know that there are two billion people on this planet who do not have access to a bank or anything outside of cash transactions? 2 That’s almost 20% of the earth’s population, completely left out of the global economy because the fees attached to those intermediaries are outside their reach.
Blockchain will make it possible for them to join the global community of commerce.
So, the question remains and seems even more confusing, “How can blockchain reduce the friction of mistrust that is amplified by the internet?”
Here’s a great video to get us up to speed on blockchain:
The magic is in the design of a system that makes the data there unalterable. A group of computers constantly record data in an arrangement like a lattice; transactions are timestamped, and each step is referred to the signature of the previous block in the chain, and that chain can be traced all the way back to the very first block created.
As a result, the blockchain contains an un-editable record of all the transactions made.
How will we all participate?
Let’s take apart a concrete example: Have you seen the movie “Blood Diamond” with Leonardo di Caprio (which, by the way, is based on a true story)? If Blockchain had existed, there would be no story-line. The largest diamond mining company in the world, De Beers, is a leader in the blockchain revolution.
Now I know most of us can not relate to the purchase of diamonds depicted in the movie, but this provides a perfect metaphor for anything else we may want to purchase.
The next short video, made by the IBM Think Academy, gives us even more insight by using the example of the purchase of a diamond (perhaps for an engagement ring), something many of us may do one day if we decide to marry.
Take a look and you’ll see that even if you are buying your engagement ring at Walmart, blockchain can make you proud of your purchase.
Yes, we are all going to be hearing more and more about blockchain, so let’s be the smartest person in the room!
Bitcoin and simplifying the language of Blockchain
So in simple terms, Bitcoin is “A Peer to Peer Electronic Cash System” with its foundations in the blockchain. It’s like an application running on an operating system.
But what’s peer to peer mean? Imagine that a “Peer” is a player such as a person, or a company, and the “block” is the ledger where you record anything done to the asset that you are transitioning from a “peer to peer”.
In other words, if I send $10 dollars to person A, on the block will be engraved, Guilherme sent $10 bucks to person A, and everybody that participates in this group (Blockchain) will know that. “Peer to peer” is a formal expression for people being able to do business directly with each other without the expensive middleman (banks).
What about the recent Bitcoin failures in the news?
You may have heard stories about Bitcoin failing to live up to expectations and that it definitely does not represent a failsafe system. So what happened to the promise of trustworthiness there?
Well, in ordinary “kitchen table” language: Bitcoin appears to be the way commerce will go in the future, but it has almost nothing in common with the economies of the past and present. It’s a new animal in a very old jungle.
It’s suffering the same as any other idea that arrives a little too early for its time. If you’d like to check out a very “readable” article about the three specific reason Bitcoin may fail, we found a really good article in The Atlantic Magazine called, Is This the Beginning of the End of the Bitcoin Bubble?
Bottom line: While the internet creates a huge step forward for civilization by democratizing information (making it accessible to everyone), the reliability of that information (fact or fiction) becomes even more critical when we move on to transactions involving money. Progress may come in fits and starts.
What organized systems could benefit?
Well, the answer is really simple: any system that experiences disputes, needs to reduce human error, or performs transactions or trades. Blockchain could almost eliminate counterfeit medicines, medical record errors, and voting abuses. It could make aircraft maintenance more foolproof, vastly improve disaster relief, and manage student progress in a whole new way. The possibilities are endless.
From the book “Blockchain Revolution” from Don Tapscott and Alex Tapscott, they state “the impact from blockchain in the next 10 years may be greater than Internet impact in the past 20 years”.
Let’s close today’s article with a great video that demonstrates 19 different ways that blockchain is already transforming different industries and countries!
If we look around, we may see infinite possibilities in the way this technology can improve our interactions.
Did you catch that quick note about making democracy far less vulnerable to hacking? Imagine how Blockchain can improve the security of democratic elections around the world!
And that may be the most important area Blockchain will introduce really important changes for people at all levels of society.
With all this possibility here, it’s safe to say the future may be brighter in a Blockchain world.
Are we about to see an evolution of trust throughout humankind?
I look forward to finding out!
” I can’t change the direction of the wind, but I can adjust my sails to always reach my destination” -Jimmy Dean
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- IFTFvideo. “Understand the Blockchain in Two Minutes.” YouTube. Institute of the Future, 18 Apr. 2016. Web. 02 Feb. 2018. <https://www.youtube.com/watch?v=r43LhSUUGTQ>. ↩
- Woyke, Elizabeth. “How Blockchain Can Bring Financial Services to the Poor.”MIT Technology Review. MIT Technology Review, 28 Aug. 2017. Web. 02 Feb. 2018. <https://www.technologyreview.com/s/604144/how-blockchain-can-lift-up-the-worlds-poor/>. ↩
- PCMagazineReviews. “Blockchain, Explained.” YouTube. PCMag, 18 Sept. 2017. Web. 02 Feb. 2018. <https://www.youtube.com/watch?v=o3im-TsfQ9I&feature=youtu.be>. ↩
- Ibmthinkacademy. “IBM Think Academy: Blockchain, How It Works.” YouTube. IBM Think Academy, 23 Sept. 2016. Web. 02 Feb. 2018. <https://www.youtube.com/watch?v=lD9KAnkZUjU&feature=youtu.be>. ↩
- “19 Industries The Blockchain Will Disrupt.” YouTube. Future Thinkers, 15 June 2017. Web. 02 Feb. 2018. <https://www.youtube.com/watch?v=G3psxs3gyf8>. ↩