Blockchain is going to change the world.
Last week, The European Commission launched the EU Blockchain Observatory and Forum with the support of the European Parliament. The forum will highlight key developments of the blockchain technology, promote European actors and reinforce European engagement with multiple stakeholders involved in blockchain activities. In its press release, Commissioner for the Digital Economy and Society Mariya Gabriel said: “I see blockchain as a game changer and I want Europe to be at the forefront of its development.” Blockchain is here to disrupt. But for many of you still unsure as to what blockchain actually is, let’s take it back to basics.
What is blockchain and how does it work?
Blockchain is the technology underpinning cryptocurrencies that has the potential to revolutionise the world economy. It’s basically a distributed database, that is truly peer-to-peer, cutting out the middlemen required to authenticate transactions. It is open source, so anyone can access it and delve into what’s going on, providing total transparency. It uses state-of-the-art cryptography, recording global transactions historical and realtime.
“An immutable, unhackable distributed database of digital assets. This is a platform for truth and it’s a platform for trust. The implications are staggering, not just for the financial-services industry but also right across virtually every aspect of society.” Don Tapscott, via McKinsey
How is it going to disrupt?
Blockchain, although still ethereal sounding, has many practical uses in day-to-day. It will be a key player in contract management, and the development of so called “smart contracts”. Contract heavy industries such as finance, law, real estate, insurance, construction and entertainment will rely upon blockchain’s immutability and indisputable way to update, manage, track and secure contracts. It will also provide water-tight anti-counterfeit measures for pharmaceuticals, luxury items, diamonds and electronics. Registering products and introducing transparency to supply chains.
So, everything with a supply chain, as well as multiples of contracts and processes that are typically managed by people, will probably at some point all be taken over by blockchain. Everything from payment processing and currency, supply chain management, asset protection, identification, personal record systems and passwords – will use blockchain to cut out the middlemen and become totally transparent.
Seen as the new “supply chain operating system”, blockchain is already being used by Walmart in China to track farm origination details, batch numbers, factory and processing data, expiration dates, storage temperature and shipping details.
“The financial-services industry is up for serious disruption—or transformation, depending on how it approaches this issue.” Don Tapscott, via McKinsey
What could go wrong?
It all sounds pretty incredible, right? You’re probably asking if there is anything at all bad about this new innovation. Let’s consider some of the impending issues.
The amount of energy produced to create blockchain is huge, and as a result negatively impacts on the environment. So, large enterprises that invest in blockchain capabilities should counteract their footprint on the planet with a strong and sustainable or circular models via a transparent corporate social responsibility plan.
It has the power to disrupt whole industries, it also has the ability to automate vast amounts of jobs, leaving the worker replaced by clever machinery whose accuracy they could never compete with.
By far the biggest potential issue, however, has to do with governance. It is essentially an anarchistic system in the hands of the people; completely peer-to-peer, based on truth and trust. Which is by no means a bad thing in itself. But what if it gets into bad hands? What if people are reckless and greedy?
“Unlike the Internet, which has a sophisticated governance ecosystem, the whole world of blockchain and digital currencies is the Wild West.” Don Tapscott, via McKinsey
Safe guarding through regulation is essential in order to protect people from its incredible power and reach. It needs to have a structure and process to guide and regulate it and the people using it. As articulately expressed by Don Tapscott, “identity is the foundation of freedom and it needs to be managed properly”.
Watch the video below to hear more of Don’s views on how blockchain is changing money and business.