Like reality TV shows and internet shopping, it’s become hard to ignore the blockchain in recent years. Despite only having been invented a decade ago, industry observers suggest it may represent the future of everything from ownership records to voting. Yet many people remain unaware of its existence, let alone how it works or the disruptive effect it’s having on established industries.
This lack of public awareness is partly attributable to the complex processes underpinning the blockchain. In essence, every action creates a permanent and undeletable record in an online ledger, which is supervised by every individual user. When a change is noted, each registered device or terminal is notified simultaneously, making subsequent changes impossible to reverse engineer.
New kids on the block
In some ways, this is the antithesis of the internet’s open source nature. From Napster to WordPress, Wikimedia Commons to Word documents, publishing something online has historically meant other people could amend or replicate it. Yet on the blockchain, there’s no way to duplicate or move a record. The author or owner might be anonymous, depending on how the chain is configured, but there’s no pretending a transaction didn’t happen, or that it occurred in a different way. There’s no centralized data repository for criminals to target, no risk of identity theft, and no delay between an action occurring and a response being received.
This technology was developed alongside (and exclusively for) Bitcoin. The decentralized cryptocurrency was briefly hailed as the future of finance before high-profile thefts from online wallets shattered public confidence in it. Bitcoin may have become little more than a stock market plaything, but the technology which ensured every transaction was (a) instantaneous, (b) anonymous, and (c) irreversible could still be transformative.
These are some of the ways in which the blockchain might eventually impact on our lives:
Rock legends Metallica built their reputation through tape trading, twenty years before going to war on file sharing platform Napster for providing a comparable service via the internet. Today, issues of copyright could be resolved by issuing digital signatures with each purchase of a document or file. Without a copyright token, the file wouldn’t work/play/run.
It’s possible to develop a protocol where currency or ownership is automatically transferred from one party to the other upon completion of certain tasks. Such self-executing contracts would eliminate middlemen. They’re referred to as ‘trustless’ because computers ensure any promises are instantly and fully fulfilled as soon as specific conditions are met – and not before.
Online voting could eliminate hanging chads or weather-affected turnouts, but fraud has always been a concern. A public ledger where each citizen gets a unique identity verification would usher the one-man-one-vote principle into the digital age. It could be used for taxes, licensing and other obligations. With no way to cheat the system, compliance is guaranteed.
It’s true that Bitcoin failed to become the trailblazer that many hoped it would. And with thousands of failed cryptocurrencies already on record, decentralized currencies have a long way to go. However, the elimination of exchange rates, settlement times and physical storage is likely to mean that digital payments for goods and services will become part of daily life sooner or later.
Crowdfunding didn’t really exist a decade ago, yet today crowd-sourced finance is the preferred route for musicians, developers, entrepreneurs, and artists. Rather than the trust-based systems of Kickstarter and Crowdrise campaigns, blockchain contracts ensure contributors receive exactly what they were promised, with no delays or ambiguity.