In last week’s blog post ‘5 Trends That Will Transform the Auto Industry in 2017’, we talked about blockchain technology as a disruptive force in the automotive industry. Today, we’re going to discuss its far-reaching potential.
Blockchain was the subject of two very interesting Ted Talks in recent months. Most recently, Bettina Warburg described how blockchain will eliminate the need for centralized institutions like banks or governments to facilitate trade. Back in August, Don Tapscott hailed the technology as the second generation of the internet, and outlined its potential to transform money, business, government and society.
Today’s blog will explore the key points from these presentations.
Transforming the Economy
Bettina began her Ted Talk with a very helpful definition of blockchain technology:
“It is a decentralized database that stores a registry of assets and transactions across a peer-to-peer network. The transactions are secured through cryptography, and over time, that transaction history gets locked in blocks of data that are then cryptographically linked together and secured. This creates an immutable, unforgeable record of all of the transactions across this network. This record is replicated on every computer that uses the network.”
For those of us that are still scratching our heads, she says it is closest in description to Wikipedia, the free online encyclopedia. How? Wikipedia is an open platform that stores words, images and changes to the data over time. Like Wikipedia, blockchain is an open infrastructure that stores the custodianship, ownership and location data for assets like Bitcoin.
Blockchain is already being used in some industries for instantaneous payments. It’s allows suppliers to track information through a secure and transparent network. Bettina provides a simple example to show how this benefits the consumer. When we order a smartphone by mail, we want to be sure the product we ordered is the one that arrives, and that there’s a record of how it got to us. The problem is that they’re managing a host of different vendors across a horizontal supply chain.
Blockchain could simply this process for supplier and consumer. Different vendors across the supply chain network won’t need to trust each other, because they will have the ability to monitor and validate the chain for themselves. Most importantly, for consumers, it means we can have a lot more transparency. As the smartphone travels along, we will be able to see its digital certificate or token move on the blockchain.
Changing Money & Business
“The technology likely to have the greatest impact on the next few decades has arrived.”
That’s how Don Tapscott describes blockchain technology. At the moment, he points out, we rely entirely on big intermediaries to establish trust in our economy. They perform provide everything from authentication through to record keeping. But they're centralized, which means they can be hacked, and increasingly are.
The Bitcoin blockchain is probably the one most people are familiar with. But as Don Tapscott points out, there are many. Take the Ethereum blockchain for example. It's best described as a smart contract that self-executes, and handles the management, performance and payment of agreements between people.
Tapscott makes a number of interesting observations during his talk, but we’re going to highlight two in particular here. The first is his assessment of the sharing economy. His view is that companies like Uber, Lyft and Airbnb are not really sharing. In fact, they're successful precisely because they don't share. Here’s a short excerpt of what he had to say:
“What if, rather than Airbnb being a $25 billion corporation, there was a distributed application on a blockchain, we'll call it B-Airbnb, and it was essentially owned by all of the people who have a room to rent. And when someone wants to rent a room, they go onto the blockchain database and all the criteria, they sift through, it helps them find the right room, and then the blockchain helps with the contracting, it identifies the party, it handles the payment.”
He also discusses the impact it could have on content creators who don’t receive fair compensation because the system for intellectual property is broken. Songwriters, for example, receive a tiny fraction of the royalties they would have got 25 years ago.
He tells us that Imogen Heap, a Grammy-winning singer-songwriter, is now putting music on a blockchain ecosystem called “Mycelia.” The music has a smart contract that protects her intellectual property rights. She says blockchain helps the song to become a business. It's out there on this platform marketing itself, protecting the rights of the author, and because the song has a payment system in the sense of bank account, all the money flows back to the artist.
The latest market research forecasts the blockchain technology market to value USD 7.74 billion by 2024. But, if these talks are anything to go by, it could easily go on to surpass these figures during the forecast period.
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