“The technology most likely to change the next decade of business is not the social web, big data, the cloud, robotics, or even artificial intelligence. It’s the Blockchain, the technology behind digital currencies like Bitcoin.”

Harvard Business Review by Don Tapscott and Alex Tapscott

Blockchain is a highly disruptive technology and the next step in how we use the Internet. The enabling digitization of assets, allows Blockchain to shift form Internet of information, where we instantly view, communicate, and exchange information, to a new level where we can instantly exchange assets. Intermediaries will likely play a smaller, or no role at all, in this process. Economic trust will increasingly be through consensus and complex computer code and less through central intermediaries we have come to accept and adopt.

It is likely and inevitable that there will be complete transformation in some industries. We are only at the beginning phase. Blockchain’s initial foray into crypto currencies is largely playing in the speculative arena --- for now. New applications and platforms are in their infancy. Businesses are now looking to incorporate Blockchain technology that will enable increased amount of people to trade more frequently and efficiently, improve and reduce internal transaction costs, and improve overall internal security from hacking.

For example:

Student Activists trying to ignite the #MeToo movement in China have turned to the technology behind bitcoin to battle government censorship.

According to Bloomberg, in an article written by Olga Kharif, May 19, 2016 ---

“Starting next September, some logistics companies in Finland, Sweden, Estonia, and Latvia will begin outfitting shipping containers with a soda-can-size device that will beam out the cargo’s location, how much it’s vibrating as it travels, and its ambient temperature. The data will flow into a repository in the cloud so the entire supply chain can be informed if a shipment’s been delayed. That will prevent redundant e-mails and phone calls. “There are massive problems communicating between companies,” says Mika Lammi, who’s overseeing the project from his perch at Kouvola Innovation, a business development agency in southern Finland. “Instead of having separate databases, why not have a single blockchain where everyone can pool information?”

For Governments the implications parallel business in many ways --- plus some.  Governments’ task is more complex as they also will need to focus on regulatory issues and implications to internal and external trade, etc. With only 8% of global financial transactions today involving cash, and diminishing, one possible outcome we could see are Central Banks minting their own currency.

It is too early to make definitive long term projections as to the evolution, ramifications, and future landscape of Blockchain technology. As with all future projections we engage in narrow and linear forward thinking process. Nevertheless, there is a compounding process where exploring possibilities stimulate and engage people to create new technological possibilities and realities. Even if today’s Blockchain technology landscape is narrowly focused, largely on cryptocurrencies, the basic technology implies transformative application for individuals, business and governments. 

 “The revolution in this technology is in the networks’ autonomous ability to synchronize the ledgers across the entire network. This may seem trivial, but it’s an enormously challenging task that mathematicians have been trying to solve since the 1960s. By 2008, the study of cryptography, networking technology and game theory was at the perfect crossroads to come up with the Bitcoin Blockchain which solved the double spending problem and made it possible. As a result, we have a global, extremely secure system of financial bookkeeping that is autonomous with no central control. The system has grown to the point that it’s virtually impossible to shut it down. Even its creator doesn’t have the power to stop it if they wanted to.”

Karim Hamasni, RBC Global Asset Management Innovation

Let me digress with a personal early technology experience. --- In 1977 I worked for Commercial Credit, a US company engaged in commercial lease and finance, owned by Control Data. Control Data installed, on a test basis, in select locations, what today would be referred to as a very crude computer screen with a modified typewriting keyboard. Our office was connected to just over twenty similar locations scattered, mostly in Universities, across North America. The connection was pre Internet (There are many names associated with this era i.e. Arpanet, Darpa, etc.) nevertheless, we were able to communicate directly with all the designated locations. Connectivity was not instantaneous. We logged on with special numbered codes, waited for several minutes --- sometimes 10 minutes or more, and started playing chess with a member location. You can well appreciate that even with this early and crude system we were like a bunch of giddy kids in a candy store. There were days after work we played chess well into the evening hours and on occasion into the early morning hours. A novel activity without comparison.  

I was fortunate and lucky to share in this exciting and novel experience --- a form of interactive TV, in what today’s instant access world would be considered very primitive --- downright clunky. In 1977 we were all so excited over the possibilities and potential applications that during our feedback sessions with Control Data techies --- the conversations vacillated from outright silly to the very serious. Yet how little we understood or realized the future implications, applications, and technological evolution over the next forty years. Equally, Blockchin will have a profound implication on our daily lives well into the future --- but not necessarily the way we perceive it will today.

How Blockchain works in simple terms:

1. You request a transaction;
2. Your transaction is broadcast to a P2P network comprising of computers --- referred to as Nodes. These Nodes all have a copy of the entire Blockchain (A public decentralized ledger where transactions are recorded and confirmed anonymously);
3. The Nodes validate your transaction and your status using known algorithms. Each recorded block holds a unique time stamped Cryptographic footprint;
4. Your transaction, once verified, which is permanent and unalterable is complete. In our current conventional system a hacker can enter a server or folder. Under Blockchain, hackers would need to seize control of 51 percent of the hosting nodes. Considering that the network is comprised of thousands and even millions of hosting ledgers this task becomes virtually impossible.  Also, the hacker would not only need to hack into that specific block, but all of the preceding blocks covering back the entire history of that particular Blockchian.;
5. Your transaction --- considered a new block --- is added, or chained, to the existing block referred to as Blockchain. Every time a new block is created it changes the ledger;
6. Blockchain is a public ledger where transactions are recorded and confirmed anonymously. So, if Blockchain is the public record, what is being recorded? Your transaction exists in solely digital from. You have the ability to transfer “ownership’ to someone else simply by creating a record in the Blockchain. Your transfer is pure data.

An easily readable Blockchain Graphic:

“This infographic is reprinted with the permission of Stratfor Worldview, a geopolitical intelligence platform."

For a more in-depth and comprehensive explanation of Blockchain please contact me.

As with everything humankind creates there are benefits and there are flaws. On the positive side ----  individual control, high quality data, lack of central point of failure, transparency, removing the need for trusted third party, etc. On the negative side ----  slower than centralized databases, large energy consumption, government regulation, additional cyber security needs to be addressed, cost of operation, etc.

As the Internet has progressed so will Blockchain. The evolution and application will not be as we are envisioning today.

John Vidas