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On the brink of a revolution? Here is what you need to know about Blockchain

  • 08/15/2018 - by Louis de Bruin

The Blockchain revolution often heralded as Internet 2.0, is upon us. It is still early days, but as a technology, its impact promises to be at least as profound as Artificial Intelligence, Quantum Computing, Internet of Things, 3D printing, or BioSciences. The promises of Blockchain are many: many of the opaque processes on which we rely will become transparent; we will be able to trust the outcome of Blockchain based processes because of inherent integrity; the role of middlemen will be eliminated; Blockchain will boost efficiency and speed of execution by orders of magnitude; Blockchain will make it possible to efficiently execute cross-ecosystem processes that up to now are considered too complex to manage.

Real and present Blockchain solutions are delivering on these promises, but it is still early days. In this series of articles, various aspects of Blockchain will be covered. This first article is to give you an impression of the future topics that will be covered in this series.

Blockchain: what, why, how?

The name “Blockchain” refers to a technical part of the technology used in Blockchains and is a bit of a misnomer. The term “Distributed Ledger Technology” (DLT) is often used as an alternative. Although Blockchains are particular implementations of DLT, the latter is a better descriptive term for the concept and therefore often used instead of Blockchain. The blockchain is not really a new technology. It is more a combination of existing, proven technologies whose value combined exceed their sum by far. The technologies involved, TCP/IP (internet), peer2peer computing, smart contracts, cryptography, distributed computing, consensus algorithms and Distributed Ledger Technology (DLT) have been around for a long time. In particular, DLT is very close to the concept of Blockchain and has seen large-scale deployments, such as file sharing services like Napster that disrupted the media industry at the turn of the century. This article will show that Blockchain is not as unique and revolutionary as we often think.

Socio-economic trends and philosophical schools of thoughts have prepared the groundwork towards what we now call Blockchain. There are even examples of Blockchain-like concepts deployed in prehistoric societies. Blockchain has properties that make for very resilient systems. In this context, the use of Blockchain to safeguard against hacking, DDOS attacks and other forms of crime will be covered in future articles. We will also look into considerations on what data can or should be stored on a Blockchain. This has interesting consequences and depending on the use cases pursued, the resulting Blockchains will need to conform to different specifications. When talking about the “what, why and how” of Blockchain, inevitably the first successful implementation of Blockchain, Bitcoin, deserves to be addressed. Although entering the realm of speculation, the mystique surrounding the origin of Bitcoin and its presumed inventor will also be covered to some extent. Finally, this article will address that Blockchains are not all created equal. There are alternative types of Blockchains and of particular interest is the rapid adoption of an open source technology that allows for the development of enterprise-grade Blockchains: the collaborative effort of Hyperledger Fabric endorsed by the Linux Foundation.

How Blockchain will impact every aspect of business: examples and use cases.

After the history and theory covered in the first article, we will show real and present Blockchain applications and to give a clearer picture on use cases that will profoundly change industries.

This will include current Blockchain developments, such as:

– Blockchain will create transparency in the food chain that will allow consumers to see the products they buy conform to their individual demands. Think of dietary, sustainability and local sourcing, the possibility to prevent food scares or nip such scares in the bud.

– Application of Blockchain in the digitization of global trade will dramatically reduce the redundancy in the administrative work effort that accompanies the transportation of goods, reducing delays at ports and borders, as checks on import duties and phytosanitary inspections can be largely eliminated. This will reduce paperwork to a fraction of its current volume, bringing down transaction costs considerably. Reduced delays will also significantly increase the volume of perishable produces to arrive unspoiled, fresh and fit for consumption.

– Vehicle crime reduction Blockchain: The ecosystem of parties involved in avoiding, resolving and dealing with the results of vehicle-related crime is extensive. Due to the nature of vehicle crime, it is also required cross-border collaboration. Law enforcement agencies, insurance companies, regulators, maintenance companies, vehicle producers, importers, transporters and many other parties are all involved in this collaboration. And whilst crime is getting increasingly organized, there is little or no organization between the ecosystem parties involved fighting this type of crime. Successful Blockchain efforts are underway to streamline collaboration in this ecosystem, without having a single party in charge or functioning as its orchestrator.

– Other use cases will apply to industries such as Energy & Utilities, Travel & Transportation, manufacturing and of course Finance.

The current hype in Initial Coin Offerings and the cryptocurrencies frenzy are particular niche developments that will be touched on as well. But the main focus of this article will be the real world, enterprise-grade Blockchain applications that deliver true business value.

The Blockchain opportunity in government

Blockchain will extensively touch on and change public sector processes. Governments should be aware, that Blockchain can serve as an independent tool in the hands of organizations or groups of citizens. If citizens feel a public service to be below par, Blockchain technology may allow them to develop tools that fill the perceived void in public services. And this is not without precedent: after all, it is what happened when the public embraced Bitcoin and realized that a currency and payment system could live outside the monetary system and regulatory oversight. So Blockchain acts as a development that forces governments to listen intently to what the public needs

Apart from that, the quest for transparency and the fight against corruption makes Blockchain a technology that governments need to embrace. It is a way to inoculate national registries such as land registries, and make them resistance against subversive attacks against their integrity, caused by corruption, organized crime or by (inter)national conflicts. The article will also address the ideal conditions under which this should be done, providing an interesting paradox that will give readers some food for thought. Blockchain also makes it possible for collaboration between institutions across national jurisdictions, guaranteeing ownership, control and exchange of data with Blockchain ensuring inherent trust and provenance. The blockchain is, therefore, an enabler for virtual cross-national distributed organizations that will not require a physical location but will run in a distributed fashion on a Blockchain through which national systems interact and on which international agreements are implemented by means of smart contracts. We already see the first examples of governments experimenting with Blockchain technology, including Blockchain based voting systems.

This article will also address the various national and international associations that governments have formed to foster an environment for experimentation and deployment of Blockchain technology and to enable standards and inter-Blockchain operability.

Rewards – and risks

The myriad of possibilities of Blockchain tends to obscure that this technology, like any other, can be used in positive, as well as negative ways. Cryptocurrencies are implementations of Blockchain and the turbulence and scams surrounding cryptocurrencies and ICO’s make clear that there are serious pitfalls. The word Blockchain is often used with ignorance and is portrayed as a panacea to cure the world of all sorts of evil. Fighting such naivety requires education through which understanding can be reached of what Blockchain is and what it is not. This is essential for people being able to discern truthful use of Blockchain from malign hoaxes. This article will also take lessons from how the internet developed over the years spawning behaviours such as online bullying, spam mail, viruses, malware and cyber scams that we might have averted, had we better thought through and adhered to design principles at the start of the World Wide Web a quarter of a century ago. Although it is impossible to avoid all mistakes, we can develop an approach that helps to assess the risk of Blockchain technology in order to avert abuse or misappropriate uses.

Being aware of the risks should embolden us to pursue Blockchain opportunities and reap its benefits.

The penultimate article in this series will cover models and approaches to develop Blockchains throughout an ecosystem and the final article will be on the impact of the interaction between Blockchain and other emerging technologies.

The goal of this series is for readers to develop better insight into what Blockchain is, what it can do for society to serve transparency, democracy and bring efficiency and prosperity, whilst being aware of its risks and pitfalls. And most likely, by the time the last article is out, you will be involved in at least one Blockchain project yourself.