The cryptocurrency market could go boom or bust, but blockchain is probably here to stay and has the potential to determine the future of commerce.
Blockchain will prove to be a revolutionary and transformative technology that will change the way we lead our lives and conduct our business. After attending the fourth annual Blockchain Week event this week and having the opportunity to meet some of the up-and-coming firms that are pioneering this innovative technology, I could not help but come away with the sense that, far from being simply a fad, we are witnessing the building blocks of the future being laid.
When most people hear about blockchain, their minds are immediately cast to Bitcoin, and for good reason too. In 2017, Bitcoin started the year with a respectable value of around $800 before sky-rocketing to almost $20,000 by December. Such enormous growth created many newly minted millionaires (possibly some billionaires, too) and likely encouraged more than a few extra fireworks in celebration as the New Year was ushered in.
Blockchain as a Service
However, the most important part of the conversation has been ignored in favour of the sensationalist headlines surrounding cryptocurrencies and their growth potential, leading to fears of a market bubble forming in the vein of past bubbles like Tulip mania or the Dot-com bubble.
Whatever the fate of the cryptocurrency market, it is the underlying technology of blockchain that will potentially determine the future of business and our day to day activities.
Blockchain is, fundamentally, not a payments technology. Rather, it is an open ledger that multiple parties can view at the same time, functioning in a decentralised manner without being owned or controlled by a single entity. Transactions and other data can be recorded with the agreement of other parties and, once recorded, the data is immutable which means it cannot be changed. Whatever you see on the blockchain is whatever was agreed, processed and recorded.
Graham Richter of Accenture Technology summarised Blockchain as a way for people and organisations to trust information from third parties, even if they do not trust those parties themselves.
In business terms, it means greater efficiency as transactions are deemed to be more trustworthy with less risk. In terms of our daily lives, it could eventually mean that our credentials, qualifications, medical and other records can be checked and verified quickly and with confidence. This could even have possible applications in airports, banks and other areas requiring security vetting.
A vision of the future
I was able to speak to Sunny Lu, CEO of VeChain, about his company’s approach to using blockchain in order to provide enterprise and other services. VeChain is one of the trailblazing start-ups leading the way on how blockchain can be used to improve trust between consumers and service providers, and boasts partnerships with global auditing and risk management giants PwC and DNV GL.
Lu encouraged people to look beyond the Bitcoin craze, and explore the possibilities that blockchain offers beyond the world of “fintech”, or financial technology.
“Blockchain is still in its very early stages, and the market potential is massive…Blockchain has many applications beyond the financial sector, and we are focused on bringing useable applications to enterprises,” Lu told me.
In particular, VeChain wants to revolutionise the supply chain sector. The company’s platform aims to allow consumers to trace products “from the factory to the consumer”, which could in future allow someone to ensure that their organic-labelled food was indeed organic, ethically sourced, or that frozen food was transported at the right temperature. Expensive products and luxury items would even have chips installed in them that would correspond with an entry on the blockchain, proving that the item was genuine and not a counterfeit product.
While Lu was candid about how nothing could be 100 percent hackproof, blockchain technology’s multi-layered security would give consumers guarantees that are more reliable than ever before.
For instance, the horse meat scandal that rocked the UK food industry in 2013 would have had a much faster auditing chain to hold people to account had it been on the blockchain. In fact, the scandal could have been entirely averted had every link in the supply chain been monitored and recorded through blockchain.
Luca Crisciotti, business assurance chief at DNV GL, was confident that his company’s services would be enhanced through blockchain. Their business involves sending out auditors to ensure that businesses are compliant with international standards, which involves painstaking and thoroughly detailed checks of company records and files. Crisciotti is confident that, by adopting blockchain, these businesses would speed up the process of being able to issue certificates verifying they are compliant, which in turn will enhance the speed at which these companies can do business with other parties in trust.
With other giant firms such as Maersk and IBM announcing partnerships to form their own blockchain to service their business models, it is arguable that we are only witnessing the beginning of a new future. Blockchain technology is becoming less of a “nerd-only” endeavour, and is instead being adopted by the titans of the business world, pushing it into the mainstream.
Although traditional banks have been slow to take the plunge into blockchain, and multibillion dollar corporations adopt the technology, it stands to reason that the banking and finance sector will also have to follow suit.
Currently, banks rely on letters of credit and other instruments to formulate legally binding contracts with stakeholders, and these can often be resource intensive and time consuming. Blockchain potentially makes this entire process far more efficient, and will encourage banks to follow in the footsteps of their corporate clients. T
Accounting and audit companies like PwC are investing heavily into the new infrastructure, which will incentivize the banks who actually handle the money and transactions of these firms. The inherent “trust” involved in blockchain would increase business at every point on the financial line, from the money houses to the corporations themselves.
Even if cryptocurrencies come under tighter regulation, that would have no impact on the underlying platforms that are driving business change, which will create a new norm in the way we interact with products and services in the future.
Once governments start applying our personal data to a blockchain – something which is actively being considered – we will most certainly have to come to terms with the technology as a part of our day to day existence.
Disclaimer: The viewpoints expressed by the authors do not necessarily reflect the opinions, viewpoints and editorial policies of TRT World.
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