Looking to the future, this article considers the potential for blockchain technology to revolutionise society and its wider impact on everyday life.
When you talk about blockchain, most people think about bitcoin and cryptocurrencies. Whilst cryptocurrency works off of a blockchain, the possibilities for blockchain technology extends way beyond crypto.
The advancement of civilisation can identifiably be pinpointed to certain events in time: the wheel; the railway; the lightbulb; the telephone; the computer; email; wifi. Each invention has been revolutionary, beginning as a novelty and then becoming the norm, to the point that it becomes hard to imagine life without them.
Advancement seems to come in waves and it would seem that a new wave is about to break with a number of currently novel concepts steadily being adopted into mainstream life, which could ultimately prove to be revolutionary.
The current concepts in early stages include advancements in artificial intelligence, faster connectivity, electric cars, lab grown meat, and two words that you may have heard: “decentralisation” and “blockchain” solutions. Arguably out of all of these, the blockchain concept could prove to be the most revolutionary advancement so far, as it is a system of work creating an infrastructure off of which every other concept can run.
What is blockchain:
A blockchain is, in the simplest of terms, an incorruptible ledger – a permanent record using simple accounting rules of making in and out entries on a ledger; each entry forming a chain in a larger block of entries that creates the blockchain ledger. There is no limit to the number of blockchain systems that could exist, but the key feature of blockchain is that the blockchain network works to a set of rules and has no central authority. It is stored across a network of computers meaning it is decentralised — the very definition of a democratized system that cannot be controlled by any single influencing power, and therefore in theory cannot be corrupted.
It is a permanent record of a chain of transactions, giving complete transparency and accountability, reducing the possibility for fraud.
Right now, cryptocurrency is most synonymous with the concept of blockchain. Taking currency as a model for example, the benefits of blockchain are clear to see. A traditional currency has a value. Historically that value was measured against a commodity such as the gold standard. In Britain for every pound in circulation there would be a corresponding pound of gold in the vault. Today, currencies are valued against each other and the dollar is the reserve currency. At the time of writing £1 is worth 1.41 US dollars (Oanda: https://www1.oanda.com/currency/live-exchange-rates/GBPUSD/). Each currency is controlled by a central bank: Sterling, the Bank of England; Euro, the European Central Bank; USD, the Fed. These central authorities have power over its currency and can change their value through policy making. On the one hand, there are valid reasons to do this, such as controlling inflation. On the other hand, a government’s fiscal policy can be corrupted creating socio-economic problems and class divides, or used to punish other nations in a bid to exert political dominance.
By working off a decentralised blockchain, cryptocurrency removes that central authority from the equation to create a truly free currency, away from the influence of politics and free from corruption. This concept is certainly revolutionary, perhaps even bordering on conspiracy theory. More than likely, pretty soon governments will attempt to regulate cryptocurrency and be an early adopter of a loosely centralised version of it themselves, in order to ensure that they retain control and influence over the monetary system in future, or perhaps worse, the powers-to-be will adopt a single digital currency to supersede all other nation currencies to create a one-world currency. Again, it begins to sound like a conspiracy theory or dystopian movie plot, but it is not beyond the realms of possibility.
This idea of a currency free from government interference sounds like a utopia, but it gives rise to larger economic questions that we cannot yet know the answers to. As an example, Bitcoin – the Daddy of cryptocurrency – intended to be used to buy and sell goods like any other currency, but it has seen its value shoot through the roof from 0.0008USD in 2010 to fluctuating around 30,000USD – 60,000USD in 2021. It is not possible to use such a volatile currency to buy and sell everyday goods, and therefore perhaps it will always be necessary for a central power to have influence over currency to regulate the value of money and control inflation.
Another way in which blockchain protects against corruption is its permanent record of ownership which can be viewed. The chain of transactions are proof of title for its owner and provides users security and comfort knowing that they are not being subject to fraud and are able to see the origin of something, whether that be the transfer of money from one party to another, or the transfer of goods. This is perhaps one of the most important factors of blockchain technology which can allow it to be adopted by society on mass and what makes it so revolutionary.
In what areas blockchain could be beneficial:
Blockchain’s possibilities are endless. Some applications will not even have been imagined yet.
For example, when buying a house, blockchain technology used for buying and selling land would protect against fraudsters. A buyer of property would be able to inspect title deeds on the blockchain and see the full history of a property and know that a seller is genuine.
State welfare could be built on blockchain as a permanent record showing who has received a benefit and for what, to remove the opportunity for abusing the system, or to stop people falling through the cracks and going without aid.
The blockchain could reduce the cost of living in many areas by removing the need for middlemen in the equation. A large majority of mega conglomerates that we know today are basically middlemen: AirBnb, Amazon, Visa, Ebay, Etsy are all middlemen platforms charging a fee on our living. For example when making payment on a credit card the payment processing company such as Worldpay or Visa adds a percentage cut to each transaction. Blockchain can eliminate the need for that additional cost of middlemen. Currently there are cryptocoins like Ripple (XRP) or Stellar Lumens that are in the early stages of being adopted by companies such as Amazon and Visa to act as the middleman exchange for a fraction of the cost.
The blockchain could be used as a system to replace the awkward credit scores used by banks to help individuals obtain credit or a mortgage from banks on information that is fair and true.
Progress can be swift but tends to come in stages. Some visions for blockchain are seriously revolutionary and would need time and change to become a reality, but there are current possibilities for blockchain which would make a significant impact to different areas right now. A particular area that could greatly benefit bricks and mortar businesses is in supply side solutions. Having a record of all transactions that a business enters, including all orders placed for stock could be revolutionary in planning, logistics, delivery and cost saving, as the journey of a product can be checked monitored and verified as it travels from a factory across the globe right to the customers doorstep all by an automated process.
What the Future may bring
In 2016 Black Cab drivers in London strongly protested the disruption (or they would say encroachment) of Uber in the taxi industry. There are not many groups right now that so clearly represent the divide between the traditional and physical to the progressive and digital than London cabbies and Uber drivers – both sides each with their own very valid points. The Cabbies are unhappy with Uber disrupting the market. Soon Uber will be protesting the disruption caused by blockchain as independent taxi drivers will be able to ditch the middleman and be hailed directly without even needing to work for a company.
Blockchain is setting up to be a real leveller that can remove the opportunity for corruption and take control away from the establishment and mega rich for the first time ever in our history and it will be very interesting to see how it develops. A true decentralised supply chain for everyday life could pass the costs back to the individuals and empower everybody equally, although it remains to be seen whether this is realistic to expect.
Our laws have been built through years of testing and legislating, seeking to balance justice and keep up with technological advancement. If blockchain technology realises its full potential, there will be entire industries created to cater for it, and completely new areas of law yet to be written to deal with it.