Why the blockchain revolution rolls on

November 09, 2020 | 10:00
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It has been a little over 10 years since blockchain technology and Bitcoin exploded into the public domain but, apart from making a few cryptocurrency miners rich beyond belief, the expected transformation of the world as we know it has yet to materialise. Why has the promised technological rapture not done so – and more importantly, will it ever?
why the blockchain revolution rolls on
Why the blockchain revolution rolls on - illustration photo

One paradox about technological innovations is that people do not need to fully understand them to see the future in them and this is particularly true for blockchain. Despite it being one of the most thrown-about buzzwords of the past decade, few people really know what it is about. Granted, a few could draw up the general outlines but just as many would mistakenly equate the technology with cryptocurrencies – which is one classical application, but is quite far from all of it.

As it stands, blockchain is a distributed ledger technology – in layman’s terms, it is a “new” way to store data. Instead of storing all data on a single computer, data centre, or server, blockchain networks store virtually all data on all computers in the network.

“At the same time, all the computers connect to all the others. The system works without centralising nodes, as all the connected devices are nodes themselves,” explained Zurich-based lawyer and blockchain strategy advisor Fabio Alves Moura to EuroNews.

At its core, the idea is just that simple. However, it is nothing short of revolutionary in its implications that would not only transform business operations and services but the very way we relate to the world around us.

In a 2018 article by Kevin Werbach, Wharton professor of legal studies and business ethics, it is explained how blockchain technology decentralises the trust inherent in most activities. Without the social accord to accept it for what it is, money would be nothing but a piece of paper. Without universal, society-wide trust, many of our modern-day institutions that turn the wheels of modern industrial civilisation would be rendered pointless.

“But there’s a downside to trust. Trust implies vulnerability. The people, governments, and companies we trust may turn out to be untrustworthy, for any number of reasons,” Werbach explained. “Bitcoin showed that something valuable – money – could be trusted without trusting anyone in particular to verify transactions.”

Blockchain and cryptocurrencies essentially remove the need for this trust (along with central control) by making sure all databases in the network are identical – one needs only trust their own records as the integrity and validity of others’ records are easily (and automatically) checked with every transaction, on every network device.

The uses of this technology are essentially limitless, as it really is all about how information is kept and secured. As reported by the BBC, Prof. Gilbert Fridgen, a financial services expert at Luxembourg University suggested a distributed ledger system to keep track of university-issued certificates and degrees to once and for all rid employers of fake certifications. Similarly, Sweden has looked into putting its land registry on a blockchain network, with encouraging initial results, and Danish shipping company Maersk already uses the tech in TradeLens to track customs documentation.

As another real-life use case, BurstIQ from the US uses big data blockchain contracts to secure sensitive medical information, and many healthcare and insurance companies are working on similar solutions.

One can also look at the most obvious use case – cryptocurrencies like Bitcoin or Ethereum. In the third quarter of this year, the market capitalisation of Bitcoin stood at an astounding $199.62 billion, according to Germany’s database company Statista. Initially worth less than a US cent in 2009, a Bitcoin is now worth $10,728. Similarly, Ethereum had a $40.6 billion market and has gone from $2.58 in 2016 to $358.18 in this September, peaking at $1,098 in January 2018. While subject to great fluctuations, patient investors could and have made a few small fortunes through these assets – and the ride is far from over.

Most cryptocurrency investors still keep these electronic tokens not to use them in any way but out of expectations that their value would appreciate as the technology becomes more mature, widely adopted, and trusted.

According to Stanislav Bernukhov, a market analyst at multi-asset firm Exness, the integration of blockchain technologies to the real economy has just started. “Blockchain can not only help validate financial transactions and create secure payment protocols, but it can be used in numerous other ways: for instance, in government, in supply chains, and project administration.”

Exness is one of the industry’s most respected brokerage firms, offering online trading services in cryptocurrencies such as Bitcoin, Litecoin, Ethereum and Ripple, but also in stocks, indices, commodities and currency pairs.

With most Wall Street big guns still hot on the topic, prospects look nowhere near dim. Despite the fact that we still do not live in a blockchain-secured utopia, there is strong interest and efforts across the globe to bring the technology to maturity.

Blockchain has the potential to be the next big thing worldwide, setting entire industries upside down the way the internet did. If the technology can be brought to maturity and ready for commercial use, it is estimated to really explode in about 10 years – and repaying early investors’ faith a thousand-fold.

By Tom Nguyen

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