THE BLOCKCHAIN REVOLUTION
blockchain. They basically automate payments and the transfer of assets as certain agreed-upon conditions are met. For example, a smart contract could send a payment to a seller as soon as a shipment is delivered to the customer, without any third-party intervention. Another example is a derivative could be set to be automatically paid out when a financial instrument meets a certain benchmark. Smart contracts will result in a massive reduction in the cost of enforcing contracts and making payments as the software will self-execute the instructions based on the terms of the contracts. and in fact, a new start-up called Ascribe provides a digital registry for artwork which contains information to verify authenticity, condition and ownership. Artists can basically upload digital art, watermark it and transfer it as they wish. Consumers are increasingly wanting to know more about the items they buy, whether for ethical grounds or health reasons. For example, someone might want to be certain that the jewellery they buy contain diamonds that are not from conflict zones. Purchasers of meat may want to know whether the livestock involved was raised in a free-range environment. Sushi restaurant chains may want to know if the seafood they purchase was harvested in a sustainable way. Blockchain allows for that as its distributed ledgers are timestamped with dates and locations and these cannot be altered and falsified.
The sharing economy as exemplified by AirBnB and Uber has really upended traditional business. But these new economy companies are actually intermediaries who help aggregate suppliers who are willing to sell their excess capacity (in the form of rooms and driven cars, respectively) and take a percentage of the sale. Blockchain provides the potential for service providers to sell directly to clients without a third-party involved. Essentially, it would be a peer-topeer sharing economy that’s decentralized. also crucial for financial transactions conducted on blockchain as there’s no intermediary like a bank involved. You need to know that the other party you’re dealing with is genuine.
There’s no doubting blockchain’s revolutionary and transformative impact on the way business will be conducted in the future. However, this isn’t something that’s going to happen overnight. It may literally be decades before blockchain become very commonplace.
An experiment done at MIT a few years ago highlights a key challenge that blockchain-based systems face: people don’t understand it. In 2014, the MIT Bitcoin Club provided each of MIT’s 4494 undergraduates with US$100 in bitcoin and gave them the freedom to do as they wish with it. Some 30 per cent of the students didn’t even bother to sign up for it, while 20 per cent of those who did sign up ended up converting the bitcoin to regular cash within a few weeks. Of course those who held on to it eventually made a lot of money as the value of bitcoin subsequently skyrocketed. But what that experiment showed is that even amongst a tech-savvy, intelligent crowd there’s still apprehension about using bitcoin.
But beyond that, blockchain technology itself is still at an infancy stage. There’s still a lot more technological development that needs to be done before we can see widespread adoption. There’s also a host of regulatory and legal issues to overcome. Blockchain might be a decentralised system but buy-in from the government is still necessary if it’s to be used for legal, financial or identity management purposes.
It’s hard to say which industries or government sectors would be most impacted by blockchain. We can make educated guesses but when it comes to disruptive technologies, it’s always very hard to make accurate predictions. Take social media for instance. If you had told someone about Twitter or Facebook around the time they launched, would anyone have believed they’d become such a regular part of our daily lives? One thing’s for sure though, blockchain is no fad. It’s here to stay and will only become more relevant in time to come.