Blockchain is this year’s buzz­word – but can it out­live the hype?

The open-source ledger be­hind bit­coin is touted as rev­o­lu­tion­ary for ev­ery­thing from bank­ing to health, but the jury is still out

The Myanmar Times - Weekend - - Weekend|tech -

THE spec­u­la­tion around cryp­tocur­ren­cies has ob­scured the fact that blockchain, the de­cen­tralised, open-source ledger that drives bit­coin, could rad­i­cally change how own­er­ship is ver­i­fied.

While the value of the main cryp­tocur­ren­cies fluc­tu­ates, “blockchain” re­mains a lu­cra­tive buzz­word that com­pa­nies have found is a mag­net for fund­ing. But cut­ting through the hype, could blockchain tech­nol­ogy re­ally rev­o­lu­tionise the way any­thing from bank­ing to ed­u­ca­tion is run?

The blockchain al­lows peo­ple to cre­ate dig­i­tal prop­erty in­de­pen­dently of third par­ties and be­lief-based meth­ods of record­ing own­er­ship. Time-stamped data en­tries are ap­pend-only and al­ways ac­ces­si­ble, partly be­cause the data­base is stored across a net­work of com­put­ers rather than a cen­tral server.

“Blockchain has the po­ten­tial to re­place me­di­a­tors who are present to­day in mul­ti­ple in­dus­tries to pro­vide trans­parency and ac­count­abil­ity, such as banks for fi­nan­cial trans­ac­tions, uni­ver­si­ties for ver­i­fy­ing aca­demic cer­tifi­cates or mu­sic com­pa­nies to re­ward mu­sic cre­ators,” says Dr David Galindo, a se­nior lec­turer at the Univer­sity of Birm­ing­ham and a cryp­tog­ra­phy ex­pert.

Calls that in­dus­tries are about to ex­pe­ri­ence a trans­for­ma­tion equal to the leap be­tween ana­logue and dig­i­tal may be an over­state­ment. More sober pre­dic­tions put its fu­ture im­pact as po­ten­tially com­pa­ra­ble with the rise of in­ter­net­based plat­forms as busi­ness mod­els.

“It could trans­form in­dus­tries whose main pur­pose is me­di­at­ing in as­set trans­ac­tions in a sim­i­lar way that Ama­zon, Uber and Airbnb have changed re­tail, trans­port or ac­com­mo­da­tion,” says Galindo.

Open­bazaar, a blockchain-based, de­cen­tralised on­line mar­ket­place that has been ac­tive in its cur­rent 2.0 it­er­a­tion since Novem­ber 2017, is one such ex­am­ple. It is free to use, un­like ebay, Ama­zon and oth­ers, be­cause trad­ing is done peerto-peer with­out an in­ter­me­di­ary that demands a per­cent­age from each trans­ac­tion. Its model could, the­o­ret­i­cally, be ex­tended to any com­mon mar­ket.

There is, how­ever, no aca­demic con­sen­sus on whether the nascent tech­nol­ogy will ac­tu­ally change much.

“I don’t think there are any “real-world” ap­pli­ca­tions that can only be achieved by us­ing blockchains, at least if one is will­ing to trust in tra­di­tional in­sti­tu­tions,” says Sarah Meik­le­john, an as­so­ciate pro­fes­sor in cryp­tog­ra­phy at Univer­sity Col­lege Lon­don who’s been re­search­ing blockchains for six years.

“For most peo­ple in the de­vel­oped world, th­ese are not prob­lems that need to be solved. If I want to send money, I use my bank ac­count; if I want to prove my iden­tity, I use my pass­port.”

“The best ar­gu­ments I’ve heard for th­ese tech­nolo­gies are thus ei­ther in the de­vel­op­ing world, in which ac­cess to th­ese in­sti­tu­tions is not as easy (or they don’t ex­ist at all), or in more spec­u­la­tive ap­pli­ca­tions where all the stake­hold­ers re­ally are mu­tu­ally dis­trust­ing.”

The blockchain can be used to pro­vide ser­vices tra­di­tion­ally mo­nop­o­lised by banks, such as elec­tronic funds trans­fers, through smart­phones and by­pass bu­reau­cracy in the dis­burse­ment of aid to refugees.

Nonethe­less, the lack of a killer ap­pli­ca­tion is a rea­son to be scep­ti­cal.

“There are also is­sues around things like scal­a­bil­ity and gov­er­nance that need to be re­solved be­fore th­ese tech­nolo­gies can achieve their full po­ten­tial. Ul­ti­mately, we’ll just have to see what hap­pens,” adds Meik­le­john, ac­knowl­edg­ing that such ar­gu­ments were made in 2014 amid cries of “bit­coin is dead” when the cur­rency plum­meted, three years be­fore it reached al­most $20,000 a coin.

Some sug­gest the tech­nol­ogy could be best suited for or­gan­i­sa­tions that wish to be as ac­count­able as pos­si­ble or open up what was pre­vi­ously locked away in data­bases.

A va­ri­ety of small char­i­ties such as Our­mala, an or­gan­i­sa­tion pro­vid­ing yoga classes for refugees, have adopted a blockchain-based plat­form through Gift­coin, which tracks each do­na­tion’s jour­ney and alerts donors to how their money was spent.

“As a small char­ity, we want the pub­lic to know we are us­ing their gen­er­ous do­na­tions not only re­spon­si­bly but on the stated cause,” says Emily Brett, Our­mala’s founder, who be­lieves there is great po­ten­tial to bring a new level of trans­parency and ef­fec­tive­ness to the sec­tor.

“In­creas­ing pub­lic trust in char­i­ties should in­crease en­gage­ment and do­na­tions, there­fore in­creas­ing po­ten­tial for pos­i­tive change which, af­ter all, is the rea­son char­i­ties ex­ist in the first place.”

Cer­ti­fi­ca­tion and ver­i­fi­ca­tion is an­other field where blockchains could sim­plify and speed up bu­reau­cratic pro­cesses.

“Blockchain-based cre­den­tials will al­low em­ploy­ers to au­to­mat­i­cally de­tect CV fraud by their ap­pli­cants right at the be­gin­ning of the can­di­dates’ screen­ing phase,” said Galindo. Cur­rently, ver­i­fy­ing aca­demic cre­den­tials can take as long as a week.

“This will save em­ploy­ers time, money and re­sources on can­di­dates that have lied on their CV,” he added.

The Univer­sity of Ni­cosia in Cyprus awards all diplo­mas with dig­i­tal cre­den­tials that al­low for se­cure and in­stan­ta­neous ver­i­fi­ca­tion, of­fer­ing the open source soft­ware free to other ed­u­ca­tional in­sti­tu­tions.

“The cur­rent sys­tem would have worked the same way in 1965: if an em­ployer wants to ver­ify some­one’s aca­demic cre­den­tials, they’ll call the univer­sity regis­trar and ask if a par­tic­u­lar per­son grad­u­ated in a cer­tain year,” said An­to­nis Polemi­tis, CEO at the Cyprian univer­sity. “Here, the em­ployer could take the PDF, go to our web­site, which will hash it us­ing the same al­go­rithm and our sys­tem will con­firm whether it’s gen­uine or not.”

The Bri­tish Univer­sity of Dubai re­cently be­came the first other univer­sity to adopt Ni­cosia’s sys­tem. But Polemetis con­cedes that it will be al­most point­less if only a hand­ful do it.

“We’re do­ing this as a proof of con­cept and to push the bound­aries tech­no­log­i­cally,” he said.

Stream­lined doc­u­ment ver­i­fi­ca­tion can also be used to slash bu­reau­cracy in sup­ply chains. A re­cent pi­lot study showed that us­ing blockchain tech­nol­ogy cut the time devoted to pa­per­work in the sale and de­liv­ery of 25 tons of tuna from Mex­ico to Spain from a week to three hours.

“The time it takes to man­age the doc­u­men­ta­tion was re­duced to just a few hours,” says Patxi Fernán­dez de Trocóniz, head of global trade at BBVA. “All par­ties – the banks, the im­porter and the ex­porter – were con­stantly aware of the sta­tus of the doc­u­ments.”

But this type of blockchain tech­nol­ogy has yet to be im­ple­mented any­where and would re­quire mass adop­tion to be­come ef­fec­tive. While blockchain tech­nol­ogy might out­live the hype, the jury is still out whether it can re­ally change the sta­tus quo.

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