The lowdown on the next new thing that will upend the world economy
WASHINGTON — Viagra began life as a treatment for hypertension. Bubble wrap protected greenhouses before it found a home in packaging. Frisbees came from pie tins. The internet was first invented for military purposes.
Some products and services take time to find their significant use.
So it goes for the core technology underpinning bitcoin, the digital currency that operates on a decentralized swarm of computers. Turns out that the blockchain technology has a bunch of other applications. Masses of them. And a real revolution may yet be unfolding.
Simple and elegant, the blockchain system is finding uses in transferring money, paying artists and musicians, proving identity, and protecting health and academic records. And that’s just for starters.
Some experts see upended apple carts and leapfrog growth in the offing, not unlike what happened in the early days of the internet, in areas of the global economy where trust barriers between customers can be partially overcome through the unique and powerful decentralized information-sharing system known as blockchain.
The impact could be “mindblowingly big because it affects every aspect of the global economy,” said Michael J. Casey, a senior adviser to MIT Media Lab’s Digital Currency Initiative and co-author of an upcoming book on the implication of blockchain ideas, “The Truth Machine.”
“We have the potential — I’m still going to use a qualifier like that — to get to trillions and trillions of dollars in savings and disruption and refocused activity,” Casey said.
Blockchain technology emerged with the advent of bitcoin in 2009, when a programmer using the pseudonym Satoshi Nakamoto came up with a novel solution using a network of computers to track transactions in a way that is secure, trustworthy, fast and transparent.
The technology is used in either public networks, open to the world, or private ones that could connect any type of group such as a manufacturer and its suppliers, a musician and her fans or a real estate market and buyers.
What blockchain does is connect participants to a decentralized record-keeping tool, or ledger, that records all transactions, usually financial, and adds a timestamp and other information. Each block links to another in a continuously growing chain of records. Every time a transaction occurs, it propagates across the global network so all parties host records, and each computer continuously monitors for anomalies. Transactions are encrypted, verified by all parties, and immutable.
Since the entire chain is continually self-updating, thieves and hackers would have to breach all computers that contain the ledger at one swoop to steal money or alter data.
Advocates say blockchain’s radical charm is that it cuts out the middleman and reduces costs. There is no need for a trusted third party to broker deals. All transactions can be audited.
In the bitcoin world, it means buyer and seller transact directly, with no intermediary, like a bank or agency, coming in between.
But startup companies and technologists are finding vast new uses for it.
Some musicians and artists see services based on blockchain technology as a godsend. New companies like PeerTracks, Mycelia, Ujo Music and Stem all use blockchain technology, working to simplify licensing and liberate musicians from intermediaries — like talent agents, record labels and streaming services — all eager to take a cut of revenue.
In other areas, blockchain is seen as a way to streamline logistical processes, cut out third parties and give a parade of entities transparent access to information.
Global ports are studying distributed ledger technology as a way to kickstart a revolution in the way goods move globally. The technology could consolidate letters of credit, bills of lading and other data into a digital blockchain, giving real time access to customs and port authorities, terminal operators and security departments.
Resiliency of the blockchain system, and the integrity of data, are part of why the technique is making inroads in finance, banking and money transfers.
“What blockchain was originally designed for was to solve what’s called the ‘double spend’ problem. After I give you 10 bucks, you should have the 10 bucks and I shouldn’t be able to spend it again,” said Andre Boysen, chief identity officer at SecureKey, a Toronto firm that provides identity and authentication services to the financial industry. Each blockchain transaction is indelibly and uniquely tagged, showing ownership of the underlying bitcoin or item.
Experts are also testing usage of blockchains in areas such as voting and in ensuring identity for individuals and giving them sovereign control over their own identity.
“Think about your own life. When do you show up and have to prove your identity? The list is so long,” Boysen said, noting places such as the airport, banks, bars, in seeking health or academic records or to the state trooper who stops a motorist for an infraction.