Blockchain isn’t a technology of the future. It’s already arrived
Despite the buzz around blockchain – the technology that underpins cryptocurrencies – the word still evokes skepticism for many people
But is the technology overhyped, or does it represent a fresh hope for the way banking and business are conducted around the world?
The answer for Arturo Bris, Professor of Finance and Director of the World Competitiveness Center at IMD, is resoundingly clear: blockchain is here to stay.
Blockchain is “changing and revolutionizing the way we do business,” said Bris, speaking at OWP in Dubai. And far from being a technology of the future, blockchain — the distributed ledger software behind cryptocurrencies like bitcoin — is here now.
“Let me ask you this” said Bris. Why do some people pay $3 million for a Picasso? What is the value? Why do people buy gold?”
Because, Bris explained, they are considered to be an accepted item of value.
In the same way, cryptocurrency – or tangible ’tokens’ – will have an accepted value the world over.
“Cast your mind back to the 1980s”, Bris said. “This was a time when people were similarly skeptical about a piece of technology.
“Today, that piece of technology is so commonplace it is a taken-for-granted part of everyday life: the internet.”
At the time it was a technology so new and complex that it was a struggle to explain to how it works.
Right now, many people view blockchain with the same level of skepticism. But the key, according to Bris, is to not focus on the technology – a decentralized register made up of endless, connected cryptographic blocks – but on what it can actually do.
And in a world which demands credibility and trust – especially in sectors such as banking and finance – the value of cryptocurrencies like Bitcoin is clear.
Blockchain works by storing time-stamped data, which are automatically distributed to many servers – or actors – at once. This electronic ledger technology securely records transactions between parties in chronological order.
It creates a record of every transaction and any change is immediately apparent to all parties. If someone adds to the data, the widely distributed ledger shows when and where that addition happened. It is, therefore, hack-proof.
Blockchain is, said Bris, the “first workable solution to one of the most nagging problems in the digital realm” – how to transfer something of value from one person to another without the need for a middleman having to make sure the items have not been copied or spent more than once.
Take the example of Ripple, a real-time gross settlement system, currency exchange and remittance network.
The cross-border payment network which allows consumers to spend and transfer money in real-time – without paying a commission – is gaining global traction.
Banks and financial systems cannot afford to be complacent in a world where alternative payment systems offer speed and trust as its two unique selling points, said Bris.
Other complex industries, from pharmaceuticals to manufacturing, can also widely benefit from the legacy tracking software. It is a technology that is going to monetize and unlock value that is today hidden, said Bris.
Take, for example, blockchain fitness startup Lympo, which incentivizes healthy lifestyles by inviting its users to join daily walking and running challenges. Once a challenge is accomplished, the user will receive a reward in LYM tokens on the in-app wallet. Lympo, currently available in the US and Lithuania, has grown to more than 250,000 users in just six months, with more than 89,000 monthly active users.
This is a big level of disruption, said Bris.
A new way of doing business
What is the business model of blockchain? As with many things in our modern world, Bris said, it is based on data and analytics.
By offering economic incentive models, or tokens, companies can find new ways of reaching costumers and rewarding users for sharing and creating content. This threatens tech giants like Google and YouTube, whose primary revenue comes from advertising. These companies are taking more and more control of our lives because they own so much of our data.
Take a blockchain-based company like search engine Brave, a technology which features tokens which can be used to reward content creators.
Brave uses our data and preferences (without ever owning or controlling them) to display better, more personalized search results. Brave users earn tokenized “commissions” in exchange for seeing the ads — removing the adversarial relationship that currently exists on more traditional search engines or websites.
This has the potential to destabilize some of the biggest tech ‘Gods’ in existence today, Bris said.
China leads, and the world will follow
It’s significant that China has thrown its weight behind the technology, said Bris.
The country’s president, Xi Jinping, said recently: “We must take the blockchain as an important breakthrough for independent innovation of core technologies.”
Bris agrees, adding that “companies can only adapt, they can only submit to the system.”
The technology will bring both winners and losers, he added – the latter being those who fail to move now to embrace its potential.