Arturo Bris: Have you ever watched footage from the early 1980s of people trying to explain the internet? They’re skeptical and confused and have no idea how to say “@”, which is comical given what we now take for granted. But that’s where we are with blockchain now. People don’t believe in it because they don’t understand it.
Blockchain is a technology with two ingredients: the first is a distributed ledger, meaning a database with identical copies held by everyone in a network. There is no intermediary, no central data depository. The second is a consensus algorithm (and this is the true innovation in the technology): the ability to digitally agree on any change in the data. It is the set of decision rules by which any new entry in the database is accepted and then shared by everyone.
The consensus algorithm will be different for every blockchain – some work on a simple majority rule, some (such as Bitcoin) have a subset of members paid to fulfil that role, and others have much more complicated arrangements. The structure of the database is also particular, because it is structure as a sequence of entries (a ledger), not a deposit.
If you don’t understand blockchain, get educated, because it’s an amazing new technology that’s going to revolutionize the world. It’s going to monetize and unlock value that today is hidden. The social impact is going to be massive. It’s going to permit new avenues for human interaction that didn’t exist before.
Carlos Cordon: I’m not sure about that, Arturo. I, for instance, understand what blockchain is, but I don’t believe that it’s going to have the impact you describe.
Blockchain requires having a lot of copies of the same data. This means that you are required to multiply the data storage by, let’s say, 100 times. The same data is stored in 100 places. That might work for something as standard and simple as money: Bitcoin works, for example, because there is just one Bitcoin, not thousands of different products.
But if you think about supply chains, for example, you’re talking about thousands of products. For each product, a lot of information is required, like weight, format, expiry date, composition, etc. This means that blockchain is extremely impractical for many of the applications that its evangelists are proposing.
Amazon isn’t using blockchain. Google isn’t. In fact, none of the top digital giants are, although Amazon has said it’s happy to provide cloud storage for it. The Nobel prize-winning economist Paul Krugman has said that Bitcoin will “set the monetary system back 300 years”.
AB: Krugman also said in 2011 that the Euro would soon disappear, and look where we are today. And, with respect to Google and Amazon, that’s exactly what disruptive technologies are: they are not usually adopted by the established players, because they disrupt their own – established – business models.
And by the way, more and more companies are using blockchain for applications beyond cryptocurrencies. These include music streaming, social networking, commodities trading, property registries – the list goes on. Blockchain is a technology that guarantees full security (it cannot be hacked) because data are already shared by the members of the network, so there is nothing to hack. We are already seeing the transformation moving extremely fast, and that’s why you need to embrace it.
CC: The way blockchain works makes it secure and trustworthy, that much is true. But if we introduce blockchain into supply chains, for example, we’re firstly trying to solve a problem that isn’t there – and, secondly, we’re possibly creating further problems for ourselves.