Should You Jump on the Blockchain Bandwagon?
The genesis of the blockchain technology is marked by the birth of Bitcoin, a cryptocurrency invented by someone under the pseudonym of Satoshi Nakamoto who published a paper about it in 2009. Since then, cryptocurrencies have become all the rage. But more important than that is the blockchain technology, a revolutionary tool that supports the Bitcoin network and is set to disrupt every industry.
While cryptocurrencies continue to be volatile, which can hinder uptake, more companies are in favour of blockchain. Based on research by investment firm UBS, the technology could generate about US$300 to US$400 million of economic value globally by 2027.
A shared and constantly updated digital database, blockchain is a decentralised system that allows each user to add and verify transactions. It is much more reliable and cost-efficient than traditional databases, and records every little transaction (they are irreversible) that has taken place. While Bitcoin uses a public blockchain, which anyone can get access to, many businesses have implemented permissioned blockchains to tailor to their private company needs.
Permissioned blockchains such as Ripple can only be accessed and edited by individuals with the necessary clearance. Unlike the former, they support private transactions and confidential contracts, while being easy to scale.
The more mainstream this technology gets, the more likely it is that middlemen such as bankers and brokers will become obsolete—as is the trend with artificial intelligence. Besides the financial world, it could be used in other industries such as healthcare, retail, government and music.
In healthcare, for instance, there is a massive gap in the need for a central system to keep and share patient records. When there’s an emergency situation, the inaccessibility of these files and information between different medical providers can prove detrimental to vulnerable parties. With blockchain, the patient’s privacy will remain intact, while their basic medical information will be readily available.
Medicalchain, a blockchain platform that is trying to solve this problem, is hoping to give patients the control they deserve over their personal records, speed up the process for doctors to obtain their records, and contribute to medical research that requires large sets of data.
Blockchain could also change the way music labels work. When bands are often caught up in financial feuds over discrepancies in individual salaries, having smart contracts (a blockchain protocol) can help spell out the revenue split. It one-ups the metadata, which comes with each track and tends to miss out certain crucial information. Furthermore, it offers a new method of interaction between fans and musicians.
For Björk, a pro-blockchain Icelandic musician, she has collaborated with Blockpool to distribute cryptocurrencies to anyone who buys her next album, Utopia. Social media interactions can earn these fans more digital cash, which can be used to purchase concert tickets and other merchandise. This system involves smart contracts, sharing part of the generated income with fans who buy or share their music.
So far, the technology and the application of it is still in its infancy. A smorgasbord of startups may be innovating with it, but there could still be hesitation when it comes to mass adoption. It is, after all, a wildly new and controversial technology. Any form of acceptance, for those who are comfortable with the status quo, will take a long while to obtain.
Besides, blockchain isn’t perfect. It may be an improvement to the current system, but it will also create new issues. Hackers may find ways around the security and compromise all sorts of private data—altering it, deleting it, etc. Irreversible transactions are also a double-edged sword. Imagine if you’ve made a mistake and sent money to a conman, or if a malicious party pulls off an illegal transaction. You’ll have no way of recovering the lost funds. It doesn’t help that the users are all anonymous.
Still, if blockchain truly is the future, you might want to get ready for that. Traditional corporations, in particular, that are in danger of being disrupted have to start adopting this technology to remain competitive. However, it might just be an overhyped topic. According to Gartner, 77% of CIOs admitted they have no plans to investigate or develop the blockchain technology.
It has also advised that in its current low state of maturity, firms should sit back, instead of diving head-first into it. Whether or not this presents an opportunity to be one step ahead of your competitors, anything new (especially in business) is an automatic risk. You have to decide how far you want to take it, or if you want to take it at all.