Blockchain: The Next Disruption That Will Change Everything For Better or For Worse

Mark Twain reputedly said, "History doesn't repeat itself but it often rhymes."

I remember when Craigslist first appeared in the Bay Area shortly after the internet was born. This guy named Craig started an online service where people could post classified ads for free. He eventually employed about 12 full-time staff (Wikipedia says Craigslist now has 50 full-time staff today).

At that time in ancient history, when you wanted to sell your car or have a garage sale, you contacted your local home town newspaper and paid them $3 to $10 to print a few lines in their "classified ads" section. Classified ads were where you looked for jobs too. In fact, I remember how we used to measure the health of Silicon Valley's high tech economy based on the thickness of the San Jose Mercury News' weekly jobs classified section.

How quaint! Do you remember those days? Then Craig started his free online classified ad service, and nobody bothered to pay the local town newspaper to post an ad anymore. The result? Thousands of small, home town newspapers went out of business. Hundreds of thousands of low paying, part time jobs vanished.

Economists later calculated that the value to America of swapping free online ads for paid local newspaper ads was about 25-cents per person annually. We all got 25-cents richer in exchange for closing down all those local newspapers who were killing trees to print newspapers. Good riddance! Or so we thought. Until all the small town city councils realized that nobody from the local press was bothering to attend city council meetings any more to report on their boring meetings. Without the annoying, prying eyes of the local town newspaper in attendance to shine a light on town council meetings, bad things started to happen.

It's funny how politicians act when the press is recording them versus how they act when they think nobody is watching. I haven't hunted for reports on the economic repercussions of the increase in graft, corruption and incompetence at the local small town city council level lately, but there have been some highly celebrated cases and anecdotal evidence that America lost something worth more than the 25-cent benefit of free ads.

On the other hand, one could cite other examples where the middle-man was eliminated and the consumer benefited: online stock transactions, travel, and buying insurance. But whether or not improved efficiency and disintermediation is good or bad depends on which side of the table you are sitting at, and the long term ripple effects may change your answer given more time.

Here is an article (interestingengineering.com/austrian-wien-energie-to-introduce-blockchain-based-products) claiming that Blockchain is about to be used for business-to-business, peer-to-peer energy trading -- basically cutting out the middle-men currently involved in selling oil, gas, and electricity to utilities. The article focuses on Europe, but there's this little paragraph way down towards the end:

"In January, the US Department of Energy announced a partnership with blockchain startup BlockCypher expressing desire to explore peer to peer energy exchanges. Shell, BP and other entities also decided to support a blockchain trading platform last year."

I don't pretend to fully grasp the underlying mechanics of how Blockchain works, but the use cases being proposed are going to disrupt a lot of traditional business models and probably force some companies out of business. The genie is out of the bottle, for better or for worse. Blockchain is here. Prepare to be disrupted.