Blockchain Technology Part 1: You Surely Need To Know Much More About This Technology

I have always loved to be abreast of emerging technologies and as one who has had to advice organisations on the directions to go in implementing technology solutions. I certainly did not like to be the ‘last guy to know’ when it comes to latest development in the tech world.

However, sourcing for knowledge means I have to subscribe to different newsletters and technology blogs and various platforms that share information daily. For a fact, it’s a lot to cope with the volume of information that come in, but it gives me the chance to look at headlines and pick interesting topics to dig deeper. One of which constantly picked my interest has been Blockchain.

Even though the subject of Blockchain was first introduced in a 2008 publication by an unknown individual or group named Satoshi Nakamoto (click to see publication) following the financial meltdown, I started to develop interest in the technology around 2013. The more I read about Blockchain, the more interesting it picked my fancy and in some cases the more I got confused about the practicality of the things that this technology has promised.

Out of curiosity, I started to invest in Bitcoin in 2015 and for me this was a way to ‘put my money where my mouth is’. This has led me to interact with different Crypto exchanges like Coinbase, Bitstamp, etc and Crypto/Stock Trading platform like eToro and Crypto Wallets like Luno, Abra, etc. I will be writing on Bitcoin in my next publication.

Still not very sure of the real use case for this technology having come to the understanding that Blockchain is much more than cryptocurrency, I enrolled for a six weeks Blockchain Business Innovation and Applications course on the MIT Sloan platform. This was fantastic and really broke down the key components of this technology. Then I read a book titled ‘Blockchain Revolution’ that sums it all. This is unarguably one of the best books on the subject of Blockchain Technology. It was written by Don Tapscott (the management guru) and his son Alex Tapscott (the blockchain expert) in a way that would blow your mind and bring you to love this technology. Recommended for blockchain enthusiasts!

What are my key Learnings?

1.    Blockchain technology has the capacity to transform our world more than what the internet has done.

2.    Blockchain technology cannot be ignored by any government or organisation that wants to be relevant in this decade and beyond.

3.    There is still so much more to be done for this technology to be adopted by mainstream businesses

4.    Blockchain Technology goes beyond Crypto Currency.

What is Blockchain

Blockchain is a distributed ledger technology where data is distributed amongst many computers (nodes) across the world and anyone on the network could have access to same information.

The Key Principles of Blockchain

1.    Distributed Ledger

The database is distributed amongst all nodes on the network and every party can see transactions and data is accepted through some form of Consensus Mechanisms without the need for a central authority.

2.    It is Irreversible or Immutable

Data stored on blockchain is irreversible because by design every data on a block references the previous block which reference the previous and continues in the chain. Any attempt to reverse a transaction or alter data on the database requires a complete reversal of such on the previous referenced blocks and this could be very expensive in terms of computations power.

3.    It is Trustless

It eliminates the need for a central authority or an intermediary to provide trust for you to transact with a third party. Every party has access to same information and the need for trust is eliminated as everyone’s identity and every change is transparent to everyone.

4.    Costless Verification

Because transactions on the Blockchain are peer to peer in nature, the identities of parties are known on the network and transactions executed are open to all parties, there is therefore no need to verify the identity of a third party or pay intermediary to help do such verification.

Practical Applications of Blockchain Technology

The Blockchain Technology will impact every industry but below are three key examples that are already in the works:

1.    Financial Services: This sector is already deriving the benefits of Blockchain Technology and has a lot more to gain if fully adopted. There are benefits to consumers in the areas of remittances where an international transfer that could last 3 to 7 days can now happen in less than 30mins. Billions of dollars are estimated to also be saved in terms of transfer fees as the Blockchain technology will remove intermediaries from the process. This is already happening on the Ripple and R3 networks. Another way the cost of verification is lowered in Financials Services is the cost reduction in back office operations. The whole process of settlement and reconciliation will be realtime and there will be no need for the huge operations setup to reconcile international transfers and trade finance amongst third parties. Remember the Facebook Libra project? That’s the kind of disruption that could happen with such technology.

2.    Aids and Non Governmental Organizations: A major issue during and after every disaster has been how to effectively distribute Aids and support to the desired recipients. We already experiencing this with Covid-19 pandemic. NGOs under Red Cross, WHO or United Nations collate billions of USD donations to help displaced people or rebuild communities, but not much of these funds ever generate the desired results. This is because there are so many intermediaries in between these NGOs and the communities/individuals. You have other smaller NGOs, corrupt government officials, etc. taking a major cut from the funds for facilitation and leaving peanuts for the recipients. Imagine how Blockchain has solved the Last Mile problem, where the distribution of these funds could be set on a Smart Contract and donors could monitor the last mile access before further funds are released. This is why the United Nations has now initiated various Blockchain initiatives to develop solutions that will address this issue.

3.    Music Industry: The music industry is one that has been disrupted by digitization in which a high proportion of distribution now happens on channels like iTunes and Spotify. But there is still a huge opportunity for future disruption and the blockchain technology is set to level the ground for artists. It is on record that most artist do not get more than 20% to 30% of share of revenue from their music records. There is a long list of stakeholders (Performance Right Organisations, producers, studios, promoters, etc) along the value chain that must first take their share and the change is given to the artist. The Blockchain promises to eliminate the intermediaries and give the artist the right to their work and can control how the right is used through a smart contract on a distributed ledger. The artist could also issue digital tokens on the ledger and be able to raise fund while rewarding fans. This is a game changer for the industry although it has major battles to overcome an established cartel.

Conclusion

The Blockchain Technology promises so much, although there are underlining architectural challenges for it to scale. A network of private, individuals and government organisations are working together to ensure the challenges are brought to the minimum. There is no doubt that our world will be better for it with this type of technology and it just look unstoppable.

Have you identified the application of blockchain in your industry? Please share.

Watch out for a part two of this publication next week, where I will dwell more on Bitcoin, the Consensus Mechanisms like Proof of Work (POW), the role of Miners and the upcoming Bitcoin Halving.

References:

MIT Education portal

https://blockchain-revolution.com/

https://medium.com/@jackmathew/future-trends-in-blockchain-technology-26881c4c9571