The coming blockchain revolution! And why it will most likely be invisible.

For those late to the party, a blockchain is a distributed database, residing over network nodes across the Internet, secured from tampering and revision. Historically, a blockchain is usually coupled with a cryptocurrency, things like Bitcoin and Ethereum.

A user of the Blockchain has access to it via a private cryptographic key that is created by the user, the private key allows the user to to perform transactions on the blockchain using their private key. The user is also identified on the blockchain using a public address. Generally, the public address has two purpose, to act as a layer of anonymity for the user, since the address is represented with a string of randomly generated numbers and alphabets. It can also be used to view an account’s balance and transactions.

Certain blockchains like the one on Ethereum allow you to deploy smart contracts onto them. What is a smart contract? A smart contract is a small piece of code that can be executed based on a given event on the blockchain and have the results reliably propagated across the network.

They are used much like how real world contracts are used, to enforce behaviour on any system that is connected to the blockchain and also the units of worth/wealth that resides on the blockchain. For example enforcing the exchange of fiat currency or goods in the real world as per the terms/logic of the smart contract.

This makes the entire blockchain audit-able by anyone with a web browser. A publicly available audit-able blockchain is a nice idea, but with a lot of pitfalls for the individual.

Technology tends to have a much more outsized benefit for corporations than they do for the individual, this is no different for the blockchain.

Public and/or large organisations might not have issues with the loss of individual privacy, but the private citizen should be concerned with the idea that the allegedly anonymised addresses are available for anyone to check out. It will be very easy for a smart person to figure out which address belongs to a specific user based on the specifics of a transaction.

Once I can narrow down your blockchain address, I will also know who you donate money to and what else you buy, you might get a friend to plead guilty to buying subscription porn using your address, but the damage is already done.

It is the same reason no one wants to live in a bad neighbourhood, it is not just the crime rate and lack of facilities, but being associated with ne’er do wells.

All your dirty laundry once hidden in private credit card and bank account statements are laid to bare for all and sundry to survey.

I really don’t see blockchains taking over a lot of things in fact, because not many people will want to give up their privacy, even though the blockchain is ostensibly anonymised.

However, private blockchains are an entirely different matter.

I think there will be a lot of private blockchains intra corporations to reduce their lawyer/escrow/middleman costs.

I can foresee many corporations forming joint ventures to employ custodians to manage and create these smart contracts. In fact I think the PwCs, Deloittes and Skaddens of the world will in fact evolve to handle the custodianship of the blockchain smart contracts.

Even if the private individual were to get over the loss of privacy, many people would rather rely upon a trusted third party to take care of their private key, because the private key allows a user to perform transactions using a specific wallet/account. Think of the number of people who frequently lose their passwords and credit card PIN numbers. Compared to passwords and PIN numbers, private keys are far harder to keep and store securely.

I can easily foresee banks evolving into the role of providing custodianship services for a consumer’s private cryptographic key along with some new businesses that will be formed to provide services along similar lines, as well as value add by adding a layer of anonymity perhaps, ie you transact with the bank and the bank uses it’s public address to make your transactions.

Examine and parse what you read, if you are at all interested in the exciting world of blockchain, a healthy level of skepticism is required to filter out the noise of multimillion dollar ICOs and acquisitions. A blockchain is a distributed database, it is a tool, it is technology. Like any other technology, there are trade-offs and alternatives. Don’t get caught blind-sided when the bubble bursts.