Blockchain is well-known as a method of exchanging assets, but in future it could also be used for - among other things - welfare distribution, secure voting, land-title transfers, even vaccine distribution. Jamie Smith, Chief Communications and Marketing Officer of The BitFury Group, and co-chair of the Global Future Council on Blockchain, explains how blockchain could bring about a revolution in banking, supply chain management and entrepreneurship.
What is blockchain and how is it affecting our lives already?
Blockchain is, essentially, the most secure way we can make exchanges today, allowing you and I to send an asset without using a trusted emissary, creating a global common exchange digital marketplace.
If we imagine exchanging assets as a train: the blockchain is like a train track, the bitcoin is a train car. You can put in the train car whatever you want. I can send you a dollar, or a health record, a piece of music, a movie. The possibilities are limitless.
Blockchain technology has the potential to make the world a more efficient, frictionless place. The amount of people around the world living in either broken systems or entirely corrupt systems is staggering. If done right, blockchain could positively reform entire systems.
How would blockchain do that?
The Bitcoin blockchain – otherwise known as the public blockchain – works on a very simple principle. Every 10 minutes, any transaction that has happened around the world is put into a block. All of the computers around the world then fight to verify those transactions within that block, ensuring that they happened, they were secure, that all the math lines up. So all these computers are competing to solve this giant math problem. Whoever solves it actually wins 12.5 Bitcoins. So, for the first time ever, we have a system where there is a financial incentive to ensure security. Simply put – security is the lifeblood of the Bitcoin blockchain.
The financial incentive embedded in the Bitcoin blockchain feeds people's desire to keep it secure. Security isn't a part of the system, it is the system.
When the internet was invented, security wasn't the first thing they thought of. So all databases today are centralized. Which means if you break into one of them, you have access to all of them. But with blockchain, we have a decentralised system. So if you want to break into one house you would need to break into all of the houses in the entire Bitcoin blockchain at exactly the same time.
What do you think your Global Future Council's contribution to the conversation on blockchain will be?
The council has a critical role to play. So many people don't know about blockchain yet. We have an opportunity to shape the dialogue and narrative around what this is and why it is so life-altering and why it can be so positively and effectively transformational.
I would like to see the council take the lead in creating a road-map for how people approach and adopt blockchain in a responsible manner so that it benefits everyone. There is so much opportunity to enhance global expansion, make businesses more profitable and also ensure that every individual around the world can profit as well. There is a huge trickle up – and down - impact, if we get it right.
How will individuals profit as well?
There are three key factors that will change the world:
In the next few years, I believe: 1) we will have global wifi 2) nearly everyone will probably also have access to some kind of phone, and 3) blockchain.
If people then have a secure system that allows them to transact freely on a secure public platform, why wouldn’t they use that?
In addition to all of that, it's extremely inexpensive – not free but close to it. The cost of a transaction, compared to more traditional fees, is infinitesimal. So you’re getting a streamlining of cost and efficiency for everyone, large and small.
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What are the key trends in blockchain that we should be aware of?
One of the next challenges is going to be in volume. If everyone adopted this technology today, the current system could not handle the traffic – but companies are out innovating at a record pace and the solution is something called the lightning network, which will allow for that efficiency. Moving the technology forward so it can handle more transactions is critical.
There are also interesting trends in where Bitcoin is catching on fastest. The first wave of enthusiasm is coming from places where financial technology dominates – Europe, the Middle East and Asia mostly – and the greatest technological advancements in the space are coming from post-soviet Eastern European countries. America, Africa, Latin America are quickly coming to the table.
Blockchain is also going beyond finance. When you think of Bitcoin right now, you think of money, but the possibilities for asset transfer are enormous. I am excited to see how many applications we can test and pilot using Blockchain technology across every industry around the globe. I think it's safe to say we can all agree we can collectively benefit from better systems.
So outside of finance, where else will we see it?
There are so many possible applications of blockchain. You can literally transact anything. It could be used for welfare distribution, or for secure voting, land title transfer, music, movies, you name it. One good example that we are looking into is in vaccine distribution.
There is a certain percentage of vaccines that get lost on their way to distribution, for numerous reasons. Where blockchain can be helpful is simple supply chain management. We could use blockchain to create an immutable record which is translated along the Bitcoin blockchain. Even if your merchandise got lost, you would know where you lost it. And while we are in the process of fixing a huge problem that impacts millions of people – especially children – around the world, we are also solving a problem that any company throughout the world grapples with on a daily basis.
Where do you think we’ll be by 2030 with blockchain?
It’s such early days for blockchain – most early investors in the original internet tell me where are in the equivalent of 1991-92 – at the most. But they all say this technology is moving much more quickly toward global adoption. I believe that in a few short years, we will be living in a world where it is being used but no one thinks about it – they just like the ease of use, the low cost and the security – the great trifecta.
The Annual Meeting of the Global Future Councils is taking place on 13-14 November in Dubai.