The most revolutionary aspect of bitcoin, might be the technology behind the controversial cryptocurrency; blockchains. Blockchain technology has the potential to disrupt and transform a wide variety of industries and processes.
A blockchain is a distributed encrypted ledger that is shared through a computer network. Theoretically this creates a permanent; easily-accessed record of every step in the process, that is completely tamperproof. The idea is to create trust in the process and the data transmitted through it.
A person that receives a bitcoin payment can instantly verify that the payer has the money using the blockchain. The same technology enables a payer to verify that the payee has received the money. Bitcoin was designed to provide instant digital payment by providing instant verification, that capability is what makes it so revolutionary and disruptive.
Beyond Bitcoin: How Blockchain could Change the World
Blockchain technology has uses that extend far beyond financial services. Companies in Finland, Sweden, Estonia and Latvia want to use it track cargo containers, Bloomberg reported. Each container would be equipped with a tracking device keyed to a blockchain. The idea is to give shippers an accurate real time record of a container’s movements and locations.
Experts think blockchain could eliminate many redundant processes and inventions such as the requirement for businesses in the same industry to keep separate databases or sets of books. Instead there would be large blockchain which would require all the transactions, eliminating a large amount of record keeping chores.
By creating a permanent and secure record that is easy to access blockchain could become what Harvard Business Review writers Don and Alex Tapscott call the “first native digital medium for value.” The Tapscotts believe blockchain’s impact could be as great as that of internet.
They think blockchains could be used to record and store a wide variety of valuable information including deeds, titles to property, contracts, legal documents, music, art, scientific discoveries and intellectual property. The owner of a copyrighted piece of information; such as an article, could use a blockchain to monitor all the uses of the data and ensure payment for it.
Another benefit from blockchains could be to dramatically reduce transaction costs including search. They cite the example of a musician who would use a blockchain contract to ensure that fans paid for her music. That could eliminate royalty and licensing costs; which often make the creation of art or entertainment unprofitable for writers and artists.
Some venture capitalists seem to agree with the Tapscott’s assessment. The amount of venture capital provided to firms developing pure blockchain solutions exceed that given to companies creating bitcoin applications for the first time in the first quarter of 2016, Bloomberg reported. Bloomberg reported that bitcoin and blockchain solution companies had received $440 million (€392.1 million) in venture capital as of March 31, 2016.
Disruptive Blockchain Solutions that could be Coming Your Way
That investment could be as disruptive and as transformative, as all the money invested in internet in the 1990s. A wide variety of potentially disruptive solutions that utilize blockchain technology are under development. News reports indicate that some of these solutions could become reality in the near future.
Some of the most disruptive blockchain solutions in the development pipeline include:
The Thunder Network – an open sourced payment solution created by Blockchain; the company behind the world’s most popular bitcoin wallet -MyWallet. If it works as advertised; Thunder would be capable of processing up to 100,000 financial transactions a second – if implemented on a large scale. That means somebody could use it quickly create a payment processing network that could rival those of Visa or MasterCard in size and scope. Intriguingly; Thunder’s theoretical capacity exceeds that of Visa’s network, which can process up to 65,000 transactions a second according to some observers. Thunder could be truly disruptive because it is an open sourced platform that any developer can use to create solutions.
R3 – a consortium of financial giants that includes Barclays, JPMorgan Chase (NYSE: JPM) and Wells Fargo. R3 is developing a blockchain based trading platform and financial network that could greatly speed up the wire transfer of money and assets, Bloomberg reported. This could be truly disruptive because Chase; America’s largest bank, is planning to roll out Chase Pay – a digital wallet similar to Apple Pay – later this year. The combination of Chase Pay and Blockchain could greatly reduce transaction costs.
IBM (NYSE: IBM) has developed securely operating blockchain networks that can function inside cloud infrastructure, Cointelegraph reported. IBM’s blockchains are compliant with the highest security standards including; the US government’s Federal Information Processing Standards, and the Evaluation Assurance Levels. That means they can be legally used to transmit financial information in the United States.
The Hyperledger Project – a collaborative effort to create a standard blockchain technology that is being spearheaded by the Linux Foundation. The idea is to create a sort of Linux for blockchain; an open sourced blockchain ledger that is available to all. A number of corporate giants including IBM, Intel, Hitachi, JPMorgan Chase, CME Group, Accenture, DTCC, Fujitsu and the Deutsche Borse Group are involved in Hyperledger. Hyperleader’s goal is to apply blockchain to a wide variety of fields including supply chain, banking, finance, technology and the internet of things. Legendary open-sourced programmer Brian Behlendorf has signed as director to make Hyperledger a reality.
Gem Health – a blockchain network for medical records and information created by Gem. The idea is to create a secure repository for medical records and to power research by creating a blockchain for hospitals and doctors, Bitcoin Magazine reported. A major motivation for this development is the vulnerability of medical information to cyber predators such as ransomware extortionists. On February 5, hackers used ransomware to seize control of the data in the computer networks at Hollywood Presbyterian Medical Center; a hospital in Los Angeles. The hospital had to pay crooks $17,000; ironically in Bitcoins to get access to its own data, Off the Grid News reported.
It looks as if Blockchain is about to disrupt many areas of business including supply chain, finance, banking, payment processing, ecommerce, accounting and bookkeeping. That means all entrepreneurs and investors need to be aware of blockchain because it could soon become as big a part of our lives and economy as the Internet.
For a good introduction to blockchain, bitcoin and digital currencies read The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order by Wall Street Journal writers Paul Vigna and Michael J. Casey. The two do a good job of describing bitcoin and demonstrating blockhain’s potential to disrupt almost everything.