On Jan. 2, 2017, Accenture kicked off its 12-week Fintech Innovation Lab London program, an entrepreneurial boot camp. The program is a mentorship opportunity, during which early-stage companies and startups can develop and connect with financial services institutions, “accelerating the adoption of Fintech and Insurtech and drive innovation within the financial services sector.” Likewise, Bank of Japan’s third FinTech Forum at the end of February will also focus exclusively on the disruption and future of blockchain.
So, blockchain is a significant thing.
For those without an understanding of blockchain, it’s essentially a public ledger of any and all digital transactions that have ever occurred. Blockchain is the technology behind Bitcoin, the digital currency that underwent scandals and inflation since its inception in 2008 and 2009.
According to strategy+business, a decision-making business management publication, “At its heart, blockchain is a self-sustaining, peer-to-peer database technology for managing and recording transactions with no central bank or clearinghouse involvement” (emphasis my own).
This explains why the main application for blockchain technology up until now was Bitcoin. While the idea of a decentralized platform for storing, recording and exchanging currency may seem unnerving, the point of a blockchain is to create a shared, continually reconciled database. In other words, transparency is unavoidable.
As blockchain education hub Block Geeks puts it, “the records it keeps are truly public and easily verifiable… By storing data across its network, the blockchain eliminates the risks that come with data being held centrally. Its network lacks centralized points of vulnerability that computer hackers can exploit.” Business magazine Fortune sums it up nicely: “The math keeps everyone honest.”
What Really is Blockchain?
However, blockchain is not just a piece of tech that supports and maintains Bitcoins. The name “blockchain” comes from the records the technology’s database keeps, called blocks. Each encrypted block has a timestamp and is lined up chronologically. Ars Technica explains even further: “Better still, the block validation system ensures that nobody can tamper with the records. Rather, old transactions are preserved forever and new transactions are added to the ledger irreversibly. Anyone on the network can check the ledger and see the same transaction history as everyone else.”
Indeed, the most important and fascinating aspect of blockchain is its versioning capabilities. Like digital signatures, each block is attributed a specific, encrypted “key.” This randomly generated string of numbers is necessary to validate, authorize and alter any part of the block.
Additionally, in order for a block to become part of the chain, any and all digital transactions conducted within that block must be verified, cleared and stored “every 10 minutes,” explains Time Inc.’s Fortune magazine. “If you wanted to steal a Bitcoin, you’d have to rewrite the coin’s entire history on the blockchain in broad daylight. That’s practically impossible.” The sheer amount of energy required to try to create a fake block history or manipulate the order of a chain is preposterous. The entire existence of blockchain technology begets security.
What Will Blockchain Mean for Other Tech Areas?
Currently, the world of finance sees the rippling effects of Bitcoin and blockchain. The industries of e-commerce, accounting, contracting, supply chains, predictive analytics, intellectual property and stocks are all poised to experiment with blockchain technology. According to Jeremy Gardner, chairman of the board at the Blockchain Education Network and an investor at Blockchain Capital, the blockchain “is going to make the financial world, and beyond (remittance, provenance, ownership), achieve a level of unbelievable transparency and auditability that has never occurred in human history.”
That declaration may seem incredibly optimistic, but the potential is there. Gizmodo, a technology, science and sci-fi publication, explains that blockchain technology “will work for any process of verification, really, and can even be used as a communication tool. This is why companies, investors and crypto diehards are starting to see potential uses for blockchains all over the place.”
Latching on to that sentiment, British daily newspaper The Guardian says, “Bitcoin was the first technology to use the blockchain, but the currency is now starting to look a bit like the steam pumping engines invented in the 17th century. Yes, it’s ingenious, but the real revolution comes when the underlying technology is used for something altogether new…. A permissionless, distributed, trust-free network has the power to revolutionise not just financial technology, stock markets and banking, but also the music industry, digital access in some of the world’s poorest nations, and could even ensure your Italian extra-virgin olive oil really is from Italy.” Cutting out the middlemen and unnecessary authoritative and institutional figures will make the whole system of transactions and communications more efficient and disruptive.
There are concerns regarding blockchains. The concept of using an unhackable system to conduct digital interactions sounds fantastical and irresistible. Additionally, massive scale applications of blockchains can also beget science-fiction levels of change in society.
However, the amount of energy required to verify, store and structure data in a blockchain is colossal. And while the allure of Bitcoins and blockchains exists in the non-physical nature of the currency, the lack of tangibility and third-party authorities translates to consumers putting their entire trust in the hands of others and an algorithm that has no fail-safe.
What does this mean? Like all things regarding innovation in technology, especially technology that revolves around crowdsourced wisdom, change takes patience, time and a discriminatory eye. Blockchain technology gives internet users the ability to create and authenticate digital information. That, in and of itself, is the blockchain’s greatest disruption.