The buzz and energy in the air at London Blockchain Week was reminiscent of the fizz surrounding the dot com revolution of the late 90s. We know that particular bubble burst, but nonetheless it left us with a nascent and enduring connected infrastructure upon which the current digital economy was built and is thriving.
Blockchain is the next giant techno leap, believe all the delegates, speakers and players at last week’s conference, and many millions beside. Unpacking the enduring value and establishing the relevance of blockchain for today’s incumbent businesses, governments and organisations – as well as for the speculators and entrepreneurs – is the next big job for the C-Suite.
Wikipedia’s definition is as good as any: “A continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a hash pointer as a link to a previous block, a timestamp and transaction data. It is ‘an open, distributed ledger’ that can record transactions between two parties efficiently and in a verifiable and permanent.”
For the uninitiated, Fun Fair Technologies founder Jez San does another good job of laying out the case for a multi-layered proposition of the distributed ledger. “Once you have the building block, the first application you can do is money, the next application is transparency that prevents cheating and corruption but enables trust,” he explains. As such it is a chain of public record that will interest many sectors and governments.
The next step to extract value from blockchain is to create tokens that are represented on the ledger and can be used for updates and transfers: it works well for the trading of stocks and shares for example. According to San, a major piece of the value here is not only the immutability, but the speed of transfer. “At present the lag in settlement means there is a huge risk and counter-play, as fraud can take place in the gap,” says San.
But because with blockchain the transaction is instantaneous, it takes away the risk of fraud. Quite simply, says San: “it’s ‘world-changing’”. This vision is what attracted an array of financiers promoting cryptocurrency exchanges, and front-running entrepreneurs, launching Initial Coin Offerings (ICOs) for their blockchain ventures. One such startup, Codex, intends to trade collectibles such as jewellery and watches.
Codex CEO Mark Lurie explained blockchain’s appeal: “Transactions remain private, yet are verified – collectors don’t want governments and other art houses knowing what they own. It creates a security risk, and too much exposure devalues the items.” Other services will be provided along the blockchain: insurance cover, loans, and even an app called Biddable, making anonymous bidding possible for the first time.
Its automation of anonymity and immutable authentication makes blockchain a facilitator of ventures that otherwise wouldn’t see the light of day. It’s particularly useful for social enterprises or other organisations that rely on large volume but small-scale crowdfunding where keeping track of legal documents would be an otherwise unfeasible overhead.
EHAB represents itself as a blockchain solution to a global housing crisis. It allows a group of strangers, including developers, landowners, planners, builders and homebuyers, to plan, build and purchase properties. The smart contract system reduces costs while creating trust, making it possible to raise funds globally and build homes. Because it is a tokenised asset, homebuyers can buy outright or over time, like a mortgage.
These are snapshots from the multitude of use cases taking seed in the financial, social enterprise, egaming and retail sectors, right now. While their instigators are betting big on the promise of blockchain, enterprise chiefs need to evaluate what the distributed ledger can offer their organisations and customers.