How Blockchain can change our interaction with strangers
Unless you are invested in the matter, you have probably only heard about Blockchain thanks to another very trendy word, Bitcoin, which is related to the world of crypto-currencies.
But, actually, it’s something that we should start to understand well if we want to be ready for future challenges.
What is Blockchain? In 5 words: interaction with strangers made easy.
“When I was child I had a few videogames and it was difficult to share them. With blockchain now I could have access to all the videogames in the world and being sure that no one will fraud me.”
In fact, the most valuable property of blockchains consist of the ability to reach a shared truth that everyone agrees on without intermediaries or a centralized authority. The key word is trust.
Bitcoin was the first application of this new mechanism — one based on algorithms — the first effective and concrete use of blockchain technology. It’s the only blockchain project that has crossed over into mainstream recognition so far. Currently, it’s in the middle of a speculative bubble, with very funny situations such as the Bitcoin conference that stopped accepting Bitcoin for its tickets.
It’s all about a new technology course.
Remember what happened during the ‘90s, when everyone went mad thanks to the onset of the Internet? Well, most of that was a giant bubble. However, the entrepreneurs and investors who believed in that revolution were right about one thing: the Internet would have changed our lives forever, bringing enormous value and launching new companies such as Google, Amazon, and Netflix.
Blockchain technology has a package of concrete features that can impact several sectors as well as the Internet did.
A new world built of digital crypto assets and tokenized economies?
Despite the fact that the cryptocurrency value has dropped by nearly half since the beginning of this year, 2018 seems still a great year for the Blockchain ecosystem. Billions of investments from many large companies and investment funds are generating an incredible number of new blockchain companies and projects in a shorter period of time than ever before. We can consider blockchain technology the strongest entrepreneurial boost ever.
ICOs: a faster and easier way to raise capital
One bitcoin reached the value of about $20,000 in December 2017. This brought a different type of investors into the startup landscape, bitcoin “early-adopters”, who rapidly became millionaires. These forward thinkers were able to invest in blockchain projects through ICOs (Initial Coin Offerings) — by means of which a company would offer tokens to the market in exchange for crypto-currencies, in the same way, companies usually offer equity during the IPO, Initial Public Offering, with the only difference that the ICO gives not equity in exchange. In the first months of this year, more than $1,2 billion were invested in ICOs, more than 600% of the entire 2016 — still less than VC ($127b) and crowdfunding ($35b) but increasing constantly because it is a faster way to raise money than all other channels.
However, the main problem with ICOs is that the company is not necessarily “validated” by a regulator that can guarantee that it is not acting fraudulently. There is also a lack of transparency in the process and this brings a lot of confusion — together with an over-crowd offering among which there are also those who are trying only to make some easy money selling “empty boxes”. Anyway, once regulated properly the ICOs can be an effective tool to raise capital, and some Countries like Switzerland or Malta have already written the first rules and guidelines for the next future.
Where Blockchain makes the difference
Going back to the real utility of blockchain technology, there are plenty of sectors where the benefits can be relevant. Josh Nussbaum, Partner at Compound, made an interesting market map of the blockchain projects that provides a good overview of the state of the ecosystem today.
Among the several areas of impact, the creation of smart contracts by using blockchain is one of the most important innovations. Ethereum, the main platform for creating smart contracts, replaces bitcoin’s more restrictive language (a scripting language of a hundred or so scripts) with a language that allows developers to write their own programs.
That’s the beginning of a new way to create relations with strangers, trustless
Blockchain technology allows to track of any information with a permanent time stamp.
This will surely impact the supply chains of every industry, improving transparency and traceability. See the case of OriginTrail, another startup accelerated in H-FARM, which recently raised about $20 million, trying to improve the food supply chain with a purpose-built protocol.
However, these benefits can be applied wherever a central institution to verify the information and guarantee the validity of the stakeholders involved is required.
IBM identified top 5 blockchain benefits:
2 Enhanced security
3 Improved traceability
4 Increased efficiency and speed
5 Reduced costs
What the future looks like
Many of the current designs present in Nussbaum’s map need to be proven out at scale. Nussbaum says:
These projects aim to accomplish what we have been promised: fully decentralized autonomous organizations or a Facebook alternative where users have control of their own data, foundational, scalable infrastructure needs to grow and mature.
If the last 10 years have been the era of the smartphones, the next 10 will be the era of Artificial Intelligence, Virtual & Augmented Reality, Internet of Things: innovations that will permeate in our everyday life.