There is a lot of hype in the air about blockchain technology while there is still a lack of knowing and understanding this term, what it is and what it does. But things seem to change in the future. According to the World Economic Forum report, in 2025, 10% of GDP will be stored on blockchain technology. This means blockchain technology is probably something which everyone involved in business should be aware of.
Some people believe that blockchain technology is somehow the Internet of value. Yes, that’s truth, but it is essential to give closer inspection to this term. The idea of blockchain technology is simple. At its most basic, blockchain is a vast, global distributed ledger or database running on millions of devices and open to anyone, where not just information but anything of value – money, titles, deeds, music, art, scientific discoveries, intellectual property, and even votes – can be moved and stored with security and privately.
In other words, it’s the first native digital medium for value, just as the internet was the first native digital medium for information. And this has big implications for business and the corporation.
On the blockchain, trust is established through mass collaboration and clever code, not by powerful intermediaries like banks, governments and technology companies. Blockchains ensure integrity and trust between strangers. In this way, it is much difficult for everyone to cheat.
Much of the hype around blockchains has focused on their potential to fundamentally change the financial services industry – by:
- dropping the cost and complexity of financial transactions
- making the world’s unbaked a viable new market
- improving transparency and regulation.
It would be extremely important to keep in mind that many companies such as IBM and Microsoft have already announced services based on blockchain technology. However, this is not a surprise because of the fact that these are mainly aimed at financial services clients. It may represent the threat of extreme disruption to their industry – but of course they will still attempt to capitalize on it – that’s what they do, after all!
We are used to sharing information through Internet in our daily life, but in a case we need money, we use banks, which are old fashioned centralized financial establishments. Why is that? Just think of PayPal. It requires to have a bank account or credit card. How this ‘’middle man’’ can be eliminated? The answer is that Blockchain is able to:
- record transactions
- establish identity
- establish contracts.
The fact is that the largest sector of industry by market capitalization is financial services market. Blockchain is able to create huge efficiencies if it manages to replace just a fraction of that market.
Blockchain technology can take networked business models to a new level by supporting a whole host of breakthrough applications: native payment systems that run without banks, credit card companies, and other intermediaries will cut cost and time from transactions.
In order to change the dynamic between consumers and companies, the individuals must control reputation systems build on social and economic capital and definitely not by intermediaries like rating agencies and credit rating services. Trust less transactions where two or more people need not know nor trust each other to do business, will be feasible.
Writer: Lefteris Daniilidis
Graphic Designer: Perrine Kerambrun