Why Nobody Will Care in Ten Years
If all goes according to plan — and there’s no reason to expect it won’t — Blockchain will be embedded within nearly every organisation on the planet in the next decade.
Interest in the Blockchain has continued to accelerate dramatically into late 2017. Major technology trade shows, including the Consumer Electronics Show in Las Vegas and the Smart City Expo and World Congress in Barcelona, featured panels on Blockchain for the first time in 2017.
Blockchain venture capital investment reached USD 107 million by Q1 2017. The aggregate cryptocurrency market cap reached an all-time high of USD 25 billion in Q1 2017.[43]
In 2017, industry heavyweights completed a significant pivot towards Blockchain. PwC (Vulcan Blockchain), Microsoft (Project Bletchley), JP Morgan (Juno and Quarom), IBM (Hyperledger and IBM Blockchain), Accenture, and Deloitte entered into the Blockchain market with meaningful stand-alone projects. [44]
Multiple reports point to adoption rates of 66-75% among banks and other financial institutions by 2020. In spite of a seeming peak of interest in Blockchain in 2017, adoption will only gain momentum in the coming years.
A report published by Grand View Research, a San Francisco-based market research and forecasting company, has predicted that the global Blockchain market will reach USD 7.74 billion by 2024. Financial institutions will lead the charge, but the public sector will dominate the market in the coming decade, the report predicts. Public institutions and governments will increasingly turn to Blockchain to facilitate open and efficient transactions for the range of services that undergird civic life — from municipal fees to vehicle inspections to voting.
With interest in Blockchain at an all-time high, and the prospect a billion-dollar market on the horizon, the technology has a long road ahead before the public can reap the benefits of widespread adoption envisioned by Blockchain evangelists.
The DAO, Parity and the Risks of Being Human
A favourite line of Blockchain enthusiasts is that the platform is ‘tamper-proof’. Early adopters of Blockchain have praised the platform as the most secure solution for managing vast amounts of data. Others have pointed to the use of public and private key infrastructure as a meaningful solution to secure individual’s data privacy.
But tamper-proof does not mean threat-proof, and while Blockchain is capable of doing all these things, it is not a fool-proof system. As the technology gains more attention, the rate of hacking attempts will also increase.
Two landmark attacks again the Ethereum network serve as a apt reminder that the Blockchain, in spite of its massive decentralised databases and indelible ledger, is ultimately a human endeavour and not infallible.
The Decentralised Autonomous Organisation (DAO) on Ethereum utilised Smart Contracts on the Blockchain to facilitate venture funding for pre-approved companies. These companies could submit proposals for funding to the DAO, and investors would vote on whether or not to approve the request. Once 20% of investors approved the request, funds would be transferred automatically to the company’s wallet. In case an investor wanted, for whatever reason, to leave the organisation, the programme’s developers built in a ‘splitting function’ to allow investors to withdraw from the DAO and regain the capital they had leveraged when signing up: the DAO raised an equivalent to USD 150 million in its first month.[47]
Despite initial success, The DAO was hacked less than two months after it was formed. Hackers exploited a bug in the ‘splitting function’ to drain over USD 70 million in funds from the DAO in a matter of hours. The Ethereum community was able to stop the attack by re-writing the rules of the platform to permit a transaction to be reversed. Part of ‘indelible’ is ‘irreversible’.
The action saved millions of dollars for DAO investors, but led to a contentious ‘hard fork’ in the Ethereum Blockchain. Today there are actually two Ethereum cryptocurrencies: Ethereum (users who accept the fork) and Ethereum Classic (users who did not agree with the fork). Hard forks are destabilising for the network.[47]
In a separate attack, hackers were able to withdraw USD 30 million from Ethereum users by exploiting an error in the code for a digital wallet in the Parity Smart Contract, which allowed hackers to reprogramme wallets in their name, then simply withdraw all of the funds within that wallet. The attack was stopped, but the money could not be returned.[47]
Neither attack was caused by a flaw in Ethereum or in the Blockchain. Mistakes were made in the coding for a particular programme and maliciously exploited. Security is hard. Attackers only have to be successful once, but defenders have be be successful every time against every possible attack. And on a distributed network like Blockchain, the risk is even higher: an attack on one ledger is an attack on every ledger.[24]
So, what can we do?
Being indelible means once a piece of Blockchain code is out there, it is in the world to stay, along with any mistakes, bugs, or vulnerabilities built into it. Just as Blockchain Smart Contracts have introduced cutting-edge cryptography, Blockchain programmers will need to introduce cutting-edge programming languages as resistant as humanly possible to error and attack.[24]
Blockchain programmers are among the smartest and most dedicated in the world, but there is still a lot to do if this technology will truly transform how we transact on the internet in the future.
Blockchain for Every Organisation
If all goes according to plan — and there’s no reason to expect it won’t — Blockchain will be embedded within nearly every organisation on the planet in the next decade.[47]
Business, by definition, is the exchange of goods or services in fulfilment of a contract. Blockchain can regulate every step of that equation. Every stage of a business life-cycle in any sector can be enhanced by Smart Contracts on Blockchain.
Smart Contracts in the music industry can be deployed by artists to ensure their IP is protected, and to make sure they receive payment for their work whenever an album or song is downloaded. The British recording artist Imogen Heap has emerged as a Blockchain pioneer and evangelist, working to introduce the benefits of an indelible ledger and self-executing smart contracts to the music industry.[48]
Through smart contracts, musicians can automatically receive payments for a song and, as Imogen Heap has done, automatically share royalties with everyone who contributed to the making of the song.
Blockchain is also being explored as a legal and mutually remunerative reincarnation of Napster. Through its distributed network and ledger technology, Blockchain can support an open, peer-to-peer music library that simultaneously allows fans access to all of their favourite music, while ensuring artists get paid for their work.
In the art world, Blockchain can be deployed to open a digital market for investors and artists, simultaneously assessing and validating the worth of an artwork, and recording the exchange of possession between artist and buyer. As forgery techniques become even more advanced, Blockchain networks can also be deployed to verify an artwork’s origins, helping would-be investors differentiate between an original Monet and an Artificial Intelligence copy.
Experts are also exploring use cases for Blockchain in the more routine field of human resources, where the Blockchain ledger could present a welcome alternative to the often time-consuming process of verifying references for new hires. With an employee’s work record and referrals stored on a Blockchain ledger, hiring managers can quickly asses a candidate’s fit for a role.[47]
Self-executing contracts on the Blockchain can also dramatically reduce payment turn-around times for client work. Companies in service, design, and consulting fields who have entered into a Smart Contract with a client can receive payment for services within moments of the client signing a delivery note, reducing the payment processing period from weeks to seconds. And because the contract terms and transaction history are permanently stored on the Blockchain, the audit trail is tamper-proof.
Businesses of all sizes should investigate the potential role of Blockchain in their organisation, and be ready to embrace the technology as it matures. Mass adoption will come sooner than you think.
A Closing Dose of Reality
The internet existed for nearly a decade and a half before the World Wide Web was invented in 1989.
Like Blockchain, the early Web remained staunchly in the domain of academics, technology firms, computer geeks, and open-minded governments. Then, in 1992, the first multimedia graphic browser, Mosaic, opened the internet to the masses.[49]
Within a year, the World Wide Web grew from 24 websites to over 1 million. Netscape launched in 1993. AOL rolled out its iconic CD-rom campaign one year later. By 1995, 16 million people were using the Internet. By 2000, that number had soared to 361 million. Today, 3.8 billion people are online.[50]
The World Wide Web has become so ubiquitous that most people confuse the platform with the internet itself.
Mosaic transformed the World Wide Web by making it visually appealing and easy to use, and in so doing rewrote how we live and interact with the world. Will Blockchain ever achieve the same degree of influence on our daily lives?
Today, the Blockchain interface is still largely code-based. While governments, start-ups, and banks have gotten involved, it is still largely in the domain of computer science experts, much like the early 1990s, before the World Wide Web took off.
Unless a new, user-friendly experience for Blockchain emerges, it is unlikely that the technology will ever reach such global prominence as the Web. Although the team behind Ethereum is trying, the platform’s interface is still a terminal-based interaction. While Smart Contracts might eventually achieve a user interface more akin to a webpage or mobile app, the Blockchain will never attain the same level of visibility to the average user as the World Wide Web.
For all its acclaim, Blockchain is a closer kin to html, the standard markup language for creating web pages and web applications. Most people recognise it, some use it, and a few know what it is truly capable of. And that is probably fine.
Whereas the value of the Web is understood through the opportunities it has created, the value of Blockchain will be most strongly be felt through what is reduces in time, effort and resources.
If payment schedules for creative agencies are reduced from 30 days to zero, what becomes of the accountants?
If a musician can share new music directly with fans on a peer-to-peer Smart Contract, what happens to iTunes?
If Dubai does achieve USD 1.5 billion savings per year, what will they do with that money?
