The potential of blockchain technology has been a hot topic in IT news over the past years. For a lot of people, blockchain is probably most known for being the technology under Bitcoin. The potential of this technology reaches far beyond Bitcoin however. According to some people, blockchain has the power to the most disruptive invention since the internet itself (Hiesboeck, 2017). Even though blockchain may have numerous potential benefits in various industries, in this post I want to focus on how blockchain can re-establish trust between the government, business and the public.
To start off, what is blockchain technology actually? Blockchain is essentially a distributed database to which data can only be added, meaning historic data cannot be lost nor corrupted (Montali, 2017). From this definition, three important properties emerge. The first one is transparency. The data on a blockchain is publicly embedded within the whole network, meaning it’s transparent by all parties. Secondly, the network cannot be corrupted. Altering or deleting historic information is virtually impossible. Thirdly, since the ledger is maintained and owned by users, transaction costs are reduced since there is no need for a third party. (Blockgeeks, 2017) So in what industries could blockchain re-establish the trust between the government, the public and businesses?
Charity
It is estimated that around 700 million people around the world are living in extreme poverty. The Brookings institute estimates that around $80 billion is needed to lift all of them out of extreme poverty. Around twice of this amount is spent on global aid every year, however since a lot of the major non-profit organization and NGO’s are inefficient and bureaucratic, only a small portion of this amount reaches the people in need. It is estimated that about 15-20% of donations actually reaches the recipients. (Kastelein, 2017) Blockchain technology could make it possible to significantly increase this percentage by reducing inefficiencies and reducing fraud or excess fees by making organizations more accountable.
Election voting
The US election in 2016 was not the first election where people accused one party of manipulating votes. The Turkish presidential election in 2014 and the Russian election in 2012 are two other recent controversial cases. Currently, most of the voting is done by in-person voting using paper ballots. Even if there would be no instance of fraud, any manual human process is prone to errors. Blockchain technology could be used here for transparent and secure vote counting, voter registration and identity verification. (Fisk, 2017). Creating an immutable ledger of votes could make elections more fair and democratic.
Even though these two industries could be two of the most important industries where blockchain could re-establish trust between entities, there are many more industries blockchain could disrupt. Examples are using blockchain to increase the transparency of government systems, distribute unemployment benefits in a better way, trustworthy ticket selling and ensuring compensation for artists who create value.
There are a lot of challenges blockchain has to overcome before it will reach this stage. However once it’s there I believe the technology has the potential be able to disrupt virtually any industry that deals with data or transactions of any kind.
What do you think? Do you think blockchain technology has the potential disrupt industries or do you think it is just an overblown hype?
Hiesboeck, M. (2017). Blockchain is the most disruptive invention since the Internet itself – not just in finance. [online] Digital Doughtnut. Available at: https://www.digitaldoughnut.com/articles/2016/april/blockchain-is-the-most-disruptive-invention-since
Montali, D. (2017). Blockchain Will Disrupt Expedia and Airbnb, TUI CEO Says. [online] Skift. Available at: https://skift.com/2017/07/11/blockchain-will-disrupt-expedia-and-airbnb-tui-ceo-says/
Blockgeeks. (2017). What is Blockchain Technology? A Step-by-Step Guide For Beginners. [online] Available at: https://blockgeeks.com/guides/what-is-blockchain-technology/
Kastelein, R. (2017). Dutch Foundation Wants to Disrupt Charities Using Blockchain Technology. [online] Blockchain News. Available at: http://www.the-blockchain.com/2017/08/03/dutch-foundation-wants-disrupt-charities-using-blockchain-technology/
Fisk, P. (2017). Blockchain beyond banking … 19 industries which the new technology is likely to disrupt. [online] Thegeniusworks.com. Available at: http://www.thegeniusworks.com/2017/06/blockchain-beyond-banking-19-industries-new-technology-likely-disrupt/
Interesting post Baruch. You have a clear and strong vision that blockchain will improve the world by making transactions and processes more efficient, less bureaucrat, less reducing fraud, being more transparent, secure, better registration and verification.
These are all nice potential benefits of implementing blockchain in an industry, however there are only a few examples of real-world implementations like Bitcoin. I believe that the technology is too complex, too difficult and hard to regulate, so it’s impossible to implement it at broad scale. Because it’s a foundational technology, I’m afraid that the technological development is to quick and there will be a better solution before the implementation of blockchain.
Indeed a very interesting post Baruch. I agree with you that Blockchain is an excellent technology for reducing fraud and making processes less bureaucratic, since the blockchain is basically a database to which data can only be added and is regulated by it’s users.
However, I do not agree with you Bo on the fact that another solution will rise before the implementation of blockchain. This is because the theory in itself is pretty easy. Actually, the implications are endless! Bitcoin is indeed currently using the blockchain technology and they allowed micropayments & microloans to people in disadvantaged socio-economic circumstances, unravelling a complete new form of advantage for the world economy.
The decentralised characteristics of the blockchain and smart-contracts mean that an agreement built on its platform does not need a separate party. And exactly thát party is usually the one causing a fraudulent of bureaucratic environment. In fact blockchain technology provides a solution every time when a transaction is being made and there is a need for a thirth party to secure this transaction.
I agree that it probably takes some time to understand the technology but I am confident that it is going to change a lot in the world!
Hello Baruch,
Thank you for your post. I think blockchain is a very interesting and relevant topic. I understand your idealistic point of view regarding for example the aid to developing countries. However, Like Bo, I am worried about the complexity of Blockchain. I believe it has great potential, but I hope it will be developed further in the future. Once it is better developed, it will certainly disrupt industries, almost every industry!