The goal of E is for Everything is to explore curiosity, and every once in a while I get very curious about one thing. This week, that one thing was blockchain. If 2016 was the year of political upheaval, I thought over paleo pancakes*, might 2017 be the year the financial sector gets flipped, like a, well ... like a pancake? If it is, then it’s worth the average consumer (i.e. me) paying a bit closer attention to blockchain.
Welcome to this week's newsletter: It's all blockchain all the time.
What follows is what I learned in a week's-worth of on-and-off exploration of blockchain news and information. It is not a comprehensive write-up on blockchain by any stretch of the imagination. If you are a blockchain aficionado, this might hurt a little. I am an unabashed noob.
So, what is blockchain. I am not in the code, nor am I an expert on cryptography or even old-school financial ledger systems. So, when it comes to a definition, here's mine:
A blockchain is a ledger maintained by a distributed network of computers. It is a tamper-proof record of what happens in a particular part of the digital world. An event, such as an exchange of currency, the initiation of a contract, or a change to a medical record, could be added as a block (think data entry) to a chain of other, related blocks -- thus the name, blockchain. Anyone could search for an event in the chain, find it and know the record is 100 percent accurate. They can also modify it securely.
Now, imagine if the record of all transactions taking place in the global economy — every single one — was kept on an open ledger, cryptographically secured, immune to human error and tampering and distributed across a global network of machines. It could lead to full financial inclusion, eliminating the population of the unbanked who struggle to participate in the global exchange of goods and services. It could make the mortgage crisis impossible to repeat. It could eliminate currency inflation and allow for the freelance economy to move at the speed of existing technology. It could revolutionize medical record keeping.
The saying “the government runs on paper” would be replaced with “the government runs on blockchain”.
This sugar-plum-fairy picture of the future has led banks, tech companies and consulting firms, among others to pour gobs of money into blockchain research and development. Innovation “garages” dedicated to exploring blockchain’s potential are springing up around Wall Street, with Barclays, IBM and recently Deloitte diving into the fray.
Blockchain is not new, but during its early days, it took a backseat to bitcoin, the cryptocurrency that rests on top blockchain's most well-known implementation. It seems bitcoin has had its "15 minutes", even though its future is still not certain. Now, it’s bitcoin’s turn to take a backseat to its ledger system, blockchain.
There are those who celebrate blockchain as the future of ever faster, perfectly secure transactions. Then there are skeptics who say the technology is a overly hyped. (A Gartner report in August found blockchain to have nearly hit peak hype.) I don’t know which way the winds will blow, but the confluence of three things leads me to believe that, as an average consumer, it is incumbent upon me to keep a close eye on blockchain’s evolution over the coming years:
- The political establishment is being gut-punched by citizens who feel that they do not have equal access to the wealth being generated in the global economy.
- The freelance economy is growing, and it’s growing quickly. In order for the economic engine to keep running, people will need to be able to engage in peer-to-peer transactions quickly and with far greater security.
- The proliferation of false information online is eroding trust and fueling fear globally. The appetite for a trusted system of information exchange is large and growing.
All of that being said, I have absolutely no idea what the future holds for blockchain. Is it the savior of the global economy or a boondoggle? I have no idea, but it’s definitely worth paying attention. Enter this week's five stories.
* - Yes, Paleo Pancakes are a thing.