When Bitcoins were first introduced in 2009, they were the first cyber currency. I labeled them a Soft Trend—one whose future was looking good but not certain. At the same time, I identified cyber currency as a growing Hard Trend that would continue; accordingly, I suggested there would be many more cyber currencies in the near future. Both have held true, as the future success of Bitcoins, although promising, is not a future fact, and there are more than 100 cyber currencies to date.
As it happens, the enabling technology with which Bitcoin transactions are handled has gained far more traction. The rapidly evolving technology of blockchains represents a Hard Trend that will continue to grow. It holds enormous promise for game changing disruption across any number of industries and fields.
For those who may be unfamiliar with the term, blockchains are a system of decentralized transaction records. By decentralized, I mean that a blockchain can be used to create a transaction without any input from any sort of controlling entity.
In one of its most widely known applications, blockchains can send and receive digital forms of currency, such as Bitcoins. But the system can’t be accessed by just anyone. Users can send digital payments only to other participants in the same blockchain network. That means only those who use the blockchain can establish and enforce rules and approved procedures—a powerful form of security.
But there’s another level of safety. Instead of a controlling entity determining whether a particular transaction is legitimate, it’s up to the entire network to make that call. That means if someone tries to tamper with a ledger entry, the rest of the network will disagree on the integrity of that particular transaction and will not incorporate it into the larger blockchain.
More Than Just Money
It’s obvious that blockchains offer enormous opportunity for use in financial transaction applications. But, blockchains also represent a platform that can be used in multiple ways in many industries and other areas. For instance:
- Data Storage—Current storage services such as the cloud are centralized, meaning that users have to put their faith in a single provider. Blockchains will let users store data and information via a decentralized platform, improving security and lessening reliance on any one provider. Additionally, systems are being developed through which users can rent out unused space–a data storage version of Airbnb!
- Voting—No one who has ever worked in a polling place recalls the tedium of counting paper ballots with any sort of fondness. Unfortunately, electronic balloting has its own drawbacks, such as verifying accuracy during recounts. On the other hand, a blockchain voting network is inherently more reliable, since changing one vote would require changing countless other votes at the same time. In fact, a blockchain voting network has already been used–Denmark’s Liberal Alliance successfully employed a blockchain for internal voting in 2014.
- Military Use—Military organizations such as the U.S. Department of Defense and NATO are actively investigating use of blockchains. Among other applications, they’re interested in messaging platforms capable of transferring information and data by way of a secure decentralized protocol. Further, the blockchain will ensure security across multiple channels.
- Regulation–Because a blockchain cannot be changed or manipulated without a majority of participants agreeing to do so, the technology underlying a blockchain might be used in place of regulations, such as those mandated by Know Your Customer (KYC) guidelines and Anti-Money Laundering (AML) compliance.
At The Base of the Mountain
Currently, blockchain use is largely restricted to private forms of transactions. But, looked at in an anticipatory way of thinking, blockchains could be used for anything that requires proof of identification, the exchange of goods or verification of contract terms and other agreements. Talk about the opportunity for disruption!
One executive involved in the development of blockchains summarized its potential in a framework we can all appreciate: “’Check it on the blockchain’ will be the phrase of the twenty-first century. It will be as commonplace as people saying “Google that.’”