Blockchain. The word itself generates a lot of excitement and anticipation. Despite the mystery and skepticism surrounding it, many believe it to be the future. What exactly is a blockchain? In simple terms, it is an encrypted digital ledger that can record anything of value.
Blockchain technology is almost synonymous to Bitcoin, the cryptocurrency built upon blockchains. Since then, there has been more than 1000 cryptocurrencies registered and used. It is thus not surprising that financial institutions have begun incorporating blockchain. Goldman Sachs most recently secured a patent for its cryptocurrency settlement system 'SETLcoin'. Citigroup and Nasdaq are working on integrating blockchain into their global banking platform. And most recently, a London startup is launching a debit card that allows people to convert and spend their cryptocurrencies in the United Kingdom.
As a rapidly developing technology, its impact is still uncertain. Yet, as many major institutions clamber to make a headway with it, blockchain seems set to infiltrate our future. If that happens, here are some of the changes we foresee will take place.
1. Value Redefined
The basis of blockchain is that it is able to record anything of value. This can be disruptive, as it changes the way we view currencies. Blockchain startups are already removing the exorbitant fees involved in foreign trade exchanges. When blockchain technology and cryptocurrencies become common, trading across borders will be effortless.
With blockchain, what is value may fluctuate as well. We already know that Facebook uses our preferences and content to earn from advertising. What if we take ownership of all the data we put out there? Meanwhile, the freshly released WhenHub token attempts to commodify time and services. Though many are apprehensive about its launch, it confirms blockchain's potential to upend money as a currency.
2. Internet of Value vs Internet of Things
Hinging on our previous argument on the changing nature of value is the vision of the Internet of Value. The IoV is a world where value transactions are instant and secure, like how information exchange is at present. This could extend to value assets such as intellectual properties or votes. Still, it requires significant application of blockchain technology. An infrastructure that ensures interconnectivity is mandatory too.
While this vision is still in the pipeline, the Internet of Things is gaining traction. The IoT is an integrated lifestyle of internet connected objects. From ventilating your house to ordering groceries, technologies are being trained to handle your life. We have seen some of that with Google Home and Amazon's Echo. Some predict that the IoT will move from experimentation to business scale in 2018. If the parallel development of the IoV could integrate with the IoT, it would upheave our lives. A major part of our daily activities would move online. Slock.it is one that has been able to bridge blockchain into IoT. It uses smart contracts based on Ethereum to lock IoT-enabled devices. With the integration of blockchain, virtual markets could become mainstream.
3. A New Phase of Security
With the Internet of Things, it is only natural that security becomes a major concern. Would interconnectivity make our lives vulnerable to hackers and malicious softwares? Blockchain eliminates this problem by making hacking very difficult and very expensive. It uses a distributed system, making it an ultimate trust machine. This is why financial institutions are trying to get a head start with blockchain.
Identity management is one area that is benefitting from blockchain technology now. It helps users use and take charge of their digital identity, in a way online databases fail to do. With the anxiety of frauds and fake news online, blockchain could regain our trust in technology.
4. A Changing World of Work
Blockchain technology is still in its infancy. Yet, it is impacting many valuable skills in the workforce today. The decentralized ledger could relieve some of the tasks of auditors today. With smart contracts like Ethereum, lawyers no longer need to draft paper contracts. The workforce of the future will need to gain different skill sets and knowledge to adapt to a whole new world. This is especially true for the fintech sector, and before that happens, we should get comfortable with blockchain.