by Danilo Falco
COO of 4CADIA Foundation
Essentially, the blockchain is a daybook or database of distributed data shared in a public or private network. Each computer link keeps a copy of the general ledger, in such a manner that there is not a single point of failure. All information is mathematically encrypted and added as a new block to the historical chain of records.
Consensus protocols are used to validate a new block or a set of transactions with other components before it can be added to the chain. This prevents frauds or double expenses without the need of having a central authority. One can also program the general ledger to make “smart contracts,” a group of conditions registered in the blockchain that automatically add the transaction to the chain when these conditions are met.
The use of the blockchain technology can completely change, or even break, well-established services available in the market — services that not a little while ago represented a true revolution in their branch of business, even when acting as intermediates.
To give an example, take a company like Airbnb. It’s a platform worth billions of dollars; by its market value and occupancy rate, it is the world’s biggest room supplier. Yet, the owners of the properties in the platform get just a small share of the value they generate. Each transaction in Airbnb leaves a considerable amount of money in the hands of Western Union; besides, the compensations are slow to come and Western Union monetizes the data of clients and suppliers.
How can the blockchain make these intermediates obsolete? Perhaps through the developing of shared applications — a set of smart contracts that store the data in inside blockchain records. Provided with an user experience not very different from using Airbnb, an internal peer-to-peer communication network, encrypted messages, and without the need to keep information in the hands of an untrustworthy intermediate, this new platform could build respect by its reputation by its identity verification, protection of privacy, risk reduction, and safety value.
Now the reader might be thinking, Why hasn’t anyone created anything like that, then? This idea isn’t new, for sure: Don and Alex Tapscott have discussed the matter in the book Blockchain Revolution. The reason can be either the low profit generated by such a company, the difficulties to keep a qualified team of developers for enough time to make this tool available, to accommodating the public to a product and a model of business that has not met its exhaustion yet.
However not everything related to blockchain development must be disruptive. As a matter of fact, market bets exclusively focused on disruption usually imply risks of failure and large quantities of time and money to companies that often need to think in terms of profits on a short run.
Software that use blockchain technology might have a limited range in terms of social externality, but generate high profits for the involved parts. It is possible to reduce complexities in the transactions, eliminating some of the stages of the transaction and reducing costs. Also, there are solutions that can be especially designed to reduce risks of frauds and losses with expensive and ineffective safety protocols. There are numerous market possibilities that haven’t been explored yet, in the most diverse niches.
The blockchain is indeed a revolution — but we are just crawling, for the time being.
