Harnessing the full potential of blockchain technology

Efficiency is nice — but what about decentralization?

By now, headlines like this have already shown us that blockchain is here to stay, whether we like it or not.

Undoubtedly, the technology brings about massive gains in efficiency for large corporations, while also improving security of information in an age where data is everything. However, since the invention of computers and databases, we have always invented new systems to make our life easier. We had hierarchical database systems, then SQL, then NoSQL, and so on. Blockchain is a natural evolution of databases and data structures, but is that all it is?

With the creation of Bitcoin, a new technology emerged with the potential to be disruptive across fields. However, as it stands, we appear to be heading towards a scenario where blockchain becomes merely an innovation for our current processes. So, why is that a problem, and what can we do about it?

The rise of AI and Big Data

Long before blockchain hit the headlines, the world has been concerned with Artificial Intelligence, both through not-so-serious sci-fi movies and very serious research. As of today, AI has proved to be a powerful tool, and is employed by most of the top service providers we interact with on a daily basis. However, to function properly and make accurate decisions, AI must be paired with data, a lot of data (commonly called big data). We have taught machines how to learn, and with enough data, they can learn how to act and react to actions better and much faster than a human could.

Now, it’s all fun and games when Spotify suggests songs to you, but the potential of the technology is much greater, as well as much more dangerous. The problem with AI is that it has a creator, and since we have not found a way to give machines consciousness just yet, it is designed to serve its creator. The way it does that is by eating up as much data as it can, meaning that the more data is available, the better. And the large majority of stored data in the world is heavily centralized. Because of this, companies like Facebook and Apple hold an enormous amount of power, and can influence the way we think, act and make decisions.

So, where does blockchain come in?

Before the creation of open distributed databases (blockchain & family), there was essentially no way to transact with information online without that information being accessible to an intermediary. With distributed ledger technology (DLT), we finally found an alternative to this. Regardless of its price, the reason Bitcoin is revolutionary is because it provided a way for value to be exchanged across the world without the control of a third party, something we never had before.

“What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party. “ — Satoshi Nakamoto

But as the interest for the technology underpinning cryptocurrencies grew and its potential became evident, large corporations naturally rushed to learn and implement it. However, in doing so, they invented something new: private/permissioned blockchains. Now, private blockchains are cool and all, but they’re not actually that much better than the current next best thing. They are faster, more secure, and open up space for smoother inter-organization collaborations, but they do not radically disrupt the dynamics of operations currently in place. They are an upgrade, an innovation.

As the CEO of a large company, I would most definitely want to implement a new technology that improves my processes, so blockchain makes a lot of sense. But for the rest of us, how much will the implementation of blockchain by the likes of Microsoft improve our lives? Sure, if companies cut their costs, they could pass that cut onto its price for the consumer, but will they? And if they do, are they not just becoming more powerful?

But the issue runs even deeper. If companies use blockchain technology internally or make use of a private implementation, the data remains where it was before, in a few massive silos. Then, all we have is a pyramid that continuously gets narrower, with top corporations constantly finding ways to be more efficient while belittling competition.

Getting from innovation to disruption

It’s easy to talk the talk, yet much harder to walk the walk. While taking down Facebook and the banks may sound like a good idea, it is not the mindset I wish to propose. In reflecting about the actions of people in the space, including my own, I have found that we tend to stand on two common extremes, neither of which I believe are optimal.

The first extreme is the “Let’s take down the banks and establish a new world order” kind of thinking. The problem with this mindset is that it is, to say the least, not very practical. It is both aggressive to those uncertain about the technology and too idealistic to actually lead to the creation of something useful. It is important to note that ambition is necessary and that thinking big is the way to disruption, but we must learn to crawl before walking.

The second extreme is giving in. This happens either by thinking the problem is too big to be worth an attempt at solving or because we are stuck with a traditional mentality. This extreme is what leads projects to flip over to using centralized protocols because it is more convenient and selling out as upgrades to traditional systems once the smell of money comes along.

In most cases, neither of the approaches above will lead to us getting anywhere. We must meet in the middle. I believe one way to go is to focus on building small solutions to actual problems, and putting emphasis on user experience. We should start building usable alternatives, and slowly let the need for the solution speak for itself. Rather than creating the project that will “end all _____ (insert anything here)”, let’s create a competing project with a few simple features and good usability and work from the ground up. It is better to deliver something small than to not deliver at all on a big vision.

Additionally, focusing on actually deploying a simple dApp opens up the opportunity for others to build on top of that and grow together. That is the beauty of open source. By contributing to the community, you benefit yourself and others, as well as open up an opportunity for a multiplier effect in the development of the space.

Lastly, blockchains have one more characteristic that we should exploit further: immutability. People change, but what is on the blockchain does not. Therefore, with the right design, we can create applications that are protected from its own creator. Initially, we always believe we will not be corrupted as our product grows and makes money, but in reality, it is easy to get distracted and abuse of our position. However, by designing our applications from the get-go to be protected from ourselves, we will be ensuring decentralization from the start, rather than attempting to institute it retrospectively.

Building a more decentralized future is far from an easy task, but is it not worth a shot? By starting small, building alternatives and driving mainstream adoption, we can tap into the true potential of blockchain technology: decentralization. And it is then that we can begin to talk about disruption.