Blockchain Application: A well encrypted key to the future of innovation
When it comes to blockchain technology — a piece of cryptography that manages the transaction of any digital asset — inspired minds are starting to crack the code and reveal the endless possibilities for how it can be applied.
Aside from those with a specific interest however, blockchain technology has not yet entered the public discourse on the same scale as say, AI. But mention the digital cryptocurrency Bitcoin and you’re likely to prick a few more ears up. It isn’t Bitcoin per se that holds the key to the future though, rather the underlying technology on which it operates. Indeed, the blockchain transcends currency to touch on any application where digital assets are involved — including industrial ones. But before getting to what those might be, let’s take a few steps back.
Another bite at the cherry?
Bitcoin was born out of a bleak time in our economic history. Today, our economy relies on large centralized intermediaries such as banks, credit card companies and governments when it comes to any sort of exchange of value. They are the ones who establish the trust in transaction, performing everything from authentication to settlement.
They say trust takes years to build, seconds to break and forever to repair. In the financial crisis of 2008, you could say that trust was certainly tried, if not broken, when it came to banking. Then, through the timely research paper “Bitcoin: A Peer-to-Peer Electronic Cash System”, Satoshi Nakamoto — a pseudonym used by the unknown creator(s) — blockchain was born. This one paper planted the seed for a decentralized, peer-to-peer (P2P) alternative where trust is inherent in the model. People soon started to realize that this technology isn’t just for exchanging cash — it’s for exchanging absolutely any digital asset you can think of. In his June 2016 TED talk, Canadian business strategist and consultant Don Tapscott describes this as the “Internet of value — a vast, global, distributed ledger running on millions of computers and available to everybody and where every kind of asset from money to music could be stored, moved, transacted, exchanged and managed all without powerful intermediaries.”
It is no exaggeration that blockchain has the promise to fundamentally remodel how commerce works — it is disruptive in the truest sense of the word. In doing so it has implications that stretch well beyond its specific technological applications and well beyond the scope of this article. But let’s just say, Don Tapscott and many others believe that with blockchain, we could implement transformations for a more prosperous world for businesses, society and individuals. This, they would argue, is our second bite at the cherry.
And so we are where we are now: left thinking about how best to use what we have at our fingertips.
Innovation in application
What exactly are the features of blockchain that offer such opportunities for innovation? I.e. why the hype? On a globally distributed ledger, when a transaction is performed, it is encrypted with the highest level of cryptography and sent to millions of high-powered computers worldwide, all of which are manned by miners and all of whom compete against each other. At regular intervals, a block is created which is a record of all transactions within that interval. Once created, it is the job of the miner to validate that block by cryptology. Once validated, two things happen: that miner gets rewarded in digital currency and the block is time-stamped and added to every block created before it, thus creating a blockchain. This means that data is immutable. It is forever written in digital history and cannot be hacked. In fact, to hack it would require hacking all of the preceding blocks on all computers around the world. If a chain is only as strong as its weakest link, then the blockchain is strong. Bottom line: transactions of assets that are secure and immutable.
And that is the key to the promise it holds.
Innovation in the field to date is taking two courses — and next47 welcomes ideas for both. The first course is seeing startups and entrepreneurs exploring innovative applications for the technology itself, such as the implementation of blockchain in devices. This is an interesting but as yet fully untested area. All kinds of applications are conceivable. For instance, communal-use devices like washing machines which usually use tokens could instead be replaced by Siemens controllers connected with a blockchain to account for electricity costs or to define and log times of use. The second course is the development of the underlying technology: making it mature and reliable enough to be applied on a large scale.
Much early activity focused on the financial sphere and decentralized currency (like Bitcoin), but the technology now powers applications previously unthinkable. Ethereum, for example, is a “decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference,” — self-executing contracts essentially. As a result, blockchain has the potential to radically change many industry sectors and this is interesting for next47.
Industrial applications
One promising area is that of energy trading. In a world where power generation is moving away from a centralized model to a distributed model characterized by small-scale, heterogeneous systems (more on that in our next article), solutions based on blockchain could provide answers to P2P energy trading.
The future of the power generation sector lies in a two-way electric system, made up of billions of endpoints, based on renewables. The idea is that if your neighbor generates excess energy, you can buy it from them — hence the P2P. In a network where everything from microgrids and smart appliances to energy management software must interact with one another, there is a strong need for a secure system that can verify the instantaneous, autonomous transactions taking place across it as demands change — and blockchain can provide it.
LO3, a partner of next47, is already putting this into practice via a microgrid in Brooklyn. They’ve built two nodes that collect consumption and generation data across the microgrid and feed it into a blockchain. Lawrence Orsini, the company’s founder recently told Bloomberg Technology that “Energy is the largest use for blockchain on the planet, larger than financial services by several factors,” because “the world runs on energy. It doesn’t run on money.”
And the synergy with our other innovation fields doesn’t end there. Take Autonomous Machines for instance. Blockchain applications could secure direct interaction between these autonomously operating machines of the future. Be it shared vehicles or those in networked and automated manufacturing and logistics processes.
The final word
To borrow a fitting quote from Abraham Lincoln: “The best way to predict your future is to create it.” So let’s be disruptive and create the future together.
