What if I told you that there was a technology that existed right now which had the potential to eliminate the usage of child and slave labor in supply chains? A piece of technology that could end art fraud, discover the source of contaminated supermarket food in seconds, and even deliver stimulus checks to millions of Americans instantaneously.
This exciting piece of technology is called blockchain. It’s impact on the well-being of humanity is going to greatly exceed that of the internet. I understand that this is an ambitious claim considering how beneficial the internet has been for all of us (especially when one take’s into account that it’s made ignorance for the first time in history a choice). Make no mistake though, blockchain is going to add a lot more value to society than the internet ever did.
So why exactly is blockchain such a big deal? Well before we can answer that, a little bit of explanation as to what a blockchain is exactly would be helpful. A blockchain is a specific type of database that stores data in blocks that are then chained together in chronological order. Designing a database in this way is revolutionary since it allows us to have a perfect (and clear) understanding of the history of whatever we decide to attach the blockchain to. By being able to clearly know the history of something, we can greatly reduce the amount of fraud and theft which takes place in society. The food industry for example could save $31 billion by using the blockchain to crack down on food fraud (If you don’t know what food fraud is, click here).
Reducing the amount of fraud in the world is a big deal considering that fraud cost the global economy over 5 trillion dollars! If blockchain was adopted in mass, the trillions of dollars that the global economy would save could be reinvested into more worthwhile endeavors. Endeavors such as hiring more people, healthcare, R&D, education, etc.
Whats even more exciting though is that the benefits of blockchain don’t stop there. In 2015, developers figured out that this technology could be used for more than documenting the history of something. This piece of technology could also be used for smart contracts. Typically, contracts need to take place between two entities who wish to sign and implement a contract. Due to legal risk associated with a contract, it isn’t uncommon for a 3rd party to oversee this process (which makes contracts tedious and expensive). Whats revolutionary about a smart contract is that it allows for the signing of contracts to take place on the blockchain automatically without any oversight. These programmable contracts are triggered by an event, and can be utilized in a variety of ways to come up with very creative solutions.
One of the coolest examples of smart-contract technology is in insurance. It was found that if the insurance industry fully utilized this technology, that it could it be used to settle a motor claim 3x faster for only a fifth of the cost. Furthermore, it was found that the operating cost of property and casualty insurers would fall by $200 billion a year! This is a big deal since all of this translates into significantly lower insurance cost for everybody, and allows for the insurance industry to become more extensive in the services that it provides. Going a step further, smart contracts could reduce the need for the courts or lawyers to get involved in people’s lives. Smart contracts would also reduce the amount of time that a lawyer would need to dedicate toward making sure a legally binding contract was valid. While although smart-contracts don’t completely automate contractual law, it moves this area of law a lot closer to this reality.
Blockchain is a big deal and is singlehandedly going to cause an economic boom thanks to how much money it’s going to save society. It’ll reduce the need for government involvement in the lives of people, which could lead to a resurgence of libertarianism into the mainstream. Culturally, this will lead to higher levels of trust in our institutions at a time when trust couldn’t be any lower. Perhaps then, this technology then could be the cure for a society that seems to have lost confidence in itself. We can only hope!