Blockchain — maturing beyond cryptocurrency
Even if the technology behind Bitcoin and older currencies is quite antiquated by today’s standards, the most popular blockchain applications in early 2018 are still crypto-currencies. One reason is that the popularity of the DLT (distributed ledger technology) is still rooted in the economic success of these systems. Due to the influx of new investors entering the crypto market, these ventures have been propelled to new highs, making it a miraculous vehicle of performance for those who put their stakes into the technology.
It’s easy to forget what blockchain actually is about: — accounting. The problem of having to keep two sets of books ‘up-to-date’ for every transaction between two parties became superfluous once bitcoin pioneered its technology. Through the immutable and instantaneously distributed nature of the application, this broadcast and verification immediately ‘set in stone’ the financial history of every transaction. Which — without going into all the technical details about proof-of-work, protocol and smart contracts — is the essence of what blockchain solves.
This solution to the otherwise tedious task of accounting will also contribute to one of the biggest cultural impacts on our society in generations. To be able to transfer value from one person to another is not really the only innovative part of blockchains. After all, we were doing fine with organizations acting as intermediaries, well, except for the fact that the horrendous fees of credit cards look like a bargain in comparison to the fees of a Bitcoin transaction. Today, cryptocurrencies allow you to, with the press of a button and the authorized signature in an app, execute the entire transfer of value yourself. As a user you are empowered to control your own digital assets — as long as you are online and have control over your private key.
This becomes quite addictive with time and an entire generation is growing up taking the possibilities for granted. If you can share a photo of your delicious looking meal over Instagram — why should it be any different when you talk about money, or if you want a document to be signed, checked or audited? Blockchain brings us forward from the ‘old-school’ version of securing our assets as our ancestors used to — when they stuffed money into their mattresses, hid cash inside walls or buried gold coins in a coffee can in the backyard to keep them secure at night. They knew where the assets were and had full custody of them. Something which has become less and less common within the span of a century.
The transfer of money is only the beginning of this technological transformation that will ultimately affect any interaction between humans. Your blockchain ‘private key’ will soon be more important than your social security number as it becomes the proof that you are the author, signatory, beneficiary, partner, submitter, owner or participant for almost everything you interact with in the world. You will no longer have to show your ticket to anyone (be it human or machine) to board a train, you will only need to know your crypto-identity. Your digital rights will be not only protected but enforced as the usage of your intellectual property will be traceable from the moment of the first publication, registration or even inception into your personal crypto-identity. Or, if your phone breaks down while you are on vacation, proving that you are who you are will be enough to activate the surety that was given to you.
If now you think that this sounds like a fairy tale — you are not alone. Our culture is based on workflows, and these workflows are being learned, taught, and passed along from generation to generation. An accountant today doesn’t really do things much differently than accountants did decades or even centuries ago. Sure, the tools at their disposal have changed but the workflows and processes have been kept intact as “it has always been done this way.”
However, even this will change with the new approach made available by blockchains. Workflows of the future will consist of smaller transactions executed by a user (or company), passed through the blockchain to the next participant in the workflow, who will then pick up the work or complete the transaction. This will not only open up a more defined workflow to participants all over the world but will also make it possible for entities to work parallel to, and with each other. To pick up the example of an accountant — when a user executes a payment through cryptocurrency, not only will the user make a payment, the taxes will be declared automatically, the annual financial statement will be updated, and the auditor will be notified in the process. Everything within a single transaction — as easy as if you were to share the photo of your meal with your family over social media.