Or: why us, the non-techies, better get up to speed with Blockchain.
We know by now that tech-land moves at lightning speed. Radio commercials for Digital Transformation consultancy? Check. I’ve heard them.
But over the past few months, there’s been some technological advancements – in the relative margins of the internet -, which could potentially cause quite a fundamental stir. I’m talking about Blockchain.
First a big caveat: I’m not a techie. I can pretend I know the difference between NodeJS and PHP, but I don’t really gét it. I look at technology for what it means. And recently, I’ve come to realise that this whole Blockchain story is a lot more than Bitcoins, ‘virtual’ currencies and unintelligible tech-geek-babble.
The techies will kill me, but let me have an attempt at trying to explain what Blockchain is, to me, the non-techie. Blockchain is a kind of database-technology, the engine behind Bitcoin for example. It is effectively a decentralised verification system, where a global network of computers verifies and creates transactions, following a complex cryptographic code. Once verified, the transaction cannot be changed. Ever.
Sounds like Chinese? Just remember one thing: ‘decentralised’. It means that transactions no longer need a centralised authority.
There are a few Blockchain versions. And a crucial one is Ethereum. The thing that makes Ethereum different from Bitcoin is that it is effectively a platform, onto which applications can be built. Those applications can utilise such a decentralised computer network ánd the cryptography that comes with it. Ethereum also has a currency, Ether, which serves as the fuel for the system, this engine.
The thing that made me pay attention is that the platform, this network of computers, can create transactions that go beyond digital currencies. The Bitcoin-blockchain does one thing: transfer Bitcoin. But with Ethereum anything’s possible; we’re talking ‘transactions’, any transaction. A crucial aspect of Ethereum is Smart Contracts, programs to well… program and automate transactions. At least, that’s what I think it is.
Example? In Brooklyn, smart citizens have built an energy network with Ethereum’s Smart Contracts. Energy, created by solar panels on one side of the street, is being sold to neighbours on the other side of the street. Again: without the involvement of a central authority.
“That all sounds grand, dear Gerrie. So let them be, those tech geeks”, I hear you think. Well, no. Over the past few weeks I’ve started to get the feeling that as an entrepreneur, government or all round smart person, it is becoming important to stop watching from the sidelines and get more actively involved in this blockchain story. And I see a few reasons.
Speedy, speedier, speediest
The tempo at which new things happen in the blockchain world is very, very, very high. Ethereum as software isn’t even a year old. Friends of mine, who’ve been reading on and working in the subject matter for a while now, were perplexed a few weekends ago. That was the moment when the DAO-hub launched. A kind of platform, built on Ethereum to fund and support other blockchain projects. Kind of like a decentralised version of a Venture Capital fund. At least, that’s what I think it is. Today. Maybe I’ll understand it better tomorrow.
But fact is: after 2 weeks it had become the biggest crowdfunding project ever, raising more than 11m million Ether. Current value of 1 Ether: about 12 euros. These are no longer the margins of the internet, methinks.
Ethereum’s website says: “like the internet was supposed to work”. Their mission is to develop an internet that is more free, more trustworthy. It is definitely connected to a certain vision of the world. But at the same time, it’s also about profit, making money and business opportunities. That’s what makes it so unique. I think.
For every old school CEO who still doesn’t really believe in the internet or e-commerce, there are smart entrepreneurs who will soon (read: now) start looking at how the transactions involved in for instance ‘shopping in a supermarket’ can be reconfigured when you look at them through a Blockchain lens.
Plus, these transactions aren’t limited to the internet. Connect the Blockchain concept to the internet of things and you’ve just added another billion use cases. At Slock.it – a bunch of leading thinkers and makers in the community – people are working on a smart lock, which only acts when all the conditions of a Smart Contract have been fulfilled.
Take the use case AirBnb. I rent a spare room to you. So when the smart lock know it’s you and it knows you’ve paid, it opens up. At the same time it triggers the financial transaction and – why not – books and pays the cleaning service when you leave.
Another fundamental aspect is that there’s an incentive system built into the core of Blockchain. It is technology after all and that requires hardware. Computer geeks who run the transaction software on their servers get a fee. That’s what keeps the decentralised network rolling. However, the fee is a fraction of the 10-ish% that AirBnB charges or the +20% that Uber deducts from its drivers’ earnings.
A real sharing economy
We need to pay attention because Blockchain is a technology that goes to the core, to the root. The word “revolution” gets mentioned occasionally. So does “Web 3.0”.
And without getting all too excited, I’m starting to see why. The internet was about disintermediation and the democratisation of information etc. But what happened? It became the bedrock for centralised platforms, who facilitated transactions at scale: AirBnB for holiday accommodation, Facebook for communications, Uber for transport,… At a price obviously.
These are amazing applications and I use use all of them. But the decentralised aspect of the blockchain technology makes it possible to redraw and reconfigure the relationships between user and supplier, in other words: the transaction as well as its value. The cost of a transaction decreases. The validation and the trust grows. An “internet of transactions”, “internet of trust”, “internet of value”,… these are all phrases that are being used in the numerous chat boxes and communities.
Example! Consensys is one of those companies who are building applications on the Ethereum framework. Ujo is one of them, “rebuilding the music industry”. Not only does it make the transaction between artist and fan more direct; it can also reconfigure the relationship between artist and session musician, between artist and film-producer-who-wants-to-use-that-song, between artist and whoever or whatever,… It’s not something Spotify is doing.
Arcade City does in a blockchain kind of way what Uber does: match demand for transport solutions to supply. The difference: the value is being distributed in another way.
Certainly, these are all experiments and prototypes. But it is significant that AirBnB has already bought up a Blockchain start-up. Their business model of ‘being the intermediary’ could potentially come under pressure.
The disruptors being disrupted? What’s next? Well, everything that’s a transaction can be looked at through a blockchain lens. Could a brand like Nike pay fees directly to people who watch their ads? And what with a concept like ‘issuing a driving license’, a typical example of centralised validation ánd transaction.
Learn, Unlearn, Relearn
Technology. Ethics. Profit. That’s what it says on the website of DAO Hub. And it’s this mix that makes the matter so complex.
So, show of hands: who has ever tried to buy BitCoin or Ether and moved them to a different wallet? I have a sneaky feeling it won’t be too many of you. And that’s a shame: because ‘that world’ involves different concepts of wallets, transactions, security,… So we have to practice, we have to get used to this new ‘language’, we have to make mistakes, get ripped off, be confused.
Because to be honest: buying Bitcoins is peanuts, compared to understanding Ethereum. And then we haven’t even started on DAO, the concept of a Decentralised Autonomous Organisation.
So, us, non-technies, need to practice, because this story is getting momentum.
Smart developers are currently learning Solidity to build blockchain-applications and create Smart Contracts.
Smart investors have known for a while who Vitalik Buterin is (inventor of Ethereum, 22 years old, no shit). They’ve been looking at daohub.org for the past few weeks and have been able to decide for themselves whether it’s a good idea to invest in DAO-tokens.
And what do entrepreneurs do? From small start-ups to the Microsofts and IBMs of this world: they’re all trying to get to grips with the blockchain-thinking. The question is: do they recalibrate their value proposition and their added value in a fundamental way? Or are they copying Blockchain technology to implement behind closed doors, like banks seem to be doing?
And what about governments? Because when it comes to transactions, validation ánd identity, there’s a lot of thinking to be done. In Honduras they’re re-building the concept of land ownership on the blockchain. The innovation unit of Unicef is looking at blockchain to tackle the problem of identity with refugees.
But also closer to home, the penny has dropped. In my hometown of Antwerp, the council’s innovation unit A-Labs is building a blockchain application to facilitate communities. They call it Locals.world and are working on a currency of their own, the LocalCoin.
In the blockchain chat communities, where I spend a bit of time these days, I read things like:
“I’m kind of dreaming of buying Tesla powerwall towers and put smart contracts on them!”
“We could invest in anything and collectively we’d be more informed than an individual to make good investment decisions.”
These guys are on a different level. And if we, laymen, want to get our hands on the wheel, we need to get flight time. We need to read, produce, buy, do. It’s up to us to understand blockchain and to translate it, take it away from the tech-talk. That way the discussion and the learning process will speed up and the possible implementations will become clear much faster.
Anyway, I’m starting to get it. Starting. And I’m going to dig deeper. If you’re interested, here’s my growing list of blockchain-related bookmarks.
(this post first appeared in Dutch on datanews.be)
Update: this post triggered a lot of interest for lectures as well as workshops. If you’re interested to find out more, click here.
13 thoughts on “Blockchain? For me, the coin has dropped”
Thank you for this inspirational piece of writing. I am amazed and excited at the potential disruptive effects this will have on the way we cooperate and do business.
Hey Steven, thanks for the comment! I would say: exciting times indeed.
hii.. I am still wondering the feasibility of this in the financial world where confidentiality is the key. The key to blockchain that says a fraud is impossible is that there are random “miners” but that’s not really possible in a financial industry. So once again if the miners are the “restricted” people within a company then will it still retain its strong character that a fraud is not possible.. maybe I am thinking too much but this was the first thought that struck me while I was trying to understand the whole concept.. please let me know if I am going in the wrong direction completely 😀
Surely, nobody is going in the wrong direction. We’re all trying to figure it out.
First, I think there’s a distinction between a public blockchain (Bitcoin, Ethereum,…) and a private blockchain, like the ones some of the banks are experimenting with (have a read through http://www.ibtimes.co.uk/how-are-banks-actually-going-use-blockchains-smart-contracts-1539789).
Secondly, even though there are no personal details attached to your transaction itself (it is done from a computer-generated ‘address’), I understand there is no full anonimity. I found this helpful (https://bitcoin.org/en/protect-your-privacy). I’m not fully up to speed on the Bitcoin community, but I understand this is a discussion point.
Super interessant. Ik moet nog wel wat studeren om er de mogelijkheden van te spotten. Alvast 1: Sabam. Ik geef t door.
Oh yeah: studeren is the name of the game. En proberen, prutsen,… Dan worden de use cases op den duur wel duidelijker.
Great post! Have nice day ! 🙂 pwxso
I’m coming back to this post about 8 months on. I would like to thank you. I learnt a lot from this post and other posts on your blog in the beginning of the year. I was just getting started with cryptocurrency so Thanks!!
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Thanks Gerriesmit for sharing your opinion on blockchain. I am completely agree with you and want to read more article like this.
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