Why Blockchain is the Next Big Thing
There were a lot of notable tech stories in 2017: the tumult at Uber, the demise of net neutrality, the relentless growth of Amazon. But the most sensational was the big bang in cryptocurrencies. Bitcoin’s meteoric rise made daily headlines and captured imaginations from the Bay Area to Beijing. “Let’s see, if I’d only bought $100 in Bitcoins in January 2017, I’d now have...”
Behind all the headlines, though, the real story is blockchain, the secret sauce underlying cryptocurrencies. Blockchain is a distributed digital ledger in which transactions are recorded chronologically and publicly. It’s an immutable, meddle-proof record whose authenticity is verified by an entire community rather than some middleman—and its potential is nearly limitless. Blockchain can simplify and optimize almost any transaction, from renting a car to trading a commodity. With blockchain, any two parties can establish trust and transact with one another without the mediation of a cumbersome and costly third party, like a bank.
“If 2017 was the year of bitcoin, then the future belongs to blockchain, because it has the potential to disrupt so many old ways of doing business and create vast new opportunities beyond the financial services industry,” said Samantha Radocchia, co-founder and chief marketing officer of Chronicled, a company that leverages blockchain and IoT technologies to deliver smart supply chain solutions.
Think of it this way: blockchain will do for assets what the internet has done for information—decentralize control and revolutionize the way people interact and transact. For example, blockchain in the energy industry could enable a quick and efficient peer-to-peer energy trading platform.
“Blockchain already enables homeowners to sell their excess solar power directly to their neighbors instead of the utility company,” said Asael Meir, partner and leader of CohnReznick’s national technology practice. “Imagine skipping the middleman altogether and auctioning it on a marketplace like eBay.”
Or consider autonomous vehicles. One day we might have cars with digital wallets embedded in their circuitry that enable them to automatically pay for their own charging and parking. These and other transactions would be handled quickly, securely and verifiably by blockchain, without any need for processing by a bank or credit card company.
Blockchain Will Become a Key Component to Supply Chains
There are also huge opportunities within supply chains. The tokenization of assets (which is what blockchain is) can drastically increase the liquidity of those assets within a supply chain, essentially creating value. “Imagine a fishing boat goes out to sea for four months to catch tuna,” said Radocchia. “The asset it catches (tuna) is illiquid during that time. But if the asset is tokenized and represented in a blockchain, the fishing boat can realize liquidity on the catch before it returns to port.”
In the IoT world, an internet-connected refrigerator could use blockchain tokens to order and pay for groceries. In real estate, tokenization is creating new paradigms as well. The same goes for cloud storage, the sharing economy, automotive and numerous other industries.
IBM and Walmart teamed up recently to do a study on the advantages of tracking food products on a blockchain. With blockchain, they could track products in 2.2 seconds— a process that takes almost seven days using traditional methods. In the future, blockchain will help cut response time when contaminated foods are discovered and make it possible to perform targeted recalls.
The bottom line: blockchain has the power to be a significant disruptor.
“Just think about the evolution of the internet from the mid-’90s to the internet of today,” said Meir. “Blockchain is on a similar trajectory. We just can’t imagine all the opportunity and efficiencies blockchain will bring to businesses coupled with groundbreaking disruption. In this moment, executives should be asking themselves, ‘how can I capitalize on blockchain for my business?’”