Blockchains, Diamonds And The New Transparency
Dr. Jemma Green , CONTRIBUTOR
If anyone has been paying attention to the tech world they’ll know blockchain is the flavour of the year. In fact, Sir Richard Branson and Bill Tai hosted a summit on the topic on Necker Island just last month, with others hosting events in Shanghai next month and many more around the world to follow. It looks like it’s going to be the new disruptive technology, but who is it going to disrupt and why?
For those who think blockchain is something that belongs in a toolbox in a shed, here is a simplified explanation of the concept:
Where the internet revolution has up until now given us lots of ways of sharing information, distributing that information in a more controlled way has so far been elusive.
In other words if you want to ensure that there is just one true copy of something that everyone can easily share and no one can alter, this control hasn't been possible.
Where computers have been used for copying and editing information and the internet for sharing and sending the information, it’s taken until now to finally figure out how to make sure you can a have a trusted single-source of information that no one is in control of and that can’t be altered or duplicated. John Bulich, co-founder of Power Ledger
It’s important that when I send you a dollar bill or a concert ticket you can’t just copy it whenever you like and send it onto someone else. It's only recently, with the advent of blockchain technology, that we have finally figured out how to make sure there is a single version of information amongst peers, that no one in the group can alter or duplicate the information without group authorization and to prevent a phony time stamp by a malicious user.
This central problem of distributed control is the issue solved by blockchain technology and it’s why suddenly a whole host of applications for storing value, certificates, concert tickets and medical records, are emerging.
This seemingly small change has finally allowed us to be able to transfer value over the internet without the need for a trusted third party, normally called a bank. There is no need for a third party as trust is implicit and inherent in the technology's design. That’s why this era is being called the internet of value because the new technology promises inviolable security. It’s set to trigger a revolution in all the institutions concerned with value including banks, insurance companies, payment processors, energy markets and so on. They’re on notice.
As with Bitcoin, which was the first blockchain project, the technology involves some very deep mathematics and cryptography but the applications are more straightforward and surprising.
A centralized bank will be under threat from a decentralized internet-bank like system. In the tech world, an internet-bank like system is really just a distributed ledger technology system - a blockchain.
So who, apart from banks, should be worried? Well, insurance companies, asset registries, exchanges and more. Just as the internet has put the BBC and centralized broadcasting organizations under threat from decentralized ones like YouTube, so it will be with any organization dealing with money and certificates.
The shift that reduces the importance of banks must also give rise to the power of Joe-public doing their own banking, much like citizen journalism challenged the power base of traditional media institutions. In the post-Brexit debate about whether London’s banks will decamp and relocate to Frankfurt, it’s possible that an entirely different outcome takes place. In a distributed financial world, the banking services may simply redistribute to everywhere and be nowhere in particular.
In the nearer future, it’s likely that decentralized mini-banks, will show up in many new areas, and, giving you a better deal on your mortgage and allowing you to switch lenders, close your old accounts and open up a new one in the same day. Or reduce the time to set up a new mortgage by 90%, like Homechain.
Who else might need a ledger system that is just as safe, or safer than a bank, but much more nimble, with less of a slice taken out for the service? Well, quite a few people.
Here are some of the other areas we can anticipate wholesale disruption.
Exchanging the exchanges
Overstock.com, an online retailer based in the United States, was the first company to become publicly traded over the internet using blockchain technology. New capital raising structures, as well as the highly explosive initial coin offering (ICO) scene right now, will disrupt traditional means to access capital, including stock exchanges, clearing houses, traditional venture capital and banks. To get an idea of how large this threat is, ICO’s alone have raised over $1.2 billion in 2017 so far.
MobileGo is disrupting app stores with its crypto-centric mobile gaming platform where game developers can sell their games. If MobileGo can capture even 0.2 percent of the $50 billion mobile market they will see revenues of $100 million. With more than 300 games already listed on the platform, it is becoming increasingly disruptive on the Apple Store, Google Play and a handful of Chinese game stores.
Another area that blockchain will impact, is the trading of electricity, where someone sells their rooftop solar electricity to their neighbour. These sorts of small and highly fluid transactions need a trusted ledger system that is going to settle payments transparently and efficiently and not take a big slice of the transaction like a bank.
Peering into the new transparency
If you think about the journey of a diamond, from when it’s mined, sorted and sold, to when it is mounted and displayed at a trusted retailer, say Tiffany’s or Harrods, there is so much opportunity to exchange a valid diamond for something of different provenance, like a blood or conflict diamond. Using the blockchain, each step of the production process can be verified, guaranteeing the legitimacy of a diamond. Everledger, in partnership with IBM, have implemented a verification process for diamonds at each link in the supply chain.
In Georgia, in the caucasus in Eurasia, the war destroyed many land registries, so no one was clear about who owned what. Land theft has been a big problem. Bitfury applied blockchain technology here, which means than no matter who burns what, the indelible and unforgeable records will now be able to be maintained. Such is the value of the technology when central agencies can no longer function.
But it doesn’t have to be about land or diamonds. The humble coffee bean and its provenance matter to the consumer because we want to know they’re genuinely from free trade sources. Soon, supply chain database management software and tools will be replaced by blockchain apps in the supply chain from Brazil to the coffee capitals of the world. Processes will be significantly streamlined for auditors, inspectors and international customs offices.
Making the documents match up with the people
In a world of increasing connectivity, identity fraud has been becoming more and more prevalent. In the U.S. alone, $122 billion in the past six years has been stolen through identity fraud schemes. Civic is tackling identity fraud with their two-factor authentication blockchain technology, which verifies not only users but also third party services trying to verify their identity. Most importantly, Civic also allows users to hold their own identity records and determine who can access them.
From beer money to careers
As the amounts paid for social media become higher and higher, no longer are citizen journalists receiving pennies for their contributions. Steemit, a social media platform that remunerates amateur publishers for their content, has paid out $1.3 million USD to content creators. Though the Steem blockchain aims to compete with Facebook, Instagram and Twitter, currently it is taking business away from blog and media pages, such as Medium, Reddit and contribution sites like business magazines. With the rise of citizen journalism, everyday authors are trading in their beer money wages for careers made possible using blockchain technology.
Peering through the chain
Perhaps one of the most interesting changes afoot is the ability for an open ledger to create a disruptive amount of transparency. Let’s say Acme pension company has an open ledger on their fund so we can see exactly who they are investing in and what those companies are up to. Is there child labour? Are they polluting waterways? Are they cutting spending on environmental management? There will be nowhere to hide on the open ledger system. It won’t be just what these companies decide to tell us in their annual reports and sustainability brochures. Every transaction, subsidiary and supplier will be open to scrutiny.
Of course corporations can still use the "dark web" of commerce, but secret maneuvers will be far more conspicuous. Perpetrators of hidden agendas will be found out. Witness Wells Fargo who created millions of fraudulent bank accounts on behalf of their clients without consent.
This illumination of every part of the supply chain and its credentials is perhaps one of the most interesting facets of the new blockchain world. Enterprises will be compelled to reveal information to customers like never before, while still maintaining privacy in commercially sensitive areas.
From talking the talk on their corporate and social responsibility pages, companies will now have to walk the walk or risk being relegated to the dust heap, as consumers choose companies from the next generation of commerce.
It's all about people wanting see feel and touch the facts for themselves before believing what the company says and blockchain allows that to happen. It will create a generation of investors to interrogate sustainability performance and see it for themselves. Mark Andrich, founder & CEO of Sustainable Trust
Jemma Green is a speaker, author and consultant on the enterprise disruption caused by blockchain technology, with special expertise on energy and the sustainable economy. Disclosure: I own bitcoin.
This article originally appeared on Forbes.com.