In this modern computer age, contracts, transactions and their associated records underpin the way the world works. These are the building blocks of our economy, our political systems and the way the legal world operates. These are the things that keep our society running the way it is supposed to, they preserve our identity and they keep track of all the events that happen on a daily basis.
These digital transactions maintain governments, manage social interaction and determine the way governments communicate with their citizens. But there is a bit of a problem. The speed at which transactions are made is now far outstripping the way they can be safely stored and recorded. The way in which we administrate these communications is too slow, potentially exposing them to risk. And that’s where Blockchain comes in.
Blockchain is an open and distributed ledger that records transactions between two parties efficiently in a transparent and permanent way. It is the technology at the heart of the virtual currency boom but its potential spreads much further than this.
The ledger created by blockchain lets us think about a world where contracts are stored safely in digital code, stored in shared databases where they can be identified and validated. This means that the classic intermediaries, such as brokers, lawyers and bankers may not be needed. Organisations and individuals may be able to use algorithms to quickly and freely transact with each other in a way that removes dispute and insecurity. In short, blockchain technology could change the way the world works.
However, this revolution in the way we operate does need to be carefully managed. If blockchain is to change the way we do business, and how economies operate, then we need to think carefully about what will follow. Blockchain allows for greater security through its open ledger system but what are the new potential security risks? In order for blockchain to reach its potential many old systems will have to be swept away, and this needs to be managed carefully.
The time when blockchain leads governments and business may be some years away. That’s because it is what is known as a foundational technology. This means it has the potential to create new foundations for our current systems rather than being a disruptional technology, which is when it shows a new streamlined and better way of doing what currently exists.
Foundational technology generally needs things to reach a tipping point when a majority of the organisations or major players decide that a change is necessary, such as when MP3s replaced CDs. But as blockchain gathers momentum, this moment in time is looking ever more likely.
There’s little doubt that blockchain will come to dominate the way things are done in the future. The big questions that remain are when this might happen and how the change will be managed. So maybe it’s better to be part of the process sooner rather than later?