Blockchain is producing a new world order that will change how we transact for products and services forever. Future technology giants will challenge the status quo by creating new applications that are entirely built on the blockchain “infrastructure”.
There are two concepts that must be understood before rushing headlong into a discussion about blockchain. The first — tokenism — is premised on a new world order in which anything and everything is being converted into a digital record or token. The second is the undeniable shift from a centralised to a decentralised transaction-tracking world.
You can think of blockchain as a decentralised ledger that is designed to track every transaction, involving every token, that takes place. This is no ordinary ledger, though. Each transaction is “seen” by every party to it and ratified by the consensus (or collaboration, if you prefer) of those parties. The blockchain “ledger” is immutable, totally visible and eliminates opportunities for corruption.
Gone are the days of having to protect transactional data by storing it on secret servers hidden in separate server rooms countrywide. Because blockchain “lives” on the Internet, you can have as many ledgers repeated in as many countries as you wish (decentralised data) with the record of ownership held by all parties to the agreement.
Blockchain will revolutionise business models where there are multiple parties making a living from a single transaction because it does away with the need for intermediaries. Take for example a house sale — a transaction between a buyer and seller. This is currently finalised with inputs from dozens of “hangers-on”, including real-estate agents, property valuators, conveyancers, deeds attorneys and banks, to name a few.
We have processes that have been invented with reliance on intermediaries to audit and ensure that everything is in order; every time we have an independent party verifying a transaction, we have additional costs that are not actually needed. The new world order that blockchain is introducing will say, “Enough — if you don’t add value, then get out of the way!”
A decentralised World Wide Web will ensure that power shifts from capitalists such as Amazon, Google and Facebook back to the individual, but companies in all areas will face disruption from blockchain-empowered competitors. Stock exchanges are among a long list of firms that will have to evolve or face obsolescence. We are nearing a time when securities will not be listed on stock exchanges but rather “tokenised” in a crypto world where they will trade, clear and settle — without intermediaries — peer to peer and in real time. We have already seen a worldwide decline in new stock market listings as money moves to coin offerings and blockchain.
Consumers will benefit
Consumers will benefit immensely from blockchain. Not only will they have greater power over their personal data, able to decide where, how and by whom it is used, but also save costs on everyday transactions. The Internet eliminates the need for costly legacy systems and processes that are rife in the banking world. Small-value international money transfers that gobble up to R20 of every R100 transferred in fees are among the first transactions under the microscope. The necessary functionality has already been established and banks will soon offer international remittances in real time with very little cost.
The new technology will affect how financial intermediaries conduct their business, too. Blockchain is going to have an impact every intermediary in terms of how they record transactions and how they advise their clients on which financial instrument to get involved with.
Are you paralysed by the apparent complexity in the bitcoin technology? Who cares about how blockchain works; we just need to learn how to use it so that we do not miss out on all the new assets that will be put into this new technology that we will all be able to trade. Begin reading up on blockchain in recognition that the technology is upon us and will have an impact on absolutely everything.
- Monica Singer is “creator of opportunities” at ConsenSys, a global formation of technologists and entrepreneurs building the infrastructure, applications and practices that enable a decentralised world. She is also a former CEO of Strate in South Africa and a current member of the global Blockchain Advisory Council