It’s been called “the second generation of the internet”, an invention just as essential as the world wide web itself. It’s already underpinned the rise of bitcoin, and one analyst has predicted, it will be worth US$340m by 2021. Not bad for a technology which is only 10 years old.
The world’s business community has realized the potential of blockchain, a decentralized ledger technology whose influence is spreading way beyond cryptocurrency, disrupting everything from travel to healthcare. The revolution is happening.
At its simplest, blockchain is reliable, efficient and very fast way to process transactions, using a connected network of computers to compete against one another. When a transaction is requested, all connected computers (known as ‘miners’) race to process the request. When one of the computers wins the race, the rest of them validate the transaction it creates. If more than 50% of the computers agree the request is valid, it goes ahead, and a record is kept as a new encrypted block, added to the shared ledger.
The technology has echoes of Wikipedia in the way it democratizes the process of data-creation, and the advantages are manifold. It’s impartial, incorruptible and it doesn’t require a bank or broker to oversee the transaction, which could drain money and create data breaches. It’s accessible, transparent and the encryption technology provides complete security. The blockchain updates itself with new transactions every 10 minutes, so it’s extremely fast, and power outages aren’t a problem.
The potential
Blockchain was created by the same people who built bitcoin, as a means of validating the transactions made using the cryptocurrency. But as Don and Alex Tapscott, authors of Blockchain Revolution, tell us, it can be used to record almost anything of value. Last year the Future Thinkers podcast suggested 19 different industries blockchain could disrupt, from banking to betting, taxis to voting. But even this estimate seems conservative; Wired recently claimed, for example, that the gemstone industry was testing a blockchain to prevent the sale of blood diamonds.
Little wonder that the value of the blockchain industry is rising at such a furious pace. Market intelligence firm Netscribes has predicted that it will grow at a compound annual rate of nearly 43% between 2017 and 2022. Unsurprisingly, the financial community is already working feverishly to cash in on this potential goldmine. UK financial giant Barclays has ploughed money into the technology, and JP Morgan has created its own customized version of blockchain, Quorum, to ensure it is not left behind.
In a world which is getting ever-smaller, we need a global transactional tool which allows us to share money and data, in real time to all corners of the planet. The rules must be clear to everyone, and we must be able to trust all the players involved.
With blockchain, we may just have found the solution.
EU Business School is running its own dedicated Blockchain Management course in Geneva, a global hub of the blockchain industry, this summer. Contact Svetlana Elinova at s.elinova@euruni.edu for more information.
