(This article first appeared in the 2017 Techonomy print and digital Magazine.)
The advent of Bitcoin/Blockchain innovations is very much like the arrival of the Internet/World Wide Web. The blockchain will fundamentally disrupt technology, society and business, just as did the Web. It was the first significant overlay on top of the Internet when it emerged in 1992, and the blockchain is the second one. This new technology is mostly about trust, so we could call it the trust layer.
In many cases the blockchain will replace how databases interact with each other. Databases are generally controlled by individual companies or organizations, whereas the blockchain is a commonly-shared ledger with access equally distributed among its users. That equality of access is a key part of its appeal. The blockchain puts the record of who owns an asset with the owner of the asset, and does not rely on a third party that owns a database that points to a record that says who is the owner. Instead of each organization maintaining its own database of records, the blockchain’s common record is shared by multiple parties who have a collective stake in it. They agree to update only one single version, known as the blockchain ledger. Each party adds their own information, and users of the ledger become peers with inherent rights and access permissions.
Once a change is made in the blockchain, its history is unalterable. That is a fundamental aspect of its computer architecture, and makes it highly secure as a means of keeping track of all sorts of data, financial and otherwise. The great virtue of blockchains will be to keep track of records in a way that is not controlled by any one central entity, and yet cannot reasonably be disputed.
The Web could not exist without the internet. The Web made the internet more useful, because it was about using information, rather than merely figuring out how to hook up computers together. Blockchain applications need the Internet, but they could in some instances bypass the Web and give us a new flavor of software applications that are more decentralized than traditional Web applications, and perhaps more equitable.
Just like access to the Web can be public or private, blockchains and their applications will come in both public and private versions. The key characteristic of public blockchains is that they are permissionless, which means any user can join, either anonymously or with a known identity. If you can get on the Internet, you will generally be able to get on a public blockchain, via a specific application. But private blockchains are like fenced environments whose membership and access rights are only granted to parties already known to each other.
Any executive or leader must understand three strategic themes:
- The Blockchain as a Website
- The Blockchain as a Development Environment
- The Blockchain as Google-like
It is unfathomable today not to have a website. Almost every business, organization, entity or individual owns or runs one or several. The blockchain is destined for a similar future.
One role of the Web is to help define an identity for its users, via profiles that we either deliberately create on Websites or that are created for us based on the Websites we visit. Websites or apps also serve as front doors to our companies, services, products or our personal brands (on LinkedIn, Facebook, a blog, or an artist’s website, for instance).
Fairly soon, every company will operate or be on one or several blockchains, just as organizations have many websites today. Similarly, we will soon have blockchain-based identities. A plethora of blockchain applications will lead to new sorts of Website-like utility, and blockchains will allow us to interact within new trusted environments that didn’t exist before.
For companies, blockchains could be operating in the background of a website, as reference repositories for the authoritative version of the “truth.” They will make available useful information about what has happened, when it happened, who was involved, and what transactions took place. This will be true for commerce, for contracts, for historical records of corporate and personal behavior, and for legal matters, among many others. Blockchains will confirm what actually exists and who owns or is responsible for it. (For more on what this means for finance, see article on page TK.)
Companies must begin to ask what uses would be appropriate for the blockchain, starting with their current operations. Just as we all asked, for our first websites, “What information can we publish?”, there will be basic questions to answer about using blockchains: What types of (digital) assets can we transfer, manage or create there? What do we need to keep immutable records about? What data or processes can we notarize on the blockchain, so we can later enable peer-to-peer transactions to occur without requiring someone to check them?
The first phase for using the blockchain may involve recording and moving assets, identities, ownerships, contracts, balances, records or data. That will be the equivalent of the electronic brochures that were the first websites in the mid-90’s, and will be succeeded by far more complex uses.
Just as the Web brought us Web Applications, the blockchain will usher in Blockchain Applications. There will be many ways to build them. You will be able to build them natively or mix them within existing Web applications. In theory, just about any software application could be rewritten with some decentralized blockchain element.
As we attempt to understand what will happen next with this peculiar and promising technology, perhaps we should think of 2017 for the blockchain as equivalent to 1995 for the Web. That’s when the Java programming language became available, making it easier to create large-scale Web applications. Applications that were written with Java could run on any Java Virtual Machine software, regardless of which kind of computer architecture it resided on. Importantly, blockchains similarly allow programs to execute without requiring developers to be concerned with a specific computer architecture.
But to achieve all this promise, we will need millions of software developers to become proficient with blockchain technologies. (There are less than 20,000 today). Meanwhile, over 9 million developers worldwide now program in Java.
Today, we “google” for nearly everything–information, services and products. Tomorrow, we will search blockchains to perform the equivalent of “googling”– to verify records, identities, authenticity, rights, work done, titles, contracts, and other valuable asset-related processes. There will be digital ownership certificates for just about everything. We will expect the utmost transparency in all record-keeping.
I still remember the initial excitement around being able to track a shipped package on the Web when FedEx introduced this capability for the first time in 1994. Today we take it for granted, but the introduction of this feature was a watershed. It demonstrated what we could do on the Web. It helped illustrate to a broad public that a previously private service could become accessible to anyone with Internet access. A whole host of such services followed: online banking, filing taxes, buying products, trading stocks, checking on orders, and myriad others.
Blockchains cannot be described as a revolution. They are a marching phenomenon, slowly advancing like a tsunami. They have many facets. Just as it took a long time for the Internet to infiltrate our world, the blockchain will spread slowly at first, then pick up steam. Today, we’re saying blockchain does this or that, but tomorrow blockchains will likely be unremarkable. We will talk more about what they enable.
What is today in a database will tomorrow be in a blockchain. Today, we wonder, “Is it on the web?” Tomorrow, the question will be: “Is it on the blockchain?”
William Mougayar is a Toronto-based investor, blogger, and author of The Business Blockchain (Wiley, 2016). He is an advisor or board member for some of the world’s leading blockchain organizations, including Ethereum, OpenBazaar, Coin Center and Bloq. He blogs about blockchains at Startup Management.