A movement aimed at decentralization
In 2008, when the mysterious Satoshi Nakamoto released a white paper describing a vision for a true peer-to-peer electronic currency known as Bitcoin, few realized that it would spark what may be one of the most transformative technological movements of the 21st century.
The underlying and hyper-hyped technology behind Nakamoto’s digital currency implementation is blockchain. The simplest definition of blockchain is a distributed ledger system that is cryptographically secure, decentralized, and tamper-proof. Transactions are updated as hashed “blocks,” validated by consensus within a peer-to-peer network, and added to a continuous, immutable “chain” (thus the name) that all participants can view and audit. Each block (except the very first) references back to a previous one, creating a verifiable digital record and a trustworthy distributed database.
The framework for blockchain was mapped out two decades ago. Why did it take all this time for entrepreneurs, investors, and companies like IBM or TIBCO or Amazon or JP Morgan or Aetna to notice blockchain’s potential? Since modern global commerce is driven by a technocentric and “disruptive” business culture (looking at you Silicon Valley), blockchain should have been old news by now. It begs the question: Why blockchain now?
The modern smartphone revolution
Blockchain could be described as a technology ahead of its time. It’s instructive to remember that the first iPhone was released just a year before Santoshi’s paper. While Personal Digital Assistants (PDAs) had grown to be popular consumer computational appendages throughout the 1990s, the iPhone marked the start of the modern smartphone revolution. You really could hold the power of a small supercomputer in your hand wherever you roamed, thus the app economy emerged offering a never-ending selection of discrete software services to pick and choose from.
And you can still pick and choose pretty much anytime and anywhere you want. Mobile networking technology has only continued to advance. The next phase of connectivity (5G) is already starting to roll out in the U.S., China, and Japan. A significant portion of the global population (GSMA expects 71% by 2025) will be increasingly liberated by the digital revolution, gaining access to services and resources previously unimaginable.
Mobile technology is now more reliable, affordable, and ubiquitous than ever before. According to the GSMA, there are well over five billion unique mobile subscribers globally. Interestingly, the 2018 Mobile Economy Report notes that new growth will be driven by developing economies, particularly India, China, and Latin America.
The progress of the mobile revolution is indicative of a global movement toward technological distribution — toward the decentralization of access. Instead of having to go to a specific location and physically connect to a line or a terminal to compute, roughly ¾ of the world now carries a wireless computational interface in their pockets. Access to the digital world through affordable mobile devices is the embodiment of our growing comfort with decentralization, which bodes well for finally harnessing the power of blockchain. The model finally matches up with the way we use our technology.
Decentralized business models
But at the same time that mobility has freed us from the tethers of wires, another force chains us to a different master — the consolidation of data. This other factor driving blockchain’s sudden celebrity hinges on our growing discomfort with powerful gatekeepers to digital life. Traditional industry is increasingly dependent on small cadres of centralized institutions. Consider the influence of large banking consortiums such as R3 and TruSight in finance. Better yet, consider the might of FAGA (Facebook/Apple/Google/Amazon) in shaping just about everything that occurs online. Too much power is concentrated in too few hands, and that’s proven dangerous for society throughout history.
Select entities wield inordinate influence on the world’s digital business. Supporting decentralized alternatives enabled by blockchain thus becomes a rallying cry for choice and freedom, and drives a new wave of disruption.
Beyond Bitcoin
PwC’s 2018 Global Blockchain Survey, which surveyed 600 executives, found that 84% of them are dabbling with blockchain in one way or another. It isn’t restricted to Bitcoin. Blockchain may make many of our traditional systems of recordkeeping and finance obsolete. Sweden, for example, is experimenting with a blockchain-based land title registry, innovation that could impact the 70% of the world’s population that lacks access to proper land titling.
Blockchain may have taken a long time to really “arrive,” but it’s unquestionably here to stay. It’s importance has finally become evident. Decentralized architecture will have a lasting impact not only on the way digital businesses operates, but also on society as a whole. Blockchain can enable humans to develop alternative governance and financial institutions, stimulating lost concepts of democracy.