The Blockchain Will Revolutionize Everything
Posted On: October 30, 2017
Picture a son or daughter who yearns to send his or her hard-earned money to their home country as a remittance, but despite years of employment, their family doesn’t have access to a bank account. At the same time, a high-frequency trader is crafting algorithms that can purchase and sell financial instruments in less than 100 milliseconds, but then has to wait three days for their stock trades to settle in their accounts.
While our technology might vastly improve, the infrastructure on which our society is built on hasn’t changed for decades.
Banks, data repositories, and businesses like Facebook, Uber, and Visa are founded on the idea of centralization. They act as the gateways between people and organizations, and they collect data they can later sell or give to governments.
This leads to what is known as the “productivity paradox.” Coined by the economist Paul David, the term describes when society undergoes rapid technological advances layered over existing architecture. This causes productivity rates to drop.
For example, manufacturers needed roughly 40 years to change gears from steam power to electrification, and dabbled between the two for years. Despite advances in high-frequency trading, traders escaping positions in seconds still have to wait three days before trades settle in their accounts. This is the byproduct of monolithic systems like the Automated Clearing House (ACH), which handles trillions of U.S. dollars in transactions annually.
The solution to this lies in the blockchain, which decentralizes transactions and removes the unnecessary complications of intermediaries. Blockchain allows anyone to verify a time-stamped ledger, which makes situations that rely on middlemen disappear. It won’t matter if banks refuse service due to lack of identification or credit card companies charge exorbitant fees.
You’re already seeing it in countries like Nicaragua, where 14 percent of people have any semblance of formal savings, while 93 percent have a mobile subscription service.
For the unbanked, the transition to a blockchain system would finally allow access to a sustainable source of credit and the chance to save their money for their family’s future.
With blockchain, people in any country can exchange money and information over an immutable ledger rather than deal with government oversight or corruption.
It doesn’t stop there.
Industries centered around data storage, resource management, record-keeping, and healthcare are all poised for change thanks to blockchain technology. The result will be broader participation in the global economy, as more people tap into the power of blockchain and store their information in an immutable trustless transaction ledger.
What would such a world look like?
In a world where most individuals with mobile access can participate in the economy, enormous additional value will be created. Business can be conducted without identity checks and transactions fees. Citizens of countries ruled by corrupt, reckless, or authoritarian governments have a greater chance to garner some of the magnificent wealth generated in this era. Governments will legislate and create propaganda, corporations will skirt the negative externalities, and those at the top will attempt to continue the status quo. Yet individuals will have increased power and agency thanks to their participation in the blockchain.
What we’ve seen with blockchain in 2017 is just the beginning. It’s not even the first inning; it’s the pre-game warm-up. While the distributed ledger technology that is blockchain is revolutionary, there is still a massive amount of work that will need to be done before these systems enter mainstream adoption. But it’s happening, the wheels are in motion, and it’s unstoppable at this point.