This past month has brought me on an unexpected journey — into the world of blockchain. I’d known from the outset back in July when I was introduced to a merry band of sustainability gurus that blockchain would play an important role in the fashioning of a sustainable planet. I just had no idea how. At the same time, just in the last several months, the call for ‘humanitarian blockchains’ has grown louder with each conference.
After all the conferences and conversations, I’ve concluded that the implementation of blockchain-based solutions will offer humanity an opportunity to reset the world as equitable and sustainable. Blockchain will shape the future / rewrite the rules for personal and corporate finance, medicine, education, insurance, humanitarian relief, human rights, local sovereignty, supply chain transparency, identity verification, construction finance, and so forth.
Blockchain — The Hype, The Hope, The Work Ahead
And yes, I am quite cognizant that it will take some time to write the code and set the rules. If you are coding for outcomes, you can miss the mark. There could be unintended consequences. How do you verify identity so that educational, financial, and medical records and services can be secured by a given individual while at the same time protecting that person’s privacy, for instance? There are a lot of people around the world working on such basic architecture, addressing these challenges. Blockchain will happen in phases as these challenges are met; these are still early days, but of this we can be assured at this point: blockchain will continue to grow in impact.
I began with the question, “Can we build a sustainable planet through blockchain?” and ended with the conclusion that in fact it is hard to imagine us doing so without it. Blockchain promises radical transparency, a prerequisite to any sustainability effort. That transparency via blockchain will extend to contractual relationships, with the contracts executing like code over time, altering as various preselected conditions change.
Could Crypto-Infrastructure Bonds Finance Sustainable Infrastructure?
Blockchain may also become the means through which we finance the many trillion dollars of sustainable infrastructure we will need to build over the next decades. It is hard to imagine the world’s governments funding such an effort. There is neither the budget nor the political will, and the incumbents that are now profiting from a broken system (banking, health care, environmental destruction, government itself) are fighting every inch of the way. What if Puerto Rico, practically wiped out by Hurricane Maria, with a shattered infrastructure and economy, ignored and abused, were to create a cryptocurrency backed bond to rebuild its infrastructure as green and sustainable planet, and belonging to the coin holders who supported this construction? A distributed solar grid, one built with a crypto-bond, would be welcome there. Haiti could also have an ICO (initial coin offering) for repairing its infrastructure. In each case, these island-wide infrastructure projects could be managed and audited via blockchain. But then how does one code this right? What would the logic of their “smart contracts” be? If the key to charitable giving via blockchain is the verification of the recipient’s identity, then it is going to take a long time to verify the millions one would be seeking to serve.
Blockchain And Supply Chains Made Transparent And Sustainable
Blockchain, as a distributed ledger, can generate a “chain of custody” for every item in a supply chain, creating the level of transparency needed to remake this supply chains as sustainable ones. In the apparel industry, for instance, the supply chains run four and five deep, with little real visibility into whether ones suppliers are acting in an environmentally responsible way. By putting one’s supply chain, with all its goods, transactions, and compliance verifications on the blockchain, the entire set of relations are rendered visible. How was that shirt in fact made? Was this salmon in fact ‘sustainably raised’ these grapes ‘organic’? Sourcemap and Provenance are two companiesto keep an eye on as we seek to bring supply chains to account. We all know that there are ‘bad actors’ in both food and apparel, for instance, when it comes to protecting the environment, or when it comes to human rights. With blockchain, companies can be verified as acting sustainably, giving companies and consumers a visibility into supply chains they can’t get now.
Verifying (The Humanity Of ) Billions
Blockchain has the capacity to verify your identity. If you have a verified identity on blockchain, it is immutable. It can also carry with it and with it all your assets, educational and medical records, all attached securely. Just think of the billions now invisible whose lives will be improved if people had a means to own and share their information and transact peer to peer. Think of the refugee, or the immigrant wanting to send money home without it taking a week and 25% in fees, or the homeless, something “Blockchain Humanitarian” and Boardmember of the Blockchain Compliance Alliance Christian Ferri envisions and is seeking to enact. Think of all the women in the world without proper financial, medical, or educational resources. Again, all that said, there are all sorts of privacy considerations that need to be worked out. How does one share ones information securely? How do we choose to share some subset but not all of our personal data? Ongoing pilots are teaching us how our approaches need to be tweaked / well coded to achieve the desired outcomes.
“The Wave Is Coming. We Just Don’t Know When”
So said Alex Mashinsky, CEO, Celsius Network, as he kicked off a forum his company sponsored in New York called Ethereum’s Future on October 23rd. I’ve known Alex well over a decade. He is a serial entrepreneur, and a successful one. He had, as he explained, been a blockchain skeptic for years. For him it was too slow. And no value was being created. Just people trading coin with each other. Pure speculation. Now though Alex was a convert. There were maybe a hundred at the forum, entrepreneurs, VCs. cryptocurrency traders. Alex’s focus was on what could ignite the market, create the customer base for his company, which is launching a peer-to-peer lending platform. If blockchain can enable direct, secure, immediate, and inexpensive transactions that benefit the poor, homeless, and the refugee, it can also be a boon to the rest of us, for people seeking loans or an opportunity to invest.
Alex asked, “How do we get from 10 million holding Ethereum to a billion?”, “What will be The Killer App?”, What will be The Netscape Moment when a blockchain enabled solution drives mass adoption, when we move speculation (literally) and we start taking all the uncertainty, the inefficiency, along with the rent collectors and middle men, out of commerce itself? What simple, dumb thing will blockchain allow us to do that will draw in the numbers necessary to make a market?
I asked the panel what the social and political implications of blockchain were. What would a frictionless, transparent world look like? Alex wisely answered that the outcomes are up to us. Blockchain is not a magic wand, but a platform, code that is executed. There is much about blockchain that is inherently democratic in structure. It is governance by consensus. It enables distributed authority over a central one. It institutes a radical transparency. But since the technology leaves a permanent audit trail of ones transactions, governments for instance could employ such technology to curtail freedoms, and violate privacy.
I wanted and needed to learn more, so I signed myself up for The Blockchain Economic Forum October 30th/ November 1st, in New York City. There were about 500 attendees. Entrepreneurs, VCs, bankers, brilliant coders, a couple of dozen visionaries, and the curious. It all felt very 1994. No doubt blockchain is in a speculative bubble, but that is because people see its potentials. As with The Internet Bubble, one could imagine that out of the 100 or so companies represented at the conference, a couple becoming ‘home runs.’ A couple will develop the right business models at the right time, will have the right team and resources to execute, and have a competitive edge in regard to the competition. All along the way, the coders will be kept extremely busy.
This is where we are on the innovation curve: Lots of startups and VCs chasing each other, lots of people trying to make money on the trade, but with the platform still immature, the rules of the road yet to be defined, and the social and political implications emerging as the technology evolves and we start to apply blockchain to the task of impacting people’s lives positively.
The consensus at BEF, best voiced by Matt Spoke, Board Of Directors, Enterprise Ethereum Alliance, was that was that we have to first tackle the challenge of interoperability, and then of governance, before blockchain can really see mass adoption in an app. Then in the words of Reese Jones, Associate Founder at Singularity University, blockchain becomes “another protocol on the Internet.,” or as was recently formulated in The Wall Street Journal, “The Internet of Money.” What simple, dumb app will trigger blockchain’s blossoming as a mass market technology?What problem is blockchain able to solve now for a mass of people? As per Alex Mashinsky, “The Killer App Lives On A Distributed Ledger.” We need to understand what blockchain is best for, given its basic architecture.
At a panel entitled Will Blockchain Transform the Global Economy? —Miko Matusmura, CoFounder at Evercoin Cryptocurrency Exchange, offered that blockchain needs to move from a “pretend economy” to the “real economy” via “end user gateways.” Blockchain must become useful to people, resting behind a moble app that allows them to send money to friends and relatives immediately and directly — peer to peer without a Paypal, a central bank, and no time required for ‘settlement.’
“Blockchain Is The Sh*tty Database You Use When You Don’t Trust Anyone”
Miko is extremely quotable, and therefore a great explainer. What Miko means by this is the following — Validating transactions on a distributed ledger is a slow process, relative, say, to speed with which centralized systems that banks and credit card companies now process our transactions. Blockchain will not be used to process 500,000 transactions a second any time soon, yet there is some expectation that as we design for it, and the technology advances, we will be able to scale blockchain more and more, enabling applications that require an ever larger number of transactions per second to be viable. Here is an advanced discussion of the scaling issue. Here is another attempt to grapple with the issue which concludes that the issues will be surmountable.
For now, let’s stipulate that blockchain is most valuable in low volume, high value transactions. That is where blockchain will have an early, and natural impact. Everledger, a blockchain startup, has produced a platform for the diamond industry that authenticates the identity of diamonds, and thereby protects against fraud and theft. A broader application to art and collectibles would seem logical, given the importance of provenance and authenticity. The artifacts would need to be uniquely identified; as with people, there’s a necessary onboarding / validation process. The goods on the chain would be ‘tokenized,’ given a running ‘worth’ within the cryptocurrency, with the blockchain providing ownership, proof of authenticity, and provenance — its history. In this scenario, what happens to all the brokers?
Jalak Jobanputra, Founder/Managing Partner, FuturePerfect Ventures, an early investor in cryptocurrencies, both foresees the potentials, but also the enormous technical and global challenges facing blockchain’s broad adoption. Eran Iyal, CEO of Shopin, a distributed Amazon that allows users to own their own data, sees in blockchain the potential to “unleash an egalitarianism never seen before” as these challenges are met.
The grand question facing the panel was this: “A $5 trillion crypto market by 2025 or just a bubble?” The sudden emergence of a multi-trillion dollar market is inevitably generating a speculative bubble, so both are true.
“Peak Centralization: We’ve Stopped Trusting You”
If the conference had a theme it was this: We stand at a moment when, literally, “the center will not hold,” or rather the center is holding too much. Look how easily hacked our large scale systems are, whether Equifax, Yahoo, Facebook, Twitter, Google, governments. Can this all get any more unwieldy, opaque, and inefficient? Look at our broken paper processes. Those entrusted with our identities have failed to protect them, even have used our data against us. The problem is more one of architecture. A centralized system becomes more vulnerable as it scales because there are ever more points of entry. Along the way, the complexity increases, and along with it, siloing and opacity. For the many who profit on the status quo, their necessity in the process is a feature and not a bug. For the rest of us, it is a set of rules written by the entrenched. At this point, as per Miko,“We shouldn’t trust anybody with our money.”
We await the day when a”slow blockchain starts to replace slow bureaucrats,” and the process of decentralization can begin, as Valentin Preobrazhenskiy, Founder at LAToken and organizer of BEF would have it. Putting the world on a distributed ledger would begin at the right place — not at the top, but starting with every person, then every community. On a distributed ledger, value may be distributed equitably. It would also be vastly more secure, immutable, and audit-able in real time. But again, this is but the long view. For now, as Miko would recommend in this interview with Business Insider, be cautious. At the same time, he favors Elon Musk’s dictum “It is better to be optimistic than not.”
“All Value That Can Be Tokenized Will Be.”
It’s coming. One used to speak of everything in the world becoming securitized, that is owned in some way, assigned a value. Tokenization, by contrast, involves the encoding of rules, conditions, relationships, procedures that confers value as conditions change. Perhaps it was not so surprising to find at least a couple of game developers there at BEF, for what they do is design dynamic worlds held together by code that structures the rules of that virtual society, usually built upon a virtual currency. As one developer put it, the purpose was to “Establish a virtual society based on blockchain / crypto currency them export it to the real world.”
The game we are now playing is one we are all losing. Let’s make a new game, one that would build a world we’d want to live in.
A lot of conversations were begun at BEF over the two days, and there is much more still to relate as they continue. Heres’ the video from Day One:
My next post on blockchain, however, will be an overview of what I learned at The Humanitarian Blockchain Summit, which took place last Friday at Fordham, and tomorrow’s Blockchain For Social Impact at The Microsoft Center in Times Square. The fact that such conferences on blockchain are increasingly focusing on humanizing potentials it holds are happening now regularly ought to give all of us hope, even as the very rules still need to be written.
Source : https://www.forbes.com/sites/marshallbrown/2017/11/16/will-blockchain-unchain-the-world/#4aa1c0ce224f