What is Blockchain?
Blockchain is essentially a digital ledger to record digital transactions. Invented by a group going by the pseudonym Satoshi Nakamoto, the ledger was originally created to record bitcoin transactions. Since its inception, many in the tech community predict its use in other areas.
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”Don & Alex Tapscott, authors Blockchain Revolution (2016)
The record of these digital transactions essentially takes the form of a database or digital spreadsheet which is duplicated multiple times across a network of computers. This chain is shared and continually reconciled, so information is up-to-date and public. As the information is collected across a series of devices, the blockchain database is not stored in one place, so it truly public. It also means that the information is harder for a hacker to corrupt, as there is no centralized location.
Blockchain technology is a lot like the internet in terms of its robustness, as by storing blocks of information across a network means the blockchain:
- cannot be controlled by a single entity
- does not have a single point of failure
Not only is the blockchain durable, it’s also transparent and cannot be easily corrupted.
Does Blockchain Equal a New Web 3.0?
With blockchains increased security, and ability to continually create and authenticate digital information, there are several new business applications that could result from the technology.
- Smart contracts – Blockchain-style distributed ledgers enable coders to create simply contracts that will only execute when specific conditions are met. Ethereum, an open source blockchain project, is already starting to experiment with this idea and others, to fully realize the potential blockchains on a truly world-changing scale.
- Impact on the sharing economy – companies like Uber and Airbnb have leveraged the sharing economy to achieve unprecedented success. Blockchain has the potential to open the door to direct interaction between providers and users, removing the need for intermediaries like Uber and Airbnb. In other words, this technology could lead to the decentralization of the sharing economy.
- Crowdfunding – Kickstarter, Gofundme, and more online portals are leveraging the power of crowdfunding or crowdsourcing. The popularity of these sites shows how more and more the consumer is looking to be directly involved in the development of products. Blockchain technology can help take this consumer desire to the next level, which opens the opportunity for the creation of crowd-sourced venture capital funds.
- Governance – blockchain’s transparency, with distributed database technology, could help bring public accessibility to elections or poll taking. Boardroom, an app which enables organizational decision-making, leverages blockchain technology to permit a company’s leadership to be fully transparent. Clear communication from leadership is vital for digital transformation, so this could have a huge impact on how companies communicate.
- Company ethos – the on-demand consumer wants to know more. They crave more information about products and companies. Increasingly, ethics impact consumer purchase decisions. Blockchain technology is transparent, and it is this transparency that will help shine a light on ethics.
- File storage – blockchain has the potential to change how we store files, which has obvious benefits especially as information would not be stored in one space, making it less vulnerable to hacking.
- Prediction markets – using crowdsourcing on market predictions is proven to have a higher degree of accuracy. Blockchain technology would allow for the “wisdom of the crowd” to be better leveraged.
- Intellectual property – many companies hope blockchain technology will open up intellectual property protection. Smart contracts, in particular, will allow companies to protect copyright and automate online sales, eliminating the risk associated with digital file copying and redistribution.
- Internet of Things (IoT) – another trend! The combination of this and blockchain has the opportunity to open doors to increase system efficiency, cost monitoring, and automation.
- Identity management – blockchain will only for better identity management and verification of data online.
- Data management – in the exchange of personal data, blockchain will add another level of user privacy offering increased security to social media users.
- Stock trading – there is a strong case for the use of blockchain technology in stock trading, as it has the potential to add significant efficiency to share settlement.
“2016 was the year in which blockchain theory achieved general acceptance, but remained in theory, with the big players lingering around the hoop waiting to see who would take the first shot. As the year comes to an end, blockchain technology is tantalizingly close to turning the corner and entering the realm of small-scale commercial ability. Overall, 2017 is going to be the year of the very well-considered and well-funded proof of concept, with a few projects achieving revenue positive status. Venture investment is going to continue to be substantial but less than we saw in 2016 and 2015. I’d predict one or two exits by acquisition.” Judd Bagley Director of Communications at Overstock.com and Chief Evangelist at t0.com
VentureBeat took a look at the blockchain world towards the end of 2016. They identified 9 startups to watch in the space.
Here are 5 that caught our eye.
A global marketplace for independent music.
With 78% of the music industry’s revenue not going to the artist, blockchain has presented the opportunity to bypass the industry, making sure the revenue goes to the creator themselves.
As the financial services are moving towards digitization, today’s customers are not satisfied with current identity verification solutions. Distributed ID is leveraging blockchain to increase security, improve identification processes and provide a higher level of certainty to the consumer and the industry.
Social influence converted into bitcoin
Consumers tell their networks when they come across something they like (or something they hate.) Ubby is looking to leverage this word-of-mouth marketing to enable social media posts to be turned into methods of purchase. So each time you endorse, you have the chance to earn a commission.
An informed way to run repair service businesses
Blockchain technology will help repair service businesses better monitor and analyze jobs, something which has been a sore point for the industry for a long time. FixHub is developing a tracking and analytics web tool to face these challenges, resulting is both cost and time savings for businesses.
B2B international payments done cheaper, faster
B2B businesses need to be able to send money internationally. To improve operational efficiency CoinPip designed a method of streamlining payment processes securely using blockchain technology.
Is Blockchain the Answer to Digital FSI Transformation?
Blockchain presents a significant opportunity to FSI businesses looking to digitally transform in the next few years.
Most notably, this new technology offers significant high levels of security. Cyber security is a huge challenge for digital transformers. Protecting consumer data, as well business assets is a vital step in the road to implementing digital technology in your business.
The transparency of blockchain also adds to this technology’s potential impact on digital transformation. A key driver is the desire to improve the consumer experience. As consumer’s look to have more control in product development, turning to crowdsourcing platforms to voice their opinions, blockchain offers a unique method to provide information and also collect data securely.
ABOUT FSI TRANSFORMATION ASSEMBLY
The Millennium Alliance is pleased to announce that application for their biannual FSI Transformation Assembly taking place September 14-15, 2017 at Four Seasons Resort in Palm Beach, FL is now open.
Following on from the success of our February edition with Keynote speaker – Lisa Shalett, Retired Partner and COO of Global Compliance, Legal & Internal Audit, Goldman Sachs, the FSI Transformation Assembly will bring together North America’s major financial services and insurance organizations.
While financial services and insurance CIOs will have to deal with many challenges in the coming year as the industry makes the final leap into digital transformation. C-level IT leaders need to understand the convergence of mobile, social, and cloud to stay ahead of the competition. One technological challenge remains prominent in the mind of CIOs everywhere – dealing with the complexity of data. This is something challenging all digital transformative industries.
With digital enhancement comes a massive explosion in data, which is creating unprecedented manageability issues for firms around the world that can be linked to the following factors: expanding customer touch points, emerging types of structured and unstructured data, new customer engagement and social media platforms, rising data security, and controlling the overall data volume.
This is not just another “Financial Services” event. Spaces are reserved for the best in the business. Enquire about attendance here!