Let’s go for a walk into the future. The year is 2030, and blockchain is not just for cryptocurrencies anymore. Far from it, in fact: blockchain technology is everywhere now. Decentralized, distributed databases have woven themselves into every aspect of public and private life. Banks and financial institutions were the first to take the plunge. Governments followed soon after. Then, a landslide: insurance companies, healthcare providers, next-gen transportation services, food, water, energy, housing. And the benefits to society and business are staggering, indeed.
Your personal information is stored securely on the blockchain, along with that of hundreds of millions of others: tamper-proof, theft-resistant, inherently protected and easily verified. Identity fraud is finally a thing of the past. In fact, fraud and corruption in general are sliding towards extinction. Most financial transactions now play out on one of the many distributed ledger platforms that have sprung up over the past decade. Shady middlemen are fast becoming endangered species; their habitats have all but evaporated.
Your personal finances live in the blockchain. When you pay your rent, your own AI negotiates with the housing AI on your behalf. Once an agreement is reached, it dispenses funds from your account and receives a month of personalized housing credit in return. Fees, of course, are minimal, because the machines do all the heavy lifting.
When you need to visit the office to meet an important client, you tell your AI to start an auction with the self-driving taxis around your neighborhood. The winner gets to pick you up and take you to your destination, receiving funds from your digital wallet in return. And when you stop for dinner on your way back, your AI lands you a nice discount in exchange for an in-depth review. The restaurant AI knows you’re good for it, because you have excellent standing with one of the foremost digital reputation services on the blockchain. Meanwhile, your personal banking AI automatically manages your funds cheaply and effectively, only charging you for access to the bank’s data vaults and servers.
A Cornucopia of Digital Possibilities
This may all sound like science fiction, but it’s a lot closer to reality than you might think. In another 15 to 20 years, scenarios like this could very well be commonplace. The technology is unequivocally real, as is the potential for such far-reaching tangible benefits. Already, businesses and governments are latching onto the blockchain trend in hopes of disrupting their own operations and value models.
And with good reason. When bitcoin was first introduced, it was lauded as revolutionary but largely ignored as fringe technology by traditional players in the financial industry. But now that this upstart cryptocurrency has achieved a global market capitalization of $100 billion, with peak daily trades exceeding $500 million, even erstwhile skeptics cannot deny that there is power in the blockchain.
In terms of tangible, short-term benefits, financial institutions stand to gain massively. The blockchain trend could help the major investment banks reduce their infrastructure costs by as much as 30%, leading to annual savings of up to $12 billion. In addition, the technology could dramatically increase the speed with which international transactions are handled, while also reducing error rates.
And the promise of the blockchain future doesn’t end there. As large corporations move to create their own ecosystems, distributed ledgers will prove a valuable tool to establish trust with new partners, eliminate market friction and structure interactions with their customer base. Meanwhile, smaller companies will be able to create their own platforms, building on the inherent advantages of blockchain technology to band together. This will allow them to establish competitive networks, giving them the ability to disrupt the monopolies of established market forces.
For governments, embracing the blockchain trend has the potential to greatly improve their operational efficiency and effectiveness. One of the key challenges in this arena is the unification of public services and data in a single, trusted framework. By achieving this, governments will be able to cut down on infrastructure costs and remove unnecessary intermediaries. Decisions at any level of government will become fully traceable and auditable, rewarding citizens with greater oversight and unparalleled transparency while simultaneously eliminating conventional avenues for voter fraud, democratic decay and corruption.
Vaulting Hurdles in Blockchain Adoption
The possibilities of blockchain technology are functionally limitless. If we allow it to achieve its true potential, we can use it to transform the global economy on almost every conceivable level, and our societies along with it. To get there, however, a number of key challenges must be addressed.
The guiding philosophy of blockchain improves on the trend of centralization that has prevailed in business and government for the past decades. Instead of simply concentrating information in traditional silos, we must learn to apply the benefits of blockchain in peer-to-peer networks, extending the cost benefits of centralization. Instead of always going it alone on the path to greatness, we must learn to collaborate in ecosystems that are larger than our own corporate interests. And instead of internalizing and constraining vital processes, we must learn to externalize them and share them among the nodes in the networks we build.
This is not a trivial change. It requires vision, the will to shift toward a new way of doing business. We will have to bid old business models farewell and create new ones that are attuned to the benefits and capabilities of blockchain technology. Updating legacy IT solutions is one part of that puzzle, and this will certainly take time in and of itself. But the most important ingredient in all of this is trust. Mass adoption of blockchain technology is the most vital challenge to address, and this will require a paradigm shift in toward trust.
The Cornerstone of the Programmable Economy
We are living in a time of great change. Artificial intelligence is maturing rapidly. User interfaces are becoming invisible as screens make way for alternative UI solutions. The Internet of Things is gaining momentum, and companies are learning to think in ecosystems and transcend traditional market boundaries.
These developments provide us with the raw materials for the programmable economy, and blockchain technology provides the crucible. By combining smart objects, machine learning and new business models with a novel approach to value exchange and information management, we will be able to create a programmable economy where new markets and new types of added value can flourish. But a new economy is not made overnight; it must be created deliberately, with consumer interests at heart and a central focus on ethical business practices.
Earning the trust needed to create the programmable economy is not only the right thing to do, but an immensely lucrative proposition for those companies willing to forge ahead into the unknown waters of the blockchain future. After all, this trust will be the seed crystal for entirely new industries and value chains. In that, blockchain offers a rare opportunity: the ability to explore, to choose the path of adventure, to be the first in verdant new lands.
But make no mistake: there is a fine line between coming first and finishing last. The technology is already out there. The cat is out of the bag. When it comes to competitive advantage, it’s a use-it-or-lose-it situation. And the only way to mitigate risk is to move forward with purpose and develop new blockchain business models. Time to get started.