The technology that may have the greatest power to transform our world is not social media or big data, but a technology arguably still in the infancy of its development- blockchain. Blockchain is known as the technology that underpins digital currencies like Bitcoin. However, the capabilities of blockchain go far beyond the trade of online currency.
I spoke with Sarah Mancinho, a Washington, DC based cyber security researcher who was named one of LinkedIn’s 2016 Top 10 Voices in Technology, to understand why blockchain technology has the potential to revolutionize our world; disrupting everything from healthcare to the financial industry and government itself. This is an exciting realm to explore as, Sarah explains, “We don’t fully know what problems or processes blockchain is capable of addressing yet. We are still trying to understand what the limitations and uses of this technology are.”
The Cost of the Middleman
Currently, we rely on intermediaries to perform transactions on our behalf. These intermediaries are necessary because they establish trust in the transaction. These middlemen include banks, credit card companies, government and social media. The list goes on. They perform functions like establishing identity between two parties in a transaction, performing record keeping, and more.
There is a cost to performing transactions with a middleman, however. These intermediaries slow things down (a simple transaction such as buying a coffee with your credit card can take weeks to settle), they take commissions on the movement of money between parties, capture personal data, undermine privacy, and exclude billions of people from the global economy. Not only that, these intermediaries are centralized, making them susceptible to hacking- as companies like Morgan Stanley recently found out when millions of customer records were compromised.
In this environment, says Sarah, “there is a huge opportunity for blockchain to revolutionize these institutions and the way we process transactions.”
How Blockchain Works
Blockchain is a new digital medium for value. As explained by Don and Alex Tapscott in their book, Blockchain Revolution, “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.”
What does this mean? It means that the blockchain database is not stored in any single centralized location. Information on a blockchain is duplicated countless times across a network of computers. While everyone has access to it, it runs on trust protocols- meaning it cannot be hacked or forged. This technology, to quote an article on Innovation Enterprise, is a “fully transparent, permission-less, proof-of-work, peer-to-peer distributed ledger” which makes it possible for participants to directly make multiple kinds of transactions.
The Transformative Promise of Blockchain
Blockchain technology offers the intriguing possibility of eliminating the middle man by enabling peer to peer transactions. This is possible because blockchain has the ability to record transactions, establish identity and establish contracts. Trust is established through mass consensus using a network. Through blockchain, anything of value- money, stocks, digital properly, land titles, music, and even identities and votes- can be transferred and managed securely.
Enabling people with the power to manage their own transactions has huge implications across industries, government and society. And, Sarah says, “has huge potential to do good and create a society that is more open and just.”
Here are just a few of the ways Sarah believes blockchain can transform some of the key institutions in our society:
Blockchain may give us a means of improving our beleaguered healthcare system. It can:
- Provide encrypted transaction history in ledger form to prevent discrepancies or questions from patients about covered services or payments made by insurance providers.
- Streamline interactions between health care providers and insurance companies by eliminating back and forth “haggling” for coverage of services.
- Secure electronic health records (EHRs) sharing and access.
- Store/develop patient reported outcomes via IoT devices (i.e. wearables).
Inefficiency and lack of transparency and accountability are endemic to government operations. Sarah believes blockchain can enable a more free, fair and accountable governance. Blockchain has the ability to:
- Provide transparency and accountability in an effort to eliminate waste, fraud, or misappropriation of funding.
- Facilitate in providing aid to programs, states, or other nations and ensure said funds reach the intended recipient(s).
- Enable a more streamlined and accurate auditing process.
- Provide a digital ledger system for things such as property, taxes, public services, and utilities.
- Supply chain management and auditing for the military.
- Enable open and fair elections, by ensuring the integrity of the system and its results.
The financial industry is essentially a complex tool to facilitate a simple act- that is, the movement and safekeeping of money. With blockchain’s ability to securely take on those functions, it has the potential to be a great disruptor to the industry- these are just a few of the ways:
- Bring greater accountability to the financial services industry.
- Enable real-time international remittances while reducing operational costs, human error and fraud.
- With the ability to establish a secure identity, banks will have the opportunity to service the billions of people in poverty who currently don’t have access to financial services.
In addition, Sarah points out, “In all instances, blockchain offers continuous, real-time availability without the limitations of a typically 9-to-5 work day where you have to call customer service the next day to find out why your doctor visit wasn’t paid for. The data is accessible 24/7/365.”
Soheila is the founder of Thinkstr.co and the Principal of Oppfinn Consulting. As a project manager and consultant, her interests lie at the intersection of innovation and societal impact. On Thinkstr.co, she writes about business, technology, travel and smart cities.