Disruption may be an unavoidable reality: Is blockchain the new status quo?
It’s safe to say that blockchain is not going away, so people working in tech should have (at least) a base-level understanding of how this technology works. In the final part of our interview series, we dissect the IMF’s piece The Internet of Trust and discuss the lessons the IT world can learn from the blockchain technology.
First things first: Hyperledger releases Fabric 1.0
A significant milestone for the open source business blockchain community, Hyperledger Fabric 1.0 heralds the technology’s readiness for production deployment and operations.
Hyperledger Fabric is a blockchain framework implementation and intended as a foundation for developing blockchain applications, products or solutions, according to the post announcing the new version. “Fabric offers a modular architecture allowing components, such as consensus and membership services, to be plug-and-play. It leverages container technology to host smart contracts called ‘chaincode’ that comprise the application logic of the system.”
If you want to hear more about Hyperledger Fabric, check out this interview with Arnaud Le Hors, Senior Technical Staff Member of Web & Blockchain Open Technologies at IBM.
Blockchain interview series recap
It all started with one innocent question: Can blockchain transform the world? Although the answer is much more complex than a simple “yes/no”, one cannot ignore the fact that this technology is changing (some might say disrupting) countless industries. Our influencers believe that blockchain will significantly change people’s lives and improve citizen-government integration. Pain points are unlikely to go away but they are being addressed.
What about regulation? According to Perianne Boring, founder and president of the Chamber of Digital Commerce, the world’s largest trade association representing the blockchain industry, “it is very important that we don’t try to regulate this technology too early because it’s still developing – we don’t really know what it’s going to be when it grows up yet.” Meanwhile, Conor Svensson, founder of blk.io, a provider of enterprise blockchain platform based on Ethereum, states that “the need for support via law will not go away.” In the end, it’s just a matter of perspective.
Our influencers talked about their concerns (hype, complexity and our inability to understand the consequences of what we use it for, to name a few), the technology’s advantages and obstacles and named a few industries that cannot be disrupted by the technology behind Bitcoin — Is it too vague to predict that all the industries where there are regulations can potentially benefit from blockchain in the long run? We don’t think so.
Can/will/should blockchain eliminate the middleman? What are the benefits and/or disadvantages of a world without middlemen? Our influencers answered these questions in the third part of our interview series.
Now it’s time to dissect the IMF’s piece titled The Internet of Trust and discuss the lessons the IT world can learn from the blockchain technology.
Interview series with blockchain influencers
9 answers: IMF claimed in its piece called The Internet of Trust that blockchain can become “the next internet.” What’s your take on that?
Meet the Influencers
Chitra Ragavan: Yes, blockchains could be the protocol that reinvents the internet for business data, through direct peer-peer transactions. If internet 1.0 connected the world and 2.0 became the internet of information, 3.0 will become the internet for business data and direct financial exchange without middlemen.
Blockchain has the potential to drive everything from payments to supply chains.
Kathryn Harrison: I agree with that perspective. Blockchain provides a transparent, efficient way to transact – just as the internet did for communications in the 1990s. Despite the rise of digital payments and transactions, there remains a lack of trust and transparency, with most companies still handling their transactions as they did in the analog world, but with digital front ends. Blockchain really has the potential to drive everything from payments to supply chains.
Conor Svensson: Blockchain builds on the traditional internet protocols, by providing a store of value embedded in the network. This store of value is trusted due to it using secure cryptographic techniques at its core.
Hence we have this notion of the Internet of Trust, where an individual’s identity can be kept secure, and you can transact with untrusted parties and exchange items of value such as cryptocurrencies or tokens without going through an intermediary. All the while with the data being stored in a decentralized manner across the Internet, with no need to deal with the middleman should you choose.
This is the emergence of the next Internet.
Stephen DeMeulenaere: We see numerous proofs of the end of the previous era of internet development. With increased insecurity comes blockchain’s response to improve security in an increasingly digital world.
Marta Piekarska: I am not sure of that. I think that blockchain is a tool, while the internet is a means of communication. I believe that in few years time blockchains will become part of backend implementations of most technologies we use in day-to-day life, and everyday users will not even know that it is there. The internet, on the other hand, is very real to us, very present and visible. It touches us and end-users are completely dependent on it. But if the question is if it is as revolutionary as the Internet – then I would say: it has the potential, but let me answer that in 20 years time.
Eoin Woods: One way of looking at blockchain is a trusted data distribution and sharing mechanism, in which case, you could see it as a “new Internet”. This is how Swarm sees itself being described as “a project towards the ambitious goal of building the third web in the ethersphere”. I think we have a long way to go before we need to worry too much about blockchain replacing the Internet though.
Having worked on the Internet before it became mainstream, I readily see how blockchain technology is going to follow a similar trajectory and have the same significant global impact.
Dawn Newton: I said this long before they did, so clearly I agree. Having worked on the Internet before it became mainstream, I readily see how blockchain technology is going to follow a similar trajectory and have the same significant global impact. What the internet did for information, blockchains will do for finance and more. The Internet revolutionized global communications and the exchange of information. Before the 90’s, long distance telephone calls were extremely expensive and we even paid for local calling. This greatly hindered our ability to communicate with each other.
Fast forward to present day and we can interface with anyone in the world at any time of the day. Additionally, we have access to data from everywhere around the globe. No longer do we need to belong to certain organizations or have certain degrees to obtain this information. We can readily access public government documents, medical studies, and news from around the globe. Blockchain technology will revolutionize finance in a similar way by enabling financial inclusion, driving down transaction costs, and increasing access to capital. We will see a wide array of applications based on blockchain technology across a variety of markets.
Perianne Boring: Completely agree. Blockchain technology can provide a base layer upon which almost every industry can build faster, safer, and more efficient programs.
I have seen a lot of smart comments on blockchain from the IMF lately. In a recent speech, Managing Director Christine Lagarde said distributed ledger can be a tool to fight cyber crime.
“Fintech can also help protect financial systems against cyber-terrorism. A good example is the “distributed ledger” technology that underpins virtual currencies and other applications. This technology is less vulnerable to a single point of failure and could prove resilient to cyberattacks because the ledger—or record of transactions—exists in multiple copies.”
The IMF’s Advisory Group on FinTech is doing a fine job!
Paolo Tasca: I am happy to know that also IMF finally agrees with my three-year-old statement which has been time-stamped on my website:
What the Internet did for information,
Blockchain is doing for money with
the Internet of value exchange.
The blockchain seen as the “next Internet” could be divided into four stages:
Stage 1: “Value Internet”, namely value transfer;
Stage 2: “Industrial Internet”, that is to build vertical industry communities;
Stage 3: Blockchain will bring us into “Encrypted Internet”, differently from the existing public Internet context, which is transparent and vulnerable to attacks;
Stage 4: Will concern the involvement of internet into blockchain from being centralized to distributed: unmediated read-write own web (Web3).
What can the IT world learn from the blockchain technology?
Chitra Ragavan: Disruption is inevitable. Prepare for your world to become upended. The winners will be the ones who can change their thinking towards this radical new way of approaching decentralized enterprise systems. The losers will be the ones holding ground and treading water.
Kathryn Harrison: I think blockchain challenges the IT world to learn how to collaborate in new ways — IT teams have always had to collaborate with their business colleagues, but blockchain adds new layers of collaboration across legal, risk and compliance and more. While this new approach and collaboration may initially be uncomfortable for IT professionals, it opens up some exciting new opportunities and will allow IT to be a driving force for the evolution of core business models.
Blockchain challenges the IT world to learn how to collaborate in new ways.
Conor Svensson: From a technical perspective, immersing yourself into blockchain technology forces you to go beneath the surface of a multitude of computer science disciplines, including security, cryptography, game theory and algorithms. It’s hard to argue that understanding of these concepts in greater depth isn’t valuable for anyone in this field, especially as systems become increasingly complex and interconnected.
Blockchain is not going away, hence it’s in the interests of people working in this field to at least have a surface level understanding of how this technology works, and the use cases that it can be applied. No-one knows exactly when it’s going to become a mainstream technology, it could be in the next couple of years or even decade.
However, as with any new or emerging technology, it’s important for technologists to understand these technologies to ensure they are not taken by surprise when they become the new status quo.
Stephen DeMeulenaere: The IT world can learn improved ways to distribute data in order to reduce their risks of storing data.
Marta Piekarska: The biggest improvement to the IT world that blockchain brought was removing the requirement of trust when interacting with each other. What the IT can learn is how to build a revolutionary and very counter-cultural system that becomes mainstream.
Bitcoin popularizing the concept of blockchain technology in its heart was meant to be quite anarchistic. Yet today blockchain is used by most traditional industries, improving the way we exchange and store data, keep a record of ownership, build reputation or track certification claims. Thinking out of the box, relying on strong cryptography and mathematics is what blockchain brings to the table.
Eoin Woods: It’s sometimes worth rethinking your fundamental assumptions.
If Satoshi Nakamoto hadn’t done that, we’d never have had a blockchain.
Dawn Newton: Consumer key management is an area that IT should stay abreast of, benchmarking best practices as they evolve. Additionally, cryptography should have more of a role moving forward in IT, especially as we see identity theft become commonplace. It would be far more secure for end users to utilize signatures instead of passwords for logins.
Perianne Boring: Perimeter cyber defense models are broken. The IT industry should learn as much as they can about distributed ledger technology and study blockchain with an open mind, as it represents a fundamental shift in the way that cybersecurity is approached today. We shouldn’t stop here though – I encourage technologists to continue to develop even stronger cyber defenses.
Thinking out of the box, relying on strong cryptography and mathematics is what blockchain brings to the table.
Paolo Tasca: The traditional IT focuses on products and services that respond to basic needs of human life. However, what blockchain tries to do is to create a community built on concepts of identity and belonging that are derived from the consensus mechanism intrinsic to blockchain itself. This technology featured by decentralization and distribution of decisions aims to make a comprehensive use of all kinds of distributed resources and in the meanwhile, it ensures an open and transparent process for the users involved.
As the system load relies on multiple nodes instead of a single one, higher efficiency and lower risks of system crashes — as a result of the failure of a single node— are achieved. For those reasons, blockchain can invert the traditional IT network logic. If you think, for example, of the traditional telephone network, it was invented as a “smart network” offering services dependent entirely on the central switches owned by the phone company, and consumed via “dumb” devices that gave users no opportunity to improve nor change their network providers. Instead, with a blockchained IT network, no one controls the devices or apps that can live autonomously on its edge. It offers one service: securely time-stamped scripted transactions. Everything else is built on the edge devices as an app. It allows any app to be developed independently, without permission and deployed on the edge of the network.
Have we fully tapped blockchain’s value? If not, how can we do that?
Like all adoring parents of infants, we’re asking ourselves, what will this beautiful tech baby grow up to be?
Chitra Ragavan: We’re just tinkering around the edges. Blockchain technology is still very much in its infancy. And like all adoring parents of infants, we’re asking ourselves, what will this beautiful tech baby grow up to be? But as all exhausted parents know, it takes a really long time to find that answer. So we watch and we wait and we work to turn it into something amazing.
Kathryn Harrison: I often like to say that if you compare blockchain to the internet, we are still only in the early 1990s. Innovation is coming fast and furiously, but we are still in the early stages; only at dial-up speed.
What is significantly different, though, is that due to the growth and evolution of the internet, early adopters and fast followers can now quickly connect with others in the space and begin to explore all of the potential opportunities in blockchain. Experimentation and a willingness to fail will help companies not only to advance the technology but also to understand how it can transform their businesses.
Conor Svensson: Certainly not, we’re still a way off. As with any new technology, we need to experiment and learn from using it.
Blockchain requires collaboration between individuals and organizations to properly utilize it. There is a lot of information being made public by individuals and organizations alike to help grow the ecosystem and identify where this technology truly adds value. This sharing of information will help us all learn where it can be most effectively utilized.
Stephen DeMeulenaere: We have just begun to scratch the surface of tapping blockchain’s value. Stay tuned for more big surprises!
Marta Piekarska: It is way too early to know that. I will tell you in 20 or 30 years time.
Eoin Woods: I don’t think we have even started, we’re still in the early adoption and technology development phase, where we’re learning what the possibilities are. To find the value we need to experiment with it in as many problem domains as possible.
We are in the nascent stage of the technology and are still pre-mainstream. We need to follow the same playbook that we did for the Internet. We are still in the pre-AOL phase.
Dawn Newton: Of course we haven’t, we are in the nascent stage of the technology and are still pre-mainstream. We need to follow the same playbook that we did for the Internet. We are still in the pre-AOL phase. Right now we need to focus on standards, key use cases, and usability.
Establishing standards will ensure an easier and quicker path to scaling as everyone is speaking to each other in the same language. Determining key use cases is also critical at this juncture. Additionally, we need to be consistently focused on making the tech simple/easy for end users. From this solid foundation, we can keep iterating year after year and expanding the uses cases/markets for blockchain technology to revolutionize.
It has been twenty-five years and we still haven’t fully tapped the Internet’s potential. We keep iterating and finding new use cases. Back in the early days, we could not imagine Airbnb. I can’t wait to see what the future that blockchain technology brings us that we can’t even imagine now!
Perianne Boring: Absolutely not, we’re just getting started. Much R&D is needed to realize the potential of blockchain technology and find more synergies, efficiencies, and uses. Governments, academic institutions, enterprises, NGOs — all should be investing resources into blockchain. Many are in advanced stages.
Paolo Tasca: Blockchain is a foundational technology which brings significant innovation in the infrastructures and other underpinnings of the system. As such, it will take decades to completely unfold its potentiality. Although the exploitation of blockchain-enabled applications is just at the beginning, the trend is already obvious and visible.
We are going toward a proliferation of blockchain-enabled platforms supported by computer-based and network-based ICTs, which will allow everybody to be connected and disseminate (exchange) information (value) without intermediaries. These platforms will disrupt existing industry structures reducing the barriers between producers and consumers: the real sharing economy beyond “uberisation”.
We are indeed shifting from centralised two-sided platform business models like Uber and Airbnb, which market-mediate suppliers (lenders) and consumers (borrowers), to P2P blockchain-based platforms on the top of open and decentralised networks of ubiquitous on-demand real-time access to information and assets where users are also producers (and shareholders) and where value created is fairly and transparently redistributed. This paradigm-shift will be multiplied by the combination of blockchain-based platforms with other emerging technology breakthroughs in fields such as deep learning, big data analytics, robotics, autonomous vehicles, 3-D printing, nanotechnology, biotechnology, energy storage, and quantum computing.
This is the outcome of the fourth industrial revolution which is characterized by the blurring between the physical and the digital space. More than 20 billions asset intelligence—sensors and connected devices will be deployed by 2020. We are building smart factories and smart cities where cyber-physical systems monitor physical processes, create a virtual copy of the physical world and make decentralised decisions. Cyber-physical systems will communicate and cooperate with each other and with humans in real time (Machine2Machine and Machine2Human communication).
If you’d like to know more about the blockchain and meet the top movers and shakers in the global blockchain scene, join us in London in October.