The internet ushered in a new era of entrepreneurs and industries. Although some feel, it failed to fulfill it’s promise of being democratic, of providing equal opportunity to all stakeholders. Much like the era before, the internet has turned into a monopoly with a handful of companies controlling majority of the traffic and thereby majority of the wealth. All this at the expense of privacy of the people these companies generate wealth from. Jaron Lanier argues in his book “Who owns the future” that the middle class is increasingly disenfranchised from online economies. By convincing users to give away valuable information about themselves in exchange for free services, firms can accrue large amounts of data at virtually no cost. Many feel that Blockchain might become a way for these firms to start being accountable. It’s a long shot, but one that we need to get right.
The internet was not meant for distribution of value, it was meant for sharing of information. It made copying of data easier, it failed in enabling transfer of value.. Money, is not like a selfie, a tweet or any other information good. You can send the same selfie to all your friends, but not the same dollar. The money you send needs to leave your bank account. The same dollar cannot be used for two transactions. This is called the double spend problem. For people to be able to do business on the internet, there was a need for intermediaries which people could trust. Banks and number of tech companies jumped at this opportunity. They solved the double spend problem by clearing every transaction through central databases of one or many third parties. Each third party took a cut of the transaction in fees. The settlement in many cases can take days. The blockchain promises to reduce transaction costs and settlement times drastically without the need of a central authority.
Satoshi designed the system to work on top of the internet, but it can run without it if necessary. Dictatorial governments could shut down the internet and the blockchain could still function as a mechanism for transaction. You could perform transactions over shortwave radio, morse code or even a series of emoticons in text messages. Unlike the internet, the blockchain is a much more inclusive system.
Peace!
References
- Blockchain revolution by Alex Tapscott and Don Tapscott
- Who Owns the Future? by Jaron Lanier
- Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia by Anthony M. Townsend
- The Laws of Simplicity by John Maeda
- How the blockchain is changing money and business by Don Tapscott (TED Talk)
- How the blockchain will radically transform the economy by Bettina Warburg (TED Talk)
P.S. A lot has been talked about the opportunities and possibilities of this technology in the domain of finance, viz . micro-payments, currency conversions, remittances, insurance, Blockchain IPOs, Altcoins etc. I have tried to stray away from these topics as much as possible.All views are personal.
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