Banks, Retailers, Social Media, Record labels, TV Shows or any other intermediary represent the normal world but, what If I tell you that from the last 10 years, a new disruptive technology is forcing economies to change.
On my first post I wrote about a powerful concept of our behavior as humans. There is a natural response when something tries to challenge our deepest thoughts and beliefs which might compromise our growth: Cognitive Dissonance. In my experience at Siemens, it has helped a lot to embrace new technologies. Next articles will address Digital Transformation starting with Blockchain.
Does it matter to switch from centralized markets to decentralized?
Surely, Yes. Just think about FAANGs (Facebook, Amazon, Apple, Netflix, Google) ruling the world, except China. All of them have accusations related to monopolies. Who gain more, creators/artists or intermediaries? I´ll let you to answer.
What does Blockchain mean?
In my words, Blockchain claims to be a new complex decentralized network powered by miners (who are members within the network that compete to validate transactions) and cryptographic algorithms to ensure transparency and promoting trust among users living aside middlemen. You cannot change a record on its network, and everyone is able to see all the transaction history. Plus, it operates on the Internet, of course.
Where can I see Blockchain applications?
On every newspaper these days. Bitcoin was coined after the network appeared back in 2008. Ethereum has been in the spotlight too and then every new cryptocurrency. But the most interesting application for me is a new “bank” called Blockfi. Endless proof of concepts are arising, take a look.
The Network in a nutshell
Blockchain networks and applications have been shaking the way digital economy behave and envision a futuristic decentralization of wellness for content creators, artists, fintechs, freelancers, workers, and billions of possibilities around the world. It claims to be a Network fully decentralized advocating in keeping the biggest portion of the benefit to the creators. It´s a powerful invention that relies on coding (smart contracts) to run transactions successfully plus a mathematic consensus among people in charge of validating each transaction (miners). Many Specialists like Michele D’Aliessi consider Blockchain as the second most valuable invention after World Wide Web, HTTP & HTML protocols better known as The Internet (from Tim Berners-Lee in the 90s). If it´s sound completely new for your, it is. The network was born back in 2008.
In other words, Blockchain is a complex technology of interconnected blocks (nodes) powered by advanced cryptographic algorithms which consist of distributed databases throughout the Internet. The attractiveness of the value proposition is the idea of eradicating middlemen, resulting on a very secure value chain favoring creators. The idea is to interchange goods/services directly from buyer to seller. Sounds quite difficult to conceive an ecosystem without intermediaries; they are habitually common because of the lack of trust among human beings. Blockchain was suitable designed taking advantage of Cryptographic & Codification solutions instead of trust or promises playing.
There is no way to modify once a transaction has been verified by the miners and booked into the public general ledger with several copies into the nodes which challenges corruption and misappropriation of resources. Every movement into the network is perfectly secure thanks to a solution called hash (encrypted unique alphanumeric identifier); all you need to know is the public key of a user to look at the history of transactions. But remember, you will only see user´s names not real names.
To put you in context, say you want to add value to another user by rendering a service or delivering a product. In blockchain networks you would be able to make it happen without the need of intermediaries. How is this possible? Cryptographic algorithms plus smart contract ensure trust between actors breaking the rules of having middlemen to make transactions happen. And even further, you won´t need traditional banks to exchange money. Cryptocurrencies were born within these networks; today almost everyone has read about the most famous: Bitcoin followed by Ethereum and Dogecoin (caught the attention of the global market when the visionary and well-known Tesla, SpaceX´s owner Elon Musk twitted about it and the owner of the Mavericks Dallas basketball team Mark Cuban supported it).
What is the problem with Centralization?
Think about e-commerce. How many intermediaries play a significant role when a purchase happens? Who ensures you the delivery of what was promised? And finally, what other options are available out there to decide whether trust in one site or using a different approach? Amazon, Walmart, Target come to my mind immediately. Facebook, Google, Record labels and so on are proof of centralized markets but also in the public discussion of monopolies. At the end -we as users- receive the product/service, but who gain more? The platform or the creators? Interesting questions, right? Would you care? Probably not but it´s inevitable that a new way of doing things is pushing the world.
Democratizing the tools of production is the first of The three forces of the Long Tail in the Best Seller book The Long Tail from Chris Anderson. As the author described “…talent is not universal, but it´s widely spread: Give enough people the capacity to create, and inevitably gems will emerge”. The best example I can think of is Apple and it´s App Store. Developers all around the world can create multiple apps and submit them to the store but each download and transaction come with a 30% that Apple commissions. A current allegation is taking place in the courts, take a look. Imagine a network where you, as a creator, can deliver your content owning the biggest portion of it, reducing the need of trusted third parties. Sounds utopian, I know, but many things are happening right now.
While I was posting my opinion on the Canvas feed at the MIT Sloan School for Latin America, I found a video (a typical short clip that explains in a nutshell from children to experts about Blockchain). Look at children´s beautiful reactions.
Who does not want equality, democratization and more opportunities for the vast majority? Well, as the book The Lean Startup from Eric Ries says“… most of the mistakes made by human within companies come from system flaws”. Technology is not perfect but, we should be willing to at least try. For me, every new step in our lives could be a leap of faith (my favorite phrase nowadays). Keep in mind that blockchain is a promising and disrupting technological solution also outlining essential consequences in terms of an impact in the planet. The process mining consumes tons of energy, even comparable to whole nations like Argentina or European countries. This agenda is forcing digital savvy to rethink more ways to ensure meaningful mining without compromising environmental footprint. In deed, yesterday I read about a new eco-friendly cryptocurrency: Chia.
Blockchain at Siemens
Speaking about Siemens, there are significant new applications on Blockchain networks from a decentralized eligible energy providers in Europe to a customs solutions throughout continents. Please click on the next links to explore more sites within the company. There is a Lab dedicated to promote information and solutions already deployed!. Anyone can access or subscribe.
Thanks for sharing, please leave a comment to complement the conversation. If you find something wrong, please excuse my lack of expertise, I just wanted to share my ideas to our community.
If you found this interesting, please keep digging into these concepts because we will discover thousand of possibilities to use them. The next three articles explain Blockchain better than I did.
How Does the Blockchain Work?
Bitcoin, Ethereum, Blockchain, Tokens, ICOs: Why should anyone care?
Why Decentralization Matters.