A new book about the technology behind bitcoin refreshingly looks at possibilities beyond currency and finance. “Blockchain Revolution” shows the versatility of the distributed-ledger concept – essentially, a database kept complete and accurate thanks to cross-checking by a network of computer users – from improving democratic processes through more secure voting to making humanitarian aid more effective. The potential is eye-opening, even if the presentation is at times a bit wide-eyed.
Aside from association with the bitcoin cryptocurrency, blockchain ideas have mainly emerged in the realm of finance. Authors Don Tapscott and his son, Alex Tapscott, nod to that connection. An immediate, immutable record of exchanges of data, money, goods or services offers a cost-cutting and security-enhancing opportunity for Wall Street. Certain transactions that now require clearing through third parties could be handled instantly and without a middleman with a blockchain structure.
Thankfully, though, the book devotes only one chapter to the financial services sector. The rest imagines how blockchain could change companies, governments, nonprofits and even lives. A shared ledger in theory improves accountability and transparency because it records all the transactional twists and turns of whatever it’s concerned with. If it’s a public blockchain, anyone can see the information, which is verified by the computers involved and can only be changed with validation by the network. That makes hacking and fraud very unlikely.
Supply-chain management is one potential application. Each component could be tracked from the factory to its last day of use in a tamper-proof ledger, making it much easier to avoid and detect theft and bottlenecks.
Titans of the sharing economy, like Airbnb and Uber, could even find themselves disrupted by blockchain. A distributed app, which the Tapscotts envision as a set of smart, automated contracts, could replace one of these tech companies’ platforms, allowing the provider and user of the service to interact directly and securely, without Airbnb or Uber in the middle.
Some of the predictions in the book can seem a bit breathless and naïve. For one thing, although a clever algorithm can manage a virtual currency, it can’t actually provide timely, safe access to an apartment, ensure a taxi driver shows up with a roadworthy vehicle, or deliver a package.
Moreover, many of the scenarios are predicated on “good” users weeding out “bad” ones. Perhaps, as with bitcoin, people will one day trust a network of anonymous computers to do this, but it seems less likely with real-world goods and services, where users benefit from the peace of mind of having someone policing the system – and handling questions and demands for refunds.
Other ideas, while plausible, sound impractical. Blockchain technology could allow investors to see a company’s financial situation in real time because statements would be updated almost instantaneously. That might seem good for transparency, but it could produce a nightmare of demands on executives and boards, many already frustrated by the short-termism inherent in the quarterly-earnings reporting schedule.
“Blockchain revolution” even suggests that workers could identify tasks and dole them out to the individuals most willing to do them, recording it all via a blockchain ledger. This sounds like management: While there’s always room for better systems, in an organization of any size human nature – with its competitive and selfish traits – tends to thwart automation.
The book does provide tantalizing possibilities outside business. Take humanitarian aid. After the devastating earthquake in Haiti in 2010, the American Red Cross raised about $500 million, which the charity said was used to house more than 130,000 people. NPR and ProPublica found that only six homes were built. Blockchain ledgers could track where every donation goes.
Other people have proposed similarly useful applications. Staci Warden, executive director of the Center for Financial Markets at the Milken Institute, wrote in the Wall Street Journal that blockchain could help refugees, who often lose physical proof of identity when they flee their homes.
And in April, blockchain firm BitFury unveiled a partnership with the Republic of Georgia to establish a blockchain-based land-titling system. The potential benefits of that for record keeping and defeating corruption are clear.
The technology could even help democracy function better, the Tapscotts suggest. A digital ballot box could let citizens vote from anywhere in the world. It would make ballot tampering extremely difficult and could protect privacy with voters using cryptographic keys to log in.
The book does not make for light reading. But its tone is conversational and it revels in its nerdiness. The Tapscotts discuss how the digital ledger could be used to track which cow a piece of beef came from, what it was fed and so on. “No one keeps histories of single cows; Bad things happen to good bovines,” the authors write.
Perhaps only a few of the book’s visions will come to fruition. Existing options like secure, managed databases will prove adequate in many cases. Where confidentiality is paramount, public distributed ledgers may not be ideal. And other new technological solutions will surely emerge.
For the average person trying to understand all the interest in bitcoin and blockchain, though, the Tapscotts present a mind-expanding perspective – and their enthusiasm makes you a believer in the revolution.