In regard to cryptocurrencies, much of our attention is consumed by the fluctuating value of Bitcoin—perhaps this is because it seems people are getting rich fast or losing money like it’s blowing away on a gust of wind. Despite the fascination with Bitcoin, it’s the underlying technology that’s most exciting. If you haven’t heard of blockchain, here’s a primer.
What Exactly Is a Blockchain?
A blockchain is a public, decentralized register of anonymous payments and contracts. Here, decentralized means that the system is served by many computers spread around the world. It is hypothetically impossible to take down a decentralized register, or “chain,” as it is simultaneously added to every computer supporting the system. When a transaction is initiated, a “block” is added to the register and verified by the network; a public note is then created, which both parties cannot alter or remove.
Blockchain’s most notable use has been to underpin currencies used on black market websites such as Silk Road, but it’s beginning to go mainstream. Microsoft and Bank of America have started a blockchain project to make trade finance transactions faster, and J.P. Morgan is creating its own blockchain-powered Interbank Information Network to processes their daily transactions, which average a total of about five trillion dollars.
But what other uses are there for blockchain, and how will it affect our society? According to Philip Boucher, writing for the European Parliament Research Service, “The most profound impact of blockchain development could be changes in broad social values and structures . . . Each time we use blockchain technologies, we reaffirm the values and politics that they represent . . . a shift of power from central authorities to non-hierarchical and peer-to-peer structures.”
Imagining a Blockchain Future
What will a shift in these social structures mean? Vitalik Buterin, co-founder of blockchain platform and cryptocurrency operating system Ethereum, suggests blockchain will enable transactions without the need for a platform: “Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly.”
Blockchain disperses power by decentralizing a network and creating billions of new network owners, but Buterin’s claims may not come to fruition. After all, the Internet promised to democratize the world’s collective knowledge, but thus far the result has been a controlling cartel of corporations that effectively curate the Internet experience. By creating a platform for more open global transactions, it’s possible blockchain will only exacerbate income inequality by supercharging our current economic systems.
“ . . . blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly.” – Vitalik Buterin, Ethereum Co-founder
That said, our lives have been revolutionized by the Internet; perhaps blockchain will similarly revolutionize our world. Blockchain has the potential to make national currencies redundant and deliver global transparency and accountability to an Internet flush with bad actors and unverified claims.
Democracy underpins our society, and voting is the most consequential part of our democratic process. With so much at stake, the validity of the voting system is paramount; the 2016 U.S. elections were marred by accusations of vote rigging and foreign interference, and countries like Norway and The Netherlands have recently hand-counted ballots after similar security concerns. Blockchain, if proven secure, could provide the security needed to make E-voting a reality and improve our democratic processes.
The technology nearly found its first proving ground in Sierra Leone, where ballots in a recent election were cast using blockchain technology—or so claimed technology company Agora. However, the country’s National Electoral Commission claims that blockchain was not used in any part of the electoral process. Despite this PR gaffe, blockchain’s potential as a voting tool remains promising.
Blockchain also shows promise in improving supply chain tracking. As Kelly Cronin wrote for Chemonics, “Across the world there is virtually no last-mile visibility to help companies and consumers alike understand how their actions may inadvertently support human trafficking or poor labor conditions. Current technology solutions rely on the use of assumptions about the economic actors involved without tracking the actual identity and behavior of everyone in the supply chain.”
Blockchain presents a solution to this issue by making every element of a supply chain transparent and trackable. Giving each element of a supply chain, like cocoa, coffee or even workers a “block” to add to the public register “chain” creates a transparent line that can be drawn from supplier to consumer. Conscientious buyers could conclusively answer questions such as: Is this garment really produced in sweatshop-free factories? Are these diamonds from conflict-free zones? Are these apples organic? Was my weed grown in the Emerald Triangle?