Forget bitcoin; blockchain will usher in a new world order
Blockchain is producing a new world order that will change how we transact for products and services forever. “Change is here, it is pervasive and disruptive, but it can be embraced if you choose to do so,” said Monica Singer, who goes by the title ‘creator of opportunities’ at ConsenSys, a global formation of technologists and entrepreneurs building the infrastructure, applications and practices that enable a decentralised world. She is also a former CEO of Strate in South Africa and a current member of the global Blockchain Advisory Council.
During her presentation to the fifth annual i3 Summit – an event hosted jointly by Sanlam Investments and Glacier by Sanlam last month – Singer observed that future technology giants would challenge the status quo by creating new applications that are entirely built on the blockchain ‘infrastructure’.
There are two concepts that must be understood before rushing headlong into a discussion about blockchain. The first – tokenism – is premised on a new world order in which anything and everything is being converted into a digital record or token. The second is the undeniable shift from a centralised to a decentralised transaction-tracking world.
You can think of blockchain as a decentralised ledger that is designed to track every transaction, involving every token, that takes place. This is no ordinary ledger, though. Each transaction is ‘seen’ by every party to it and ratified by the consensus (or collaboration if you prefer) of those parties. The blockchain ‘ledger’ is immutable, totally visible and eliminates opportunities for corruption.
And gone are the days of having to protect transactional data by storing it on secret servers hidden in separate server rooms countrywide. Because blockchain ‘lives’ on the Internet you can have as many ledgers repeated in as many countries as you wish (decentralised data) with the record of ownership held by all parties to the agreement.
Blockchain will revolutionise business models where there are multiple parties making a living from a single transaction because it does away with the need for intermediaries. Take for example the house sale – a transaction between a buyer and seller – that is currently finalised with inputs from dozens of ‘hangers on’ including real estate agents, property valuators, conveyancers, deeds attorneys and banks, to name a few.
“We have processes that have been invented with reliance on intermediaries to audit and ensure that everything is in order; every time we have an independent party verifying a transaction we have additional costs that are not actually needed,” said Singer.
The new world order that blockchain is introducing will say, ‘Enough – if you don’t add value, then get out of the way!’
A decentralised world wide web will ensure that power shifts from capitalists such as Amazon, Google and Facebook back to the individual, but companies in all areas will face disruption from blockchain ‘empowered’ competitors. Stock exchanges are among a long list of firms that will have to evolve or face obsolescence. “We are nearing a time when securities will not be listed on stock exchanges but rather ‘tokenised’ in a crypto world where they will trade, clear and settle – without intermediaries – peer-to-peer and in real time,” said Singer. “We have already seen a worldwide decline in new stock market listings as money moves to coin offerings and blockchain”.
Consumers will benefit immensely from blockchain. Not only will they have greater power over their personal data, able to decide where, how and by whom it is used, but also save costs on everyday transactions. Singer noted that the Internet eliminates the need for costly ‘legacy’ systems and processes that are rife in the banking world. Small value international money transfers that gobble up to R20 of every R100 transferred in fees are among the first transactions under the microscope. “The necessary functionality has already been established and banks will soon offer international remittances in real time with very little cost,” she said.
The new technology will affect how financial intermediaries conduct their business too. “Blockchain is going to have an impact on each of you in terms of how you record transactions and how you advise your clients on which financial instrument to get involved with,” she said.
Are you paralysed by the apparent complexity in the bitcoin technology?
“Who cares about how blockchain works; we just need to learn how to use it so that we do not miss out on all the new assets that will be put into this new technology that we will all be able to trade,” concluded Singer.