Is Bitcoin up? What about Ethereum? It’s easy to find headlines, tweets and other chatter about these digital marvels. Today we know what cryptocurrencies are and there are several of them. What we don’t yet know are the amazing things still to be built on the fundamental technology that enables them.
Bitcoin and other cryptocurrencies tend to drown out the significance of blockchain. Yet, blockchain’s potential is limited only by our imaginations.
From pebbles to digital tokens
Blockchain is an incredible new technology and it’s easy for people to reduce it to cryptocurrency as a simple way to understand it. A better way to understand it is to think of it as a way to turn transactions into tokens.
Using tokens as a way to track value is nothing new. At a rudimentary level, our Neolithic ancestors used pebbles to keep track of who owed what to whom. Not that long ago, many of us carried little cards that our favorite baristas would punch when we bought a coffee; get ten punches and you get a free mocha latte.
These tokens store value, just like Bitcoin or the other cryptocurrencies. The big difference, though, is that those archaic token systems could be corrupted easily. That early human could pick up a bunch of stones by a creek and claim immense wealth. You could punch your own coffee cards until you were vibrating from caffeine. Token systems can only work over the long term if they can be trusted by all parties.
Blockchain builds trust into the token system by distributing record keeping across a network through multiple copies of a ledger. The security bar is quite high. Only transactions with the right digital signatures can be recorded. All the systems holding the ledger copies verify the transactions independently, and all copies must match for a transaction to be recorded. The new record becomes a “block” in the entire history of the token chain. Any attempt to tamper would have to rewrite the whole chain.
The blockchain is essentially designed NOT to trust a transaction. A transaction that can pass such a high bar can be trusted by all parties.
The imagination of the entrepreneur
So what could entrepreneurs do with that concept? Platforms for various vertical use cases could be built on the blockchain foundation.
For instance, theft is a huge issue for the shipping and logistics industry. They tend to track goods at relatively high levels of abstraction – like containers or pallets – because tracking individual items requires a prohibitive amount of record keeping. Pilfering can happen at each leg of a logistical journey and not be discovered until a final inventory in a warehouse somewhere. With tags on individual items and a blockchain to record all movements of those items, we could tokenize the logistics system and build a greater degree of trust in supply chains. We could extend that idea to verify that rare elements such as lithium or cobalt used in the chip or auto industry did not come from questionable sources. Pharmaceuticals and the food industry have their own supply chain issues where verification back to source through all channels would benefit everyone.
Blockchain has applications beyond supply chains of course. I recently moved to the US from the UK and bought my first house. I got writer’s cramp from signing the mountain of paperwork which apparently is the way that trust works in that intersection point between the real estate and banking industries. Blockchain could tokenize the individual transactions represented by each document and save the tendons in my hand.
Even consumers could tokenize aspects of their lives. They could monetize their own data by making it securely available only to those they want to have it. We could give a friend short-term use of something of value like a subscription (or our accumulated free coffees at our favorite barista!) while we’re out of town.
Imagination to reality
These ideas and more are all waiting for an entrepreneur to build a platform. All it takes is imagination…and infrastructure.
You could design your own blockchain, though you might be able to license one that already exists. Then you need to make it accessible through distributed infrastructure like networks and edge compute nodes. Lumen Digital Ventures can help create the best execution venue for the idea.
So, what’s your idea for blockchain that goes beyond cyptocurrency? Let’s talk. I’ll buy the coffee.
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