“The technology likely to have the greatest impact on the next few decades has arrived, and it’s not social media, it’s not big data, it’s not robotics, it’s not even AI… it’s the underlying technology of cryptocurrencies like Bitcoin” — Don Tapscott.

Blockchain technology. For every article extolling the virtues and framing it as a world-changer, there are others who think it’s not that impressive.

In the last year, myself and my company Digital Knights have seen a dramatic increase in the number of startups and entrepreneurs asking for engineers within this discipline, and when you look at what it can do, it becomes exceedingly clear as to why it’s in such high demand.

The Blockchain is a technology that could enable an actual peer-to-peer exchange of value and could undo the centralized monopoly of information. This is groundbreaking. What happens when we don’t need all powerful third parties to verify monetary transactions, to verify who I am, to facilitate the trade of assets? Well we get a very unbureaucratic order of things and the technology that is going to give us this is the Blockchain.

What is the Blockchain?

In essence, the Blockchain enables a network of computers to maintain a system of collective bookkeeping via the Internet. It’s like a giant open sourced Google sheet in the cloud that isn’t controlled by one party, but public and distributed across the entire network. The blocks that make up the Blockchain are logs of information from the ten minutes before, and that block is added to the block before it, which is connected to the block before that, and so on. You can see why they settled on calling it the Blockchain. Elegant simplicity.

All transactions in the Blockchain are logged, including the time/date/actors and ‘amount’ of every transaction. Each node in the network owns a full copy of the ledger. Bitcoin miners verify the transactions and in doing so maintain the ledger. The mathematical principles that form the basis of the operation also ensure that each and every node in the Blockchain automatically and perpetually agrees about the current state of the ledger and every transaction that has occurred within it. If there’s any discrepancy in a single node, the rest of the network will not accept it has happened.

Bad Actors

Trust is native to the Blockchain. Within it, if anyone attempts to corrupt a transaction the nodes will not arrive at a consensus and will refuse to incorporate the transaction in the Blockchain. The ‘trust’ that forms the basis of the Blockchain is due to thousands of nodes needing to ‘agree’ that a transaction has occurred, which is the equivalent of having a notary present at every trade. Of course, there is no real notary, but the quality of a self-executing system of nodes that all must agree with each other that an action occurred is more or less the same thing.

Blockchain isn’t without its challenges of course. The most widely discussed utilization of Blockchain is the cryptocurrency Bitcoin, and whenever Bitcoin hits the news, both the currency and the technology beneath it are mentioned in the same breath, and it’s rarely good. You might already be familiar with the MtGox hack, or more recently the Bitfinex hack. Together these Bitcoin exchange breaches totaled losses of $416m, and that would be enough to scare off any potential adopter of Bitcoin, and by extension the technology underpinning it. What’s important to take into account is that is not the Blockchain itself that was breached, but the companies themselves. Big difference. The issue is they both get tarred with the same brush, and the idea of Blockchain as a trust protocol gets called into question.

The Program (Get With It)

One of the lesser known aspects of the Blockchain, and specifically Bitcoin, is the ability for the currency to be programmed. Blockchain offers trust, and now it can ensure fiscal compliance. In one instance a unit of currency can be programmed to be returned to a distributor if it isn’t used in a certain amount of time. One use case that springs to mind is using programmable money to give companies control over their spending. Programming salaries, budgets, materials, and maintenance. Money that is programmed for a specific purpose can’t be misused. There could be fewer cases of corporate embezzlement and, as an extension, the need for fraudulent activity audits. Less red tape.

But why stop there? The programmable open character of Blockchain would allow us to rebuild our financial sector and admin process altogether. It could make them efficient and transparent, and significantly less bureaucratic. Now, this is huge, considering the banking sector is a 13 TRILLION dollar industry. Wall St. has remained fundamentally unchanged in 50 years thanks to hundreds of years of financial structure — and only now are we dismantling the inefficient system we have begrudgingly inherited with apps like Abra and the nature of cryptocurrency itself.

What Other Than Money?

Assets such as property, art, identity documents, bonds, stocks, deeds, land titles, and loyalty points can also be traded and stored on a Blockchain. There would always be a record of who owned what, which couldn’t be tampered with. In places with corrupt governments, having an immutable record of who you are and what you own is invaluable. No more papers, please. No more unlawful seizures (in theory). No more mishandling of data. In that same vein, vote casting could be done through Blockchain. Some states in the US already use DRE vote collection systems with the vast majority still employing a slow and inefficient paper trail style vote system. Digital voting systems are not free from the rumbles of ‘vote hacking,’ and rightly so. Digital voting systems need a 100% incorruptible and immutable quality which current systems can not provide. Of course, a Blockchain can. With it the question of trust becomes obsolete, and vote casting becomes streamlined, safe, and efficient.

What This Means For an IoT

In an IoT, our economy, our commerce, our everything will be dealing with machines that participate in the daily IoT traffic — and these machines do not have a concept of trust.

But Blockchain does.

When Amazon announced their drone delivery service, I and many others felt their proposed homing beacon system felt a little insecure. There was a feeling that you couldn’t trust a drone to deliver a package to the correct address since homing beacons can be compromised, stolen, moved, etc. But a delivery drone instructed by an immutable record of payment, identity, and residency in the form of a Blockchain record can be absolutely certain of where the package needs to go and if it’s been paid in full.

Recently I discovered a company called modum who ‘ensure drug safety with Blockchain technology,’ and are currently one my favorite examples of the democratization of data. In this instance, a device monitors medicinal substances in transit to ensure it complies with regulatory temperature and condition requirement. When the shipment is received the transit information is uploaded to the Blockchain giving both the distributor and consumer the relevant data.

With Blockchain we are heading towards a decentralized administration system where you are the custodian of your value and your data is secure. Blockchain is actively empowering people with its reliability, immutability, and decentralized nature. Nobody can own it, so it is by definition democratic. It’s the mother of all disruptive technologies set to shake up the sharing economy, finance, big data, and our identity.

We should focus our energies on creating novel applications for this awesome new technology, not mire ourselves in questions of trust. Blockchain IS trust. And it’s already changing everything.

About Keilian Knudsen

Keilian is Co-Founder and Head of Sales at Digital Knights. A Swiss-made, Berlin-based tech concierge. Digital Knights connect entrepreneurs, startups, SMEs, and corporates with pre-screened tech teams. Learn more here.