Bitcoin’s digital scaffolding has caught the eye of some of the most innovative companies and entrepreneurs with its versatile, game-changing features. Wired journalist Gian Maria Volpicelli explores its uses in business.
What is blockchain? Think of it as a never-ending Excel spreadsheet. It is a digital ledger that can make a permanent record of an infinite number of transactions, but unlike Excel, a blockchain does not exist on a single server. Rather it is run collectively by a decentralised swarm of computers (or nodes), a design choice that makes it hard to tamper with. There is no need to back up, unlike an Excel spreadsheet saved on a single computer that may one day fail, get stolen, or be hacked.
These features make blockchain technology a smart, secure solution for carrying out and keeping track of any kind of transactions — not only cryptocurrency transactions — between a number of parties, without relying on any middleman acting as a central authority.
Over the last few years, the technology has been trialled and applied in a vast range of sectors — from banking to logistics, and even diamond trading. Blockchain recently gained mainstream visibility when Walmart announced a new partnership with IBM and Chinese retailer JD.com, the Blockchain Food Safety Alliance. The three giants teamed up in mid-2017 to use a decentralised ledger to track food items as they move from farmers to suppliers and so on, throughout the supply chain. The idea is to guarantee better food traceability and food safety.
That was not IBM’s only foray into blending blockchain tech and logistics. In early 2018, following months of collaboration, IBM — which has developed its own blockchain — announced a joint venture with cargo giant Maersk. The objective? Building a blockchain-fuelled platform to bring more transparency to the international commerce ecosystem, and in the same breath allowing trading partners to monitor the movement of freight in a secure and collaborative way.
Although logistics — and, perhaps obviously, banking — look like natural sectors where blockchain could be applied, there are several other fields currently experimenting with the disruptive technology. Diamond-mining companies are turning to London-based start-up Everledger to verify the provenance of precious stones and root out conflict diamonds. A similar process could be used to fight counterfeits in sectors such as fashion and art, or to guarantee a fine wine’s authenticity. Music could be next: British singer Imogen Heap is working on a project aimed at harnessing blockchain tech to streamline the purchase of intellectual rights.
Last year, the Marketing Group launched a media agency with blockchain at its very core. London-based Truth promises to give advertisers full supply-chain transparency. Its founder, Adam Hopkinson, explains that the advertising sector is particularly opaque: about 80% of companies using programmatic advertising worry about how their money is spent, and fret over how many of their ads end up actually being seen by consumers, especially on third-party platforms. “At Truth we are planning to show and prove to advertisers that their money goes exactly where they think it’s going,” says Hopkinson. “We want to disintermediate the supply chain and make sure there are only practitioners who are doing the right thing — and blockchain allows us to create consensus across the value chain.”
First conceived 18 months ago, Truth is testing its product with multiple clients. The clients can see the blockchain technology in action via a dashboard, which records information related to their campaigns. Hopkinson predicts that Truth — and other companies like it — is bound to radically change the way the industry works. “Introducing blockchain will start to drive down advertising budget. Advertisers will become more aware that a lot of their money is being wasted. It shouldn’t have to be,” he says. “there’s quite a lot of disruption coming.”
Not everyone agrees on blockchain’s practicality. Analytics company Dun & Bradstreet’s Global Leader in Data Innovation, Saleem Khan, has publicly described blockchain as “a solution in search of a problem”. Among the issues dogging the novel technology du jour are worries over cybersecurity. Bitcoin’s blockchain itself is said to be unhackable, but several second-generation blockchains have been the target of malicious attacks. Scalability and speed are also sticking points. The Bitcoin blockchain is able to manage only seven transactions per second; Ethereum (another popular platform) is slightly better at 15 transactions per second. That is still too slow for many companies operating on a global scale. By comparison, Visa’s payment network processes about 2,000 transactions every second.
Blockchain’s 10th birthday is approaching, yet this is a technology that is still undergoing growing pains. More than nine out of 10 of the 26,000 blockchain projects launched in 2016 are now defunct, according to analysis by consultancy firm Deloitte. Part of the problem is the sheer number of blockchains out there. They are not all designed to be compatible with one another. For blockchain technology to work well in the future, blockchains cannot be limited to a single vendor or technology.
Some solutions allow communication between two blockchains at the same time, but London start-up Quant Network thinks it has the ultimate answer. It has filed a patent for Overledger, a connecting technology that it claims can match data across any number of ledgers. Quant claims that “different structures and working mechanisms make it harder to build a common interface” so instead, Overledger addresses the issue by sitting on top of them rather than struggling to match them up. Nevertheless, until the many issues are ironed out, blockchain technology is still yet to be adopted in business by the masses.
Do you think blockchain technology could be useful to your sector and, if so, how? Are you already part of a blockchain? Share your thoughts by emailing homeworkeditor@workspace. co.uk or tweet @WorkspaceGroup using #homeworkmag
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