As digital cash, bitcoin has quickly become the medium of exchange for the booming sector that is the online black market. But elsewhere, bitcoin is still a long way away from mainstream adoption.
The coders don’t care about that though. Like the black marketeers, they can see that the tech works. They're now investigating what else that tech – known as the blockcain - can be used for, beyond alternative money systems.
Today I want to look in detail at some of the blockchain’s potential applications. We’ll start with communication.
How do I know you’re you?
The breakthrough of bitcoin was that you could transfer money directly to somebody else, just as you would hand cash directly to someone next to you. The middleman – the bank, the credit card company – is, to use the jargon, ‘disintermediated’.
So systems are now being developed for direct messaging. Again, the middleman - be it gmail, iMessage, Facebook, WhatsApp – is disintermediated. There is even a blockchain-based mobile phone operating system being developed – Trustonic - to challenge the duopoly of Android or Mac OS. This all has enormous implications for privacy.
Of course, an essential part of communication is knowing that the person you’re talking to is the person you think they are. In the flesh, you can verify them by their face, voice and mannerisms. In extremis, by their ID. But online? How do I know you’re the person you say you are and not some nefarious ne’er-do-well?
For now we have a system of usernames and passwords, but it’s unwieldy and vulnerable. Using blockchain tech, internet authentication is more efficient and secure. It could become the global standard.
An immediate extension of identity is to use blockchain tech in voting applications. Already you can audit your vote and make sure it is counted even with your anonymity protected.
There’s even the possibility the tech will be used in political votes
Of course, we don’t just vote in general elections. There are all sorts of occasions when votes are required. Within institutions, for example, clubs, families – any sort of social group. As the tech improves, we might find more and more decisions put out to a vote of some kind.
If the tech really takes on, there’s even the possibility the tech will be used in political votes. In the UK, we’d have known the result of the general election by 10.01pm. In the US, there wouldn’t be the kind of shadiness around certain counts in Florida which lead, argue some, to the wrong guy getting elected.
Politicians will resist it, of course. But if voting becomes a more common feature of our digital lives, then politicians will struggle to resist the application in political votes. Referenda could become more common. You’ll be able to vote with one party on issue and another on another. The tech could usher in a whole new era of direct democracy.
What are you like?
The online review system has transformed the way business works. All anyone in the tourism sector now wants is a good review on Trip Advisor. I base decision after decision on what I read there – where to eat, where to stay, what to do.
The same goes for Amazon or eBay. I decide what to buy and who to buy it from based purely on user reviews. I am far from alone in this. On Uber, drivers won’t pick you up if you have had too many bad reviews.
Suddenly one’s reputation (or their online one at least) is important again. Well, your online reputation, as well as your identity, can be recorded permanently and publicly on the blockchain! Ponder the implications of that for a moment. One consequence is that we could see a wholesale improvement in standards of behaviour.
The blockchain could even be used for international criminal record keeping.
What have you got?
As well as identity and reputation, the blockchain can not only prove ownership reliably, it can facilitate the transfer of that ownership. The obvious use here is in the trading of financial assets – stocks, shares and bonds, for example. Already the Nasdaq is developing ways to employ the blockchain.
But we are not just talking about financial assets. Land, houses, vehicles, licenses, theatre tickets – the ownership of just about anything can be recorded and traded using the blockchain. The Isle of Man is already taking steps to record its land registry on a blockchain. Honduras has hired the services of a Texan blockchain company to do just the same.
This decentralized, distributed, commonly shared proof of ownership could have potentially large ramifications for the legal profession and the way it currently operates. The same goes for the new systems of notarization (the authentication of documents), which are being developed.
The legal profession has escaped the internet-caused reform that has been forced on music and publishing. It looks like that will change. If I’m right about the identity of bitcoin’s mysterious founder, Satashi Nakamoto (read my book if you want to know more), he was actually a legal scholar. He actually coined the expression, ‘smart contracts’. It looks as though he knew just what he was doing.
Two other industries that have ‘escaped the net’ are the behomoths accounting and, especially, insurance. The potential uses of the blockchain here are manifold. Think of the impact of William the Conqueror Domesday Book of 1086. Of course, kids still study it now, but it was actually being used in legal disputes as late as the 1960s.
The blockchain is a digital Domesday Book for the 21st century.
All that, I haven’t even got started on micropayments …