now awash in “crypto” hype—cryptocurrencies like bitcoin and
fundraising efforts like initial coin offerings. For every venture
capitalist or technical expert, there’s a half-dozen hype men and fly-by-night
startups making the entire space look like a 21st-century version of the Amsterdam tulip mania.
All that noise has
obscured the bona fide efforts involving the underlying technology, blockchain.
Of all the manifestations of crypto, it’s the most seemingly mundane
applications of blockchain that could lead to the biggest and most concrete
changes in all of our lives.
These applications can’t be found on a coin exchange, and they aren’t
going to turn anyone into an overnight billionaire. But they could bring
much-needed change to some of the world’s most critical, if unsexy, industries.
This means new ways of transferring real estate titles, managing cargo on
shipping vessels, mapping the origins of conflict materials, guaranteeing the
safety of the food we eat and more. Using blockchain, you could prove that a
particular diamond on sale in a Milan boutique came from a particular mine in
What is blockchain? It’s essentially a secure database, or ledger,
spread across multiple computers. Everybody has the same record of all
transactions, so tampering with one instance of it is pointless. “Crypto”
describes the cryptography that underlies it, which allows agents to securely
interact—transfer assets, for example—while also guaranteeing that once a
transaction has been made, the blockchain remains an immutable record of it., How to Invest
has the power to transform all these industries for three reasons. First, it’s
genuinely well-suited to transactions that require trust and a permanent
record. Second, blockchain typically requires the cooperation of many different
parties. In cases where it’s implemented as open source software, it avoids the collective-action problem—the
disincentives that prevent individuals from adopting something that would
benefit them collectively—that occurs when a single company tries to push, and
benefit from, a new standard.
The third reason is that hype I mentioned. The current excitement around
cryptocurrency gives blockchain the visibility to attract developers and
encourage adoption. Companies that have taken an “If it ain’t broke, don’t fix
it” attitude toward back-office processes and logistics IT might be ready to
spend big on updating those systems when they hear the buzzword “blockchain.”
In this way, blockchain resembles another buzzword, “the cloud.” While
detractors argued that the cloud was just “someone else’s computer,” it gave
many industries new business processes, new ways to charge for services,
disruptive startups and new divisions within existing companies and an
ecosystem of supporting technologies. Blockchain has the same potential.
logistics. Already, 1.1 million items sold or on sale at Walmart are
on a blockchain—including chicken and almond milk—helping the company trace
their journey from manufacturer to store shelf. Global shipping giant Maersk
uses the same technology from IBM to track shipping containers,
making it faster and easier to transfer them and get them through customs.
While these projects are still a fraction of the overall tracking that
goes on at these giants, they are expanding rapidly both within the
organizations and across their industries. Other companies using blockchain
technology to track goods include Kroger, Nestlé, Tyson Foods and Unilever,
with many more yet to be announced, says Bridget van Kralingen, senior vice
president of platforms and blockchain at IBM.
Everledger, a company started in April 2014 with the intention of
creating a blockchain-based registry of every certified diamond in the world,
already has 2.2 million diamonds in its registry. It’s adding about 100,000
diamonds a month, says Leanne Kemp, chief executive and founder.
By recording 40 different measures of each
stone, including “physically unclone-able features,” Everledger is able to
trace the journey of a stone from when it’s pulled from the earth to the day
it’s purchased by a consumer. Every participant in that chain, from the miner
to the cutter to the retailer, maintains a node—with a complete copy of the
database—in the Everledger blockchain network.
CartaSense is an eight-year-old Tel Aviv
company that puts internet-connected sensors on freight pallets and uses
analytics to determine when goods may be delayed or damaged. CartaSense
customers, rather than physically handing off scanned and signed paper
documents, use a blockchain database on which freight companies can record
every stage of the journey of a package, pallet or shipping container. Kuehne +
Nagel, one of the world’s largest freight companies, is one of CartaSense’s
Blockchain is being implemented first within companies and centralized
governments that can move quickly on new technologies.
for example, has declared its intent to make itself the “first blockchain-powered government in the world by
2020.” That could streamline things in real estate, says Stephen
McKeon, an associate professor of finance at the University of Oregon who
studies blockchain. By moving the central record of all real-estate
transactions onto a blockchain, Dubai could make it faster and easier to
transfer property titles.
Because such “smart contracts” on a blockchain are code, they can
contain rules about how they can be modified or transferred. In this way,
blockchain could become a way to transfer the obligation of enforcement from
bureaucrats to computers. For example, to prevent fraud, titles could be
transferable only to certain accounts, or might transfer only after another
condition, such as the transfer of funds in escrow, is met.
too early to say whether blockchain, as both a technology and a movement, has
the power to overcome issues that thwarted generations of software engineers.
The most justifiable skepticism is that blockchain is incremental rather than
revolutionary. In some cases, it isn’t much more than a marketing term imposed
on systems that hardly differ from existing databases. (There’s a healthy debate about
what blockchain even means, and even companies like CartaSense call their
system a “blockchain-like technology.”)
But if it works, it has the potential to be a fundamental enabling
technology, the way new standards for transmitting data across networks led to
the internet. More concretely, it could someday underlie everything from how we
vote to who we connect with online to what we buy.
here for the original article from The Wall Street Journal.