The 5 Ways That Blockchain Will Change the World
1. Protecting rights through immutable records
2. Creating a true sharing economy
3. Ending the remittance rip-off
4. Enabling citizens to own and monetize their data (& protect privacy)
5. Ensuring compensation for the creators of value
The technology, likely to have the greatest impact on the next few decades has arrived. And it’s not social media it’s not the data. It’s not robotics, it’s not even a AI, and you’ll be surprised to learn that it’s the underlying technology of digital currencies like Bitcoin.
It’s called the blockchain
Now it’s not the most sonorous word in the world. But I believe that this is now the next generation of the Internet, and that it holds vast promise for every business, every society and for all of you individually. You know, for the past few decades we’ve had the Internet of information. And when I send you an email or a PowerPoint file or something. I’m actually not sending you the original I’m sending you a copy. And that’s great. This has democratized information. But when it comes to assets, things like money, financial assets like stocks and bonds loyalty points, intellectual property, music, art of votes carbon credit and other assets, sending you a copy is a really bad idea. If I send you $100, it’s really important that I don’t still have the money. And then I can send it to you. So this is thing called the double spin problem by cryptographers for a long time. So today we rely entirely on big intermediaries middlemen like banks, governments, big social media companies credit card companies and so on to establish trust in our economy.
And these intermediaries perform all the business and transaction logic of every kind of commerce from authentication identification of people through to clearing settling and record keeping, and overall they do a pretty good job but there are growing problems. To begin their centralized that means that they can be hacked and increasingly are and JP Morgan US federal government LinkedIn Home Depot and others found that out the hard way, they exclude billions of people from the global economy. For example, people who don’t have enough money to have a bank account, they slow things down can take a second for an email to go around the world, but it can take days or weeks for money to move through the banking system across the city, and they take a big piece of the action. 10 to 20% just to send money to another country.
They capture our data. And that means that we can monetize it or use it to better manage our lives and our privacy is being undermined.
And the biggest problem is that overall. They’ve appropriated The largest of the digital age asymmetrically, and we have wealth creation, but we are growing social inequality. So what if that were not only an internet of information what if there were an internet of value, some kind of vast global distributed ledger running in millions of computers and available to everybody. And we’re every kind of asset from money to music, could be stored move transacted exchange and managed, all without powerful intermediaries. What if there were a native medium for value. Well, 2008, the financial industry crashed. And perhaps propitious Lee. A unknown anonymous person or persons needs to Toshi neck Komodo created a paper where he developed a protocol for a digital cash that used an underlying cryptocurrency called Bitcoin. And this cryptocurrency enables people to establish trust and do transactions, without a third party, and the seemingly simple act set off a spark that ignited the world that has everyone excited or terrified, or otherwise interested many places.
Now don’t be confused about Bitcoin
Okay Bitcoin is an asset it goes up and down.
And that should be of interest to you if you’re a speculator. More broadly, it’s a cryptocurrency it’s our fifth currency controlled by a nation state. And that’s a greater interest. But the real pony hair is the underlying technology it’s called blockchain. So, for the first time now in human history, people everywhere, can trust each other and transact peer to peer and trust is established, not by some big institution, but by collaboration by cryptography, and by some clever code. And because trust is native to the technology.
I call this the trust protocol. Now you’re probably wondering well how does this thing work.
Assets digital assets like money to music and everything in between. are not stored in a central place but they’re distributed across a global ledger using the highest level of cryptography. And when a transaction is conducted, it’s posted, globally, across millions and millions of computers and out there around the world is a group of people called miners. These are not young people they’re Bitcoin miners, and they have massive computing power at their fingertips 10 to 100 times bigger than all of Google worldwide.
And these miners do a lot of work.
And every 10 minutes kind of like the heartbeat of a network, a block gets created that has all the transactions from the previous 10 minutes, and then the miners get to work, trying to solve some tough problems. And they compete. And the first miner to find out the truth and to validate the block is rewarded in digital currency. In the case of the Bitcoin blockchain with Bitcoin. And then this is a key part that block is linked to the previous block and the previous block to create a chain of blocks and everyone is timestamp kind of like where the digital wax seal. So if I wanted to go in and hack a block and say, Hey you, and you with the same money. I’d have to have that block, plus all the preceding blocks entire history of commerce on that block chain, not just a one computer but across millions of computers simultaneously all using the highest levels of encryption. In the light of the most powerful computing resource in the world that’s watching me, tough to do. And this is infinitely more secure than the computer systems that we have today blockchain. That’s how it works. So, the Bitcoin blockchain is just one. There are many the theory of blockchain was developed by a Canadian named metallic butare and he’s 19 years old. And this blockchain has some extraordinary capabilities. One of them is that you can build smart contracts, it’s kind of what it sounds like. It’s a contract itself executes, and the contract handles the enforcement and the management performance, and payment contract kind of has a bank account to in the sense of agreements between people. And today on the Ethereum blockchain. There are projects underway to do everything from, create a new replacement for the stock market to create a new model of democracy where, where politicians are accountable to citizens. So to understand what a radical change this is going to break let’s look at one industry financial services, recognize this Rube Goldberg machine, it’s ridiculously complicated machine that does something really simple like crack and Hagar shut her door.
Well, kinda reminds me of the financial services industry honestly I mean you tap your card and in the corner store in a bit stream goes through a dozen companies, and each with their own computer system some of the being 1970s mainframes older than many of the people in this room, and three days later, a settlement occurs.
Well, with a blockchain financial industry, there would be no settlement because the payment and the settlement is the same activities just change in the ledger. So, Wall Street and all around the world the financial industry is in a big upheaval about this wondering, can we be replaced, or how do we embrace this technology for success. Now, why should you care. Well, let me describe some applications, prosperity, the first era of the Internet. The Internet of information brought us wealth, but not shared prosperity because social inequality is growing, and this is at the heart of all of the anger and extremism and protectionism and xenophobia and worst that we’re seeing growing in the world today. Brexit being the most recent case. So could we developed some new approaches to this problem of inequality because the, the only approach today is to redistribute wealth tax people spread around more could we pre distribute wealth. Can we change the way the wealth gets created in the first place by democratizing wealth creation, engaging more people in the economy, and then ensuring that they got fair compensation. Let me describe five ways so this can be done. Number one, did you know that 70% of the people in the world who have land, have a tenuous title to it.
So you got a little farm and Honduras and dictator comes to power, he says, I know you got a piece of paper that says you’re on your farm but the government computer says my friend owns your farm. This happened on a mass scale in Honduras, and this problem that exists everywhere. Fernando de Soto the great Latin American economists is the number one issue in the world, in terms of economic mobility more important than having a bank account, because if you’re on a valid title to your land you can borrow against it. And you can plan for the future. So today, companies are working with governments to put land titles on a blockchain. And once it’s there. This is immutable. You can’t hacker.
This creates the conditions for prosperity, potentially billions of people.
Secondly, a lot of writers talk about Uber and Airbnb and task rabbit and Lyft and so on is part of the sharing economy is a very powerful idea that peers can come together and create and share wells.
My view is that these companies are not really sharing fact they’re successful, precisely because they don’t share. They aggregate services together and they sell them. What if rather than Airbnb being a $25 billion Corporation, there was a distributed application on a blockchain will call it be Airbnb, and was essentially owned by all the people who have a router max. And when someone wants to rent a room, they go on to the blockchain database and all the criteria sift through help them find the right room, and then the blockchain helps with the contracting it identifies the party, it handles the payments, just through digital payments are built into the system. And it even handles reputation because if she rates a room as a five star room that room is there, and it’s rated, and it’s immutable. So, the big sharing economy disruptors in Silicon Valley, could be disrupted. And this would be good for prosperity. Number three, the biggest flow of funds from the developed world to the developing world is not corporate investment, and it’s not even foreign aid. It’s remittances.
This is the global diaspora
people who’ve left their ancestral lands, and they’re giving sending money back to the families at home. This is $600 billion a year, and it’s growing, and these people are getting ripped off. Emily Domingo is a housekeeper. And she lives in Toronto, and every month she goes to the Western Union office with some cash to send her remittances to her mom and Mila. It cost her around 10% the money takes 47 days to get there mom never knows when it’s quite arrived takes five hours out of her week to do this. Six months ago Emily Domingo used a blockchain application called Abba, and from our mobile device, she said 300 bucks, went directly to her mom’s mobile device without going through an intermediary, and then her mom looked at her mobile device, it’s kind of like an Uber interfaces ever tellers moving around, she clicks on a teller that’s a five star tellers seven minutes away guy shows up at the door gives her Filipino pesos she puts them in her wallet. The whole thing took minutes, and it cost her 2%. This is a big opportunity for prosperity. Number four, the most powerful asset of the digital age is data and data is really a new asset class maybe bigger than previous asset classes like land under the agrarian economy or an industrial plant,
or even money.
And all of you, we create this data, we create this asset. And we leave this trail of digital crumbs behind this as we go through life. And these crumbs are collected into a mirror image of you the virtual you and the virtual you may know more about you than you do, because you can’t remember what your body is over, a year ago or your exact location, a year ago, and the virtual you is not owned by you. That’s the problem.
So, today there are companies working
to create a identity and a black box, the virtual you on by you. And this black box moves around with you as you travel throughout the world. And it’s very very stingy, it only gives away. The shred of information that’s required to do something a lot of transactions, the seller doesn’t even need to know who you are. They just need to know that they got paid. And then this avatar is sweeping up all this data and enabling you to monetize it. And this is a wonderful thing, because it can also help us protect our privacy and privacy is the foundation of a free society. Let’s get this asset that we create back under our control where we can own our own identity and manage it responsibly,
finally, number five.
There are a whole number of creators of content, who don’t receive fair compensation, because the system for intellectual property is broken. It was broken by the first era of the internet, take music musicians are left with crumbs at the end of the whole food chain you know if you’re a songwriter 25 years ago you wrote up a hit song, it got a million singles, you could get royalties around $45,000. Today you’re a songwriter you write a hit song, it gets a million screens, you don’t get 45 K, you get $36 enough to buy a nice pizza. So Imogen Heap the Grammy winning singer songwriter is now putting music on a blockchain ecosystem. She calls it mycelium, and the music as a smart contract surrounding it, and the music protects her intellectual property rights. you are listening to the song It’s free, or maybe it’s a few micro cents flow into a digital account you want to put the song in your movie that’s different, and the IP rights are all specified. You want to make a ringtone that’s different. She describes that the song becomes a business, it’s out there in this platform marketing itself, protecting the rights of the author, and because the song is a payment system in a sense of bank account, all the money flows back to the artists and they control the industry, rather than these powerful intermediaries. Now this is, this is not just songwriters, it’s any creator of content like art, like inventions scientific discoveries, journalists, throw all kinds of people they don’t get fair compensation, and with blockchains, they’re going to be able to make it rain on the blockchain. And that’s a wonderful thing.
So, these are five opportunities out of a dozen to solve one problem prosperity, which is one of countless problems, blockchains are applicable to now technology doesn’t create prosperity of course people do. But my case to you is that once again, the technology Genie has escaped from the bottle. And it was summoned by an unknown person or persons at this uncertain time in human history. And it’s giving us another kick at the can. Another opportunity to rewrite the economic power grid and the old order of things and to solve some of the world’s most difficult problems.
If we will it.