How blockchain will change the world (1)​​

[Also available on LinkedIn, here.]

[Versión en español, aquí.]

Blockchain will change the internet and the world. It’s better if you know about it as soon as possible.

I'm sure you must have heard of blockchain in the last few years and still don't understand what it means. Don't worry, I don't think you're the only, but first of all: is it necessary to understand the insides of blockchain to see its enormous potential of changing everything? I don't think so. It's irrelevant. We have never understood the internet protocols nor e-mail, or what’s behind a credit card payment, and we keep using them happily.

The magic of technology lies in what it permits you to do, not how or why it does it. The more "invisible" the technology, the less you discover, the better. This means it works perfectly, without giving us any problems or dizziness.

The obsession of experts in “user experience" is that technology is invisible. What you’ve to pay for, for example, is fun and not a nuisance or friction, like having to write the numbers of a credit card. Whether engineers or other “technicians" are coping with the insides, however, there are below some links and videos that give very brief and simple explanations on blockchain, in case you have a particular interest to deepen them.

"If the internet has permitted us to access information almost without limits, blockchain goes even furthermore: it will allow us to distribute value."

The basics of what is coming our way is this: if the internet has permitted us to access almost unlimited information and distribute it easily and instantly, blockchain goes one step further: it will allow us to distribute value, such as money or property, theoretically without any need for intermediaries, without touching a paper or moving from home, to any part of the world immediately.

A metaphorical example to understand it better: Today we attach a PDF document to an electronic message that we can send to 10 people or 10 million people can access it, it multiplies, and nothing happens because it does not have an intrinsic economic value. Whereas with blockchain, we can attach the same PDF file, but with a value of 50 euros, in fact, in the PDF, we put a picture of a 50 euros banknote. It could also be the deed of a house. Once I have sent it to you, and it has been registered, it’s yours not more mine, it’s not duplicated, and there is a single owner of those 50 euros or house.

Where's the trick? I mean, how do I trust that those 50 euros are not duplicated 10 million times or that the deed is not in another person’s name?

The answer is as follows: Blockchain is an accounting record (a sort of Excel spreadsheet or database) shared, i.e., which in turn is "public" and allows total transparency. That is, if I send 50 euros to you and everyone knows that I have done it (because everyone has a copy of the Excel), then it is registered, and there is no doubt of who is the new owner.

Besides, this record is permanent and unchangeable. It’s not possible to hack or duplicate it since the record is in a good number of places around the world. In blockchain, each block is a transaction in the chain and, once made, can never be changed. The change occurs in any case in a new block, and everything is always registered.

So, does everyone knows you sent the 50 euros? Not exactly. There's privacy. For one reason: the information is confidential and encoded. It is deciphered with cryptography (secret key writing) so that only one person, the owner and possessor of the key, can access the property. There are also semi-public and private blockchains.

At this point, maybe this is all sounding like Bitcoin. Yes, the explanation on blockchain so far is that of bitcoin, whose record is public. The creator of Bitcoin had a clear objective: to disintermediate the banks, to remove them from the domain. To create the Bitcoin, he needed a technology capable of distributing the bitcoin, and that technology is blockchain. He produced two things at once.

"Banks are by far those companies that are investigating and investing more to use blockchain. As well as other companies, like Apple, Amazon, Toyota or Walmart."

Interestingly, today banks are by far those companies that are researching and investing more to use blockchain. There are also many companies from other sectors, such as technology (Apple, Google, Samsung, Amazon, Facebook, IBM), Automotive (Toyota, Daimler, Ford) or food, beverages, distribution, pharmaceutical (brewing AB InBev, Nestle, Walmart, Pfizer ).

All these companies are generally not interested in the bitcoin or the cryptocurrencies as they are known today. Bitcoin owners are anonymous which may be due to regulatory and compliance issues, given that banks, for example, need to know their clients to avoid fraud, money laundering, terrorism funding, among other things. What interests these companies most is the blockchain technology itself, and, by the way, regulators and central banks are not only interested but enthusiastic, as shown by the Governor of the Bank of England's speech on this technology in March 2018.

Blockchain has many variants. The Bitcoin (distributing money) is the easiest. There are also other types of blockchain that permit you to do a good number of things, that is, to execute more complex commands (the so-called "smart contracts”). Ethereum is one of the most popular blockchain technologies that runs smart contracts. For example: owning a stock exchange with Ethereum blockchain could permit any right you have as a shareholder of a company to be automatically executed: dividend payment, voting in a shareholders meeting, among other things. All of this is under study, even regulators are looking at it, and something will be launched in the future.

"Use cases are simply innumerable, perhaps infinite: payments, micropayments, property registration, digital identity, logistics, voting in elections... "

Executing actions in accordance with the rules and conditions of a company, a service, a State (the laws), could immediately automate and executes countless actions. This gives much imagination. For example, if you exceed the speed allowed for a car, you pay the fine instantly, i.e. before you get off the car. If you think there has been an (unlikely)error, then you turn it into a later process.

Logistics is a key sector that will apply blockchain to the business in the coming years. It will save you from headaches. Photo author: Ibmphoto24.

Use cases are simply innumerable, perhaps infinite: payments, micropayments, property registration, digital identity, logistics, voting in elections or shareholders' meetings, among many others. In the second part on this subject, which will be published soon, we are going to stand firm and talk about some use cases that are already underway or are being seriously investigated, as an example of what blockchain is capable of doing.

As to blockchain, there are the most diverse opinions. Some people think there's a lot of smoke. When the mobile was popularized, the first to use it rained criticism. When the WiFi was popularized in public places, those who used it were worried about not being able to go home or work to check their emails...

"As it has happened with internet and smartphones, blockchain will change your life without you noticing."

I think the technology already exists, but it requires much research, investment and, above all, the time needed to get the most out of it. Just like we had to wait years for 4G, and now for the 5G there are also three or four years despite the high expectation, to see significant changes with blockchain will have to wait a while. Little by little it will arrive. As it has happened with the internet and smartphones, blockchain will change your life without you noticing.

By the way, I have already used something linked to blockchain, and it’s not Bitcoin... Don’t miss the second part with the use cases of blockchain and how you can experiment with this technology, sign up for the newsletter of Notes941 (see below) or follow me on Twitter.

[Update 17 March 2019, second part already available here.]

What do you think of blockchain technology and/or about the invisibility of the insides of the technology? Please, comment below or on Twitter.

Annex with links and videos

• Spectacular chart of Reuters on blockchain (view).

• Fortune: "The 50 Largest Public Companies Exploring Blockchain" (view).

• Speech by the Governor of the Bank of England on the future of money (view).

• Coindesk explains what is blockchain and many more things (view).

• Alastria, the world's first national blockchain network, launched in Spain (view).

• Video (1 min) on what is blockchain, from Banco Santander (tweet here and video below).

• Video (8 min) “TED Talk” by Julio Faura on Blockchain (November 2017).