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If the internet augured a world of frictionless information sharing, can blockchain augur a world of frictionless value transfer? A standards war – or better still a use case knife fight – is being waged among blockchain technology companies large and small, as well as a raft of consultants who are pitching every novel blockchain use case to anyone who will listen. The industry and world-changing outcomes that are promised are few and far between in the real world, with the exception of blockchain’s so-called “killer app,” Bitcoin and its digital currency brethren. And yet, however fleeting or threatening the prospect of a low-friction economy may seem to established players, blockchain is here to stay and its power to transform, augment and disrupt may very well surpass the internet’s.
A growing cadre of people are recognizing that blockchain is in fact the “killer app” of the digital currency era, going as far as likening it to a foundational technology. A growing number of entrepreneurs and investors are crowding in to the blockchain space all seeking to answer the core question: “If blockchain could not exist without the internet, what could not exist without blockchain?”
It is this wave of creation, much like the early days in any emerging industry, that will drive the most profound change in the global economy minting a new generation of Tech Titans – call them Blockchain Billionaires. In 1994, when Amazon was founded setting a young Jeff Bezos on a path toward an $83 billion personal fortune, it was easy for retailing stalwarts like the 124-year-old Sears, which is wrestling with financial risks, along with the equally troubled J.C. Penney to dismiss the concept of online commerce or assume that “try before you buy” consumer behavior was a steady state. It turns out that neither assumption was constant with some existential consequences for traditional retailers that ignored opportunity’s knock.
Much like Blockbuster met its demise by not opening the door to the internet and the concept of content streaming, established businesses and institutions may meet a similar fate for ignoring blockchain’s call to action. The most enduring firms that roared through the internet bubble and the new breed of sharing economy giants, like Uber and Airbnb, have created outsized value by providing people with what they want in the real world.
At our core, people want less friction in their lives, they want more trust in their relationships, personal, professional and institutional, and perhaps most profoundly, they want common witness to their claims of value. For this reason, some of the larger blockchain implementations outside of the digital currency market have focused on reducing the friction while increasing the trust and security of land titling.
For most people – at least those that have the fortune of ascending Maslow’s slippery economic pyramid – land and property represent their single largest assets. And yet, the drag coefficient, friction and opacity surrounding the lifecycle of this asset class labors under the weight of costly and inefficient intermediation, and, worst yet, risk-prone paycheck persuasion. The result is that affordable homeownership is aspirational for most. For the lucky ones who cross this threshold they are often burdened with “trust-inducing” private mortgage insurance (PMI) as a condition of their loan, all to acquire an asset that can be whisked away from them with a stroke of a pen.
In advanced economies, this event tends to be rare under the banner of eminent domain. However, in many developing and emerging countries land rights often shift with impunity behind the firewall of centralized record keeping. The only public defense against this impunity is the collective memory and power of common witness. Blockchain-based land registries are the 21stcentury equivalent of an entire village bearing witness to an unalterable transaction.
The advent of blockchain technology is not a zero-sum proposition for established industries and institutions, although it can be profoundly disruptive for late adopters. Instead, blockchains can become an enduring part of a business model or operating process provided they connect to the things people value. While much analysis on blockchain tends to focus on the business impacts in finance and supply chain management, the opportunities, especially in the e-governance arena are bigger. Imagine modernizing campaign finance, for example, with a verifiable single-citizen token that tracked a political contribution from origination to candidate.
Not only would this make the process much more efficient, it may very well accelerate and, critically, flatten the revenue model such that all viable candidates operate on common ground. Without blockchain, this type of idea would be dead on arrival, for all current alternatives grind with the friction of centralization and special interests. The era of Blockchain Billionaires and digital transformation is upon us and those that succeed will connect to enduring values and interests the way the Tech Titans have before them.
Originally posted at Forbes