Beyond security and trust, this video discusses the idea of zero authority functioning systems and middleman elimination.
- As the origin story of blockchain describes, this distributed ledger supports immutable transactions, currency movements in the case of Bitcoin, that are secure, frictionless, undisputed, without central authority, and only modifiable by agreement from all participants. By extension, a whole range of financial transactions can take place over a blockchain. Following the same concepts as Bitcoin, stock trades, bonds, and other financial assets can be managed this way.
Financial institutions are taking note, and it's a business sector that is exploring and experimenting with the blockchain. However, with our knowledge of the advantages of the blockchain as a backdrop, what other situations beyond financial transactions might this type of model be useful to support? This is where it gets really interesting. Let's take a simple example of the challenges of proving ownership of a digital product. While digital products such as photos and music have made it really easy to acquire, store, and move across devices, the same advantage makes it really easy to copy them, and dare I say it, steal them.
Artists and media organizations have had to largely accept this fate, resulting in the loss of billions of dollars of lost value. If you are a valid owner of a digital product, it's hard to prove that you are. If we could register our creation and ownership of digital products in a blockchain, it's possible we could attain immutable proof. For example, if you are a professional photographer and you register your photographs on a blockchain, it would be difficult for someone else to claim that they took the picture.
Your ownership record will be stored on the blockchain, and it will be near impossible to change that fact. The blockchain would also enable a more trustworthy mechanism to support transfer of digital ownership. Let's discuss another more complex use. In ports all over the world, ships drop off products and they load up products. This is done quite fast. Putting massive containers on a ship for export moves quickly.
After all, with fruit, any time lost means the product can spoil. However, where the shipping business loses time is with significant volumes of paperwork. A container of fruit might have paperwork that needs to be signed and stamped by around 30 people: customs, tax officials, and health inspectors, for example. Added to this burden, this paperwork can be tampered with, allowing criminals to siphon off product or mislabel to exact a higher price.
Now, instead of using paperwork, let's make all the transactions digital and make all changes on the blockchain. Suddenly, it becomes near impossible to tamper with. All signatures can be more efficiently managed, and there is an immutable history of every step of the journey of the fruit. It solves a lot of problems. IBM and Maersk, the container shipping company, have been piloting just such a system. And a bold proposal for the port of Dubai in the United Arab Emirates challenges all of the transactions to be conducted on the blockchain within just a few short years.
Whether they can pull it off is yet to be seen. An emerging theme with the blockchain is that it provides trust in cases where establishing trust is difficult. Let's look at identity. The internet today relies heavily on identity, but continues to be a challenging space. So often, we establish identity on a system with a username and a password. Sadly, we know all too well, that our passwords can be stolen and our identities compromised.
Might it be possible to store our identity on a blockchain, and have it universally accepted for all manners of authentication. We could imagine all our credentials such as system passwords, credit ratings, driver's licenses, birth and marriage certificates, property titles and more stored confidently and tamper-proof in this system. We'd even eliminate many of the traditional authorities that make access and updates to our own documents so difficult and often so costly.
Many will be happy about this, and some will have reservations. Finally, having a trustworthy online identity could allow us to fulfill the dream of online voting, enabling more citizens to vote in elections from their smartphones. When we begin to imagine these types of uses, we quickly recognize how transformational the blockchain could become. But it's still early. We're speculating here, and at best, there is a lot of interesting experimentation underway.
Let's take a look at some real examples in the next video.
Jonathan begins by describing some of the current challenges with the Internet, including existing risks and security problems such as identity management. Next, he describes how traditional online databases function, so that you have a basis for how the blockchain redesigns this function. He then describes how the blockchain becomes a potential solution for many of the existing limitations of online databases. Since the blockchain has its genesis in Bitcoin—the digital currency—he provides some background on that too. He also discusses how blockchain technology actually offers new capabilities beyond simply solving old problems. To wrap up the course, Jonathan shares steps you can take in your organization to understand the implications of the blockchain.
- Risk and security challenges
- Rethinking the traditional database
- What is the blockchain?
- What problems does the blockchain solve?
- Transforming transactions
- Examples of the blockchain in action
- Obstacles to blockchain adoption
- Risks to existing solutions and enterprises