An innovative technology that enables anonymous exchanges of digital information could revolutionize the way consumers carry out a wide range of transactions. That was the consensus of an expert panel at a public discussion Thursday night at eBay’s Chelsea offices.
Blockchain technology is the invention of a person or group of people known only by the pseudonym Satoshi Nakamoto. It was originally created as the backbone for the world’s largest cryptocurrency, Bitcoin, which rose to an all-time high on Sunday of $7,601.39 per Bitcoin. But some innovators have recently started expanding blockchain’s uses to industries outside of finance, such as healthcare, logistics, insurance and more.
The “Bringing Your Company on The Blockchain” panel included Michael Yuan, chief scientist at Cyber Miles Foundation, which is building the next generation of blockchain technology; Nicholas Walker, a researcher at the blockchain integration consultancy Blockchain Driven, and Morgan Hill, managing partner at the cryptocurrency hedge fund AxionV.
Panelists shared their experiences in building blockchain projects with an audience of company representatives considering integrating blockchain, those launching Initial Coin Offerings (ICOs) and members of the public personally interested in the technology.
“Blockchain has applications across industries that have nothing to do with Bitcoin,” said Walker, who also collaborates with the Blockchain Research Institute, a Toronto-based think-tank that researches blockchain technology and its strategic implications. He believes that because it is decentralized, blockchain could completely replace auditing and third-party processing of transactions. This has brought about interesting applications such as smart contracts — legal contracts converted to computer code and used to conduct services and transactions that are paid for by cryptocurrencies.
“Smart contracts are a way of taking an idea or amount of instructions that you want your coin to do, and just writing it out in code,” said Hill. “It contains detailed instructions as far as when money comes in, money goes out, how, what and why this thing’s going to happen. And so, it can detail things like transactions, allocations, the timing, and you write it out and that creates your code.”
Other potential blockchain applications include identity verification and social networking, said Hill, who believes the technology is now at the “proof of concepts” stage where models are being constructed.
Walker said companies need to start thinking about ways in which they can utilize blockchain if they don’t want to get left behind. “The question is how fast will the future arrive,” he said. “You should have started thinking about it yesterday.” Pointing to the cautionary example of Blackberry, which didn’t catch on to smartphones quickly enough, he advised audience members to think about how blockchain is disrupting industries across the board, reminding them that they are no longer competing with “the bodega down the road or the start-up down the street” but with companies implementing blockchain around the globe.
However, Yuan, the author of an upcoming book “Code is Law: A Developer’s Guide to the Blockchain,” warned that there remain significant issues with existing blockchain-driven applications such as Bitcoin. These include lengthy transaction times, the use of computers that generate enough heat to power a U.S. household for seven days and problems with overusing limited networks.
Walker also recommended caution when allocating money to blockchain and advised companies to interact with blockchain experts in addition to conducting their own research. “Some people said that the internet was this crazy thing or putting your credit card on the internet for an e-commerce website was absolutely insane,” said Walker. “People are a little scared, they’re a little uncertain of what’s going to happen. A lot of the reaction is don’t trust it, it’s all bullshit, it’s all a Ponzi scheme. That’s just part of the process.”
In the future, Hill believes that major banks will remain dominant not because of their financial prowess or technology but because of their infrastructure which may integrate blockchain solutions in innovative ways, such as decentralizing their bank branches.
The audience seemed impressed. “I thought it was interesting to hear the different nuances and how people actually got into learning about the blockchain and getting involved with it in the first place,” said Lance Chambers, 22, who works in retail merchandising. “I appreciated that they had three different backgrounds, going from consulting to somebody who’s starting a hedge fund and then looking at it as an investor.”
“It was a really intelligent analysis,” said Mark Belkin, 42, an attorney at Quantum Alley. “The ideas are almost moving quicker than the technology.”