As your average Luddite of a certain age I confess that rather a few aspects of the technology revolution scare me. It’s not necessarily someone having an apparently superior holiday to my own which is splashed all over Facebook, Instagram, Snapchat, etc. I don’t post that stuff anyway so I’m thankfully out of the pictorial comparison game with regard to R&R.
I could invoke Jean-Paul Sartre’s dictum of hell being other people to support that view, but I shall hold the thought in the certainty that he would have made a lousy travel agent – or quite possibly an even worse travelling companion, nausea included.
No, I was thinking of some specifics such as blockchain, ethereum and bitcoin after spending a few hours on WhatsApp and Facebook Messenger last weekend trying to convince some old dinosaur friends of mine that they ignored these – how does one refer to them with a go-to collective noun? – at their peril.
Crypto-currencies (such as bitcoin and ethereum) and their attendant offshoots such as blockchain form part of the core rubric of financial technology, a subject which even avowed techies are keen to defer engaging with. At least my field research into the issue tells me so.
If it’s a phobia it needs to be cured en masse, because much like the creepy clown “It” created by Stephen King, the monster, in all its various incarnations, is not going away soon. And, leaving aside the recent spectacular price surges in bitcoin and ethereum, which have caught the imagination of the get-rich-quick brigade and all the hindsight traders (I include myself in the latter group as past columns in this publication might attest), the part no one can afford to ignore is blockchain.
I suspect blockchain is going to have a profound impact on the world. Something along the lines of the horseless carriage, the telephone or the internet.
According to Oxford Dictionaries, a sister publication of the Oxford English Dictionary which specialises in current English language usage, including slang, blockchain is “a digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly.”
That definition is rather too restrictive, however. Blockchain is more than just about cryptocurrency – digital currency utilising encryption techniques to restrict issuance, and beyond the purview of a central bank.
Blockchain is a database comprising transactions that each member of that database, which is decentralised and encrypted (to ensure that the information exchanged in the database is secure), has access to. The chain is literally a chain (I’m having problems here again with collective nouns) of computers which must agree in concert to approve a transaction before it is verified and becomes a matter of public record.
The developers of the technology have it that blockchain can facilitate a vast array of transactions involving a price and can encompass arenas such as property, imports and exports, and taxation.
It’s tiny right now though, with just 0.025% of the world’s GDP held on blockchain ledgers. It was the same of course with the internet back in the early 1990s. That has come quite far in the intervening years and I’ve little doubt the same will apply to blockchain.
And, thinking in very broad brushstrokes, I was imagining just what or who the beneficiaries will be when blockchain becomes the standard mechanism for facilitating and recording transactions, which industry pundits suggest will happen over the next five years or so.
It seems to me quite obvious that the biggest beneficiaries are going to be the citizens of countries which are mired in fraud and corruption, principally those in developing economies.
The pellucid modus operandi of blockchain will render fraud literally impossible. I’m told by my techie friends that the encryption of blockchain means it is simply not an option to be able to misrepresent transactions on the chain.
Massive and complex fraud such as that which apparently happened in Malaysia and spread across the globe from government-owned investment company 1MDB will literally become impossible.
Countries such as Indonesia and the Philippines, where corruption is a way of life, will have to get used to doing business honestly.
That is, of course, if their worried ruling elites don’t try to legislate against blockchain. Well, they can try to but good luck with that. It would be akin to legislating against the internet. And not even the hermetically sealed North Korea has done that, even if its leaders would like dearly to do so.
Meanwhile, blockchain will allow investors to see the sum total of long and short positions in securities over the short and the long term. The net result of that would seem to be reduced volatility, the clipping of the wings of speculative short traders and a clearer representation of the true value of an enterprise in the price of its outstanding or pending securities.
Blockchain contains the elements of a “poor man’s charter,” one that might serve to close the massive inequality gap in wealth which characterises both the developed and developing world. Do I say that because “behind every huge fortune lies a huge crime?” Something like that.
The rich won’t like it and will do all they can to head it off at the pass. Their efforts will be wasted as the technology juggernaut powers on down roads no one could have dreamed of back in the days of the horseless carriage.
