May 19, 2018
In smaller towns or in the countryside, the thinking goes as follows: people are nicer because the social bonds are stronger, thus creating a huge disincentive to commit crimes or to partake in misdeeds in general. You know, ‘folksy’.
In China, they have a term – guanxi (pronounced gwan-shee) – that means the relationship you have with others. If you have no strong relationship with others, don’t expect to do much business with them. That’s a pretty big deal when looking for a job, a partner or a client. In dire straights – if we don’t trust the local government or the legal system, for example – we naturally fall back to personal relationships.
This may sound like a strange way to begin an article about the whiz-bang blockchain, but bear with me. If it’s true that people in smaller towns are more likely to know each other well and thus be more inclined to do the right thing (i.e. live by a moral code), we have a problem; with every passing year more and more people are moving into big cities.
Here in Canada the percentage of people that live in urban centers is 82%. That figure is pretty much the same across the United States and in South Korea (nations that are similarly developed). The implication, therefore, is that the vast majority of Canadians, Americans and South Koreans are surrounded by people that they don’t really know, and may not trust. This is pretty much how we do business, too: we don’t really trust strangers but we trust that the government and the legal system will ‘bail us out’ if anything goes awry.
What do you think it does to one’s psychology when they enter every business deal, car purchase or medical procedure with a sense of insecurity?
Does this company have a money back guarantee? Will this ________ be here in 10 years if something goes wrong? Will we need to go through legal proceedings if something bad happens?
We probably can’t move back to the countryside – but we can use technology to reinstate that level of trust.
The term ‘trustless’ is often used to describe the blockchain because the blockchain doesn’t require a personal element of trust or trustworthiness. It operates in a much more unbiased fashion because forging/disrupting the data requires the cooperation of an impractically large number of bad actors acting collaboratively, as opposed to the current system — trusting a single bank, institution or government body. For more on the trustworthiness of the blockchain, read Preethi Kasireddy’s article on the subject.
If you’re willing to get on board with this digital uber-secure ledger, what can you do with it? Here are some specific examples of how the blockchain can be (and have been) put to use.
One version of the truth. The blockchain can act as a shared ledger of medical history so that patients, providers (doctors, clinics and hospitals), insurers and governments all have easy access to the same information. So much time and energy is wasted due to the difficulty health care providers currently have with sharing data with other parties. As you might expect, these organizations might not have a vested interest in doing so. On top of this, well-intentioned organizations and cooperative patients might still face hurdles due to human error in data entry and the need to fill out countless online and offline forms (or simply lacking data and spending precious time chasing after it).
Smart contracts – blockchain-based algorithms that are triggered by specific events – could also automate the sharing of relevant information with various parties, if the patient were ever in need. Having up-to-date patient data reside on a secured ledger would also massively reduce lag times when switching healthcare providers and insurers, creating a more competitive market for care.
At the end of the day, speeding up a painfully slow system is nice – but when it comes to medical coverage, it can be life-changing, if not life-saving.
As with the medical sector, the most beneficial applications of the blockchain can be found in systems that are very complex, such as manufacturing, investment and trade. Where there are lots of moving parts – and where human error has significant consequences – there is a high likelihood that the blockchain can make a difference.
In the case of international trade, the need for decentralized coordination is even more pronounced because of language barriers and inherent interoperability concerns (not to mention all the little differences between logistics companies, suppliers and government trade requirements, etc).
IBM conducted a pilot test using a blockchain-based shared ledger for export/import documents between America and Singapore. With the “trustless” blockchain-backed system, many steps (redundant double-checks) in the system could be removed, thus speeding up processes and reducing complexity. Since every shipment contains a multitude of paper documents related to the origin of the goods, matters of taxation, etc., shipping can take forever. Putting all of this in the cloud – with a link to view the original documents – is far superior. Again: with excessive amounts of data, the chance for human error is great, resulting in much double-checking and wasted human hours. The alteration of data (either intentionally or unintentionally) may result in massive consequences: upset business partners and clients, financial losses, legal problems, and so on.
plasticbank.org has come up with an ingenious plan which addresses the plastic waste problem disproportionately affecting impoverished countries and cities, while building communities and enriching those looking for stable income. Their use of the blockchain ensures that online payments cannot be compromised in any way, offering security that far exceeds that of fiat cash payments. Here’s an inspiring TED Talk from The Plastic Bank‘s founder and CEO David Katz.
In an ideal world, the blockchain would be used to fix one of society’s biggest weaknesses — the lack of trust and security we feel when dealing with people and organizations we don’t know well. The above are just a few examples that give you a sense of what’s possible and what’s coming in the future. You can read more about how IBM is using the Hyperledger in various industries here. Additional reading on various case studies can be found here.
Here at Convergence we work on blockchain projects for many of the same reasons. If you think the blockchain could bolster your software-based business – or just want to talk about the possibilities – please get in touch.
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