About Blockchain I wrote a long time ago. It was a time when many people in Spain wondered what this new word was that was beginning to occupy “popular” conversations. With time, we are talking about mining in all places, and above all, the idea that their contribution to the development of our societies is beyond doubt is becoming popular. Especially, because of its relationship with bitcoin and its supposedly social contribution. As always, the story has more nuances than clarity.
The chain block technology or “blockchain” is already known as the “trust machine”. It is a cryptographic technology that allows to have a distributed “ledger” and that also requires a consensus (equally distributed, naturally) to be able to modify the information stored. For all these reasons, security increases.
This architecture and design allows you to have a fresh speech that fits very well in all those sectors that see as the culprit of all the evils of traditional institutions (not only financial ones): to be independent of a central bank to process payments or Buy currency, sounds great. Decentralize power, too. Having smart contracts that “self-express” without dependence on third parties (notaries, registrars, etc.) also like people. And make secure transfers of digital assets, it also looks good.
All this has meant that not only many people talk about it and think that it is going to revolutionize our societies, but also that it has begun to use it. At the last World Economic Forum in Davos, Blockchain was the second most used word (after “Trump”). Some examples that can be found out there:
Carrefour in France is already using these block chains to trace the provenance of products such as honey, cheese, milk, salmon or hamburgers.
Diamond giant De Beer has implemented a solution based on Blockchain to control how their diamonds are changing hands.
Telefónica, Seat and the component manufacturer Ficosa, are tracing the supply chain through a solution of intelligent contracts.
Santander has launched One Pay FX, a new service based on blockchain to perform transferences quickly, without waiting for subsequent authorizations, to verify them instantly.
AXA has launched an insurance against flight departure delays: imagine that you buy a Bilbao-Madrid plane ticket for € 150 and a € 25 insurance if the plane is delayed 2 hours. If after these hours the departure time has not yet taken off the plane, automatically (without third party intervention), you receive € 175 in your bank account.
Kodak has launched the KodakCoin cryptocurrency so that photographic artists are able to sell their works directly without relying on financial institutions.
The freight giant Maersk together with IBM already have a solution for the translatability of certain goods.
There are many more, but I think you already understand the intention and the objectives of all those projects. What we said before: remove intermediaries, give more prominence to the agents of the value chain, etc. You can observe a certain pattern in all these examples, even.
But, of course, this architecture and design is not without problems. There are still technical problems: its distributed nature means that in order to execute an operation (return the amount of a policy, make a bank transfer, etc.) the consensus of all the nodes must be available. That is, there is latency. By relying on cryptographic techniques, the computational cost is really great. Perhaps, these two problems (latency and computational cost) can be solved soon: computing is living a golden age at the level of its capacity increase.
It is clear that technology brings new ways of doing things. At the moment, it is the companies themselves that are driving the movement. But who knows if tomorrow can also be public administrations to give us an added value in the management of our procedures. What I’m not so sure about is that all applications give us such a high social value. And I will take the example par excellence: cryptocurrencies.
Your champions have already told us their supposed advantages. However, its volatility, lack of transparency and its lack of official status is not without problems. Basically, the risk you still have today. But that is not precisely the biggest problem. There are others, who have a lot to do with this social component:
Access to this “democratic” currency: who can access? Those who have technical knowledge. But, do it through intermediaries (those who were supposed to disappear).
Access cost: processing costs and energy resources are not low. Was not it a democratic currency? Maybe we should have explained this financial component too.
Environmental cost: search in google “environmental impact bitcoin”. Beyond the exact figures (difficult to obtain), what is clear is that the planet will pay the energy costs of the famous “mining”.
Knowing the need to know technically how to access the system, and the financial and energy difficulties posed, how good is it? It generates some doubt. And these same doubts generate me the other applications of the Blockchain if they follow the same pattern of development.
The value of the Blockchain as a technology is beyond doubt, but as always, maybe we should go slower in terms of its applications. Especially, reflecting on their supposed social advantages.