In a recent TED Talk, Bettina Warburg, Blockchain entrepreneur and researcher, describes exactly what we should be expecting from the upcoming blockchain innovations and how it is reducing today's uncertainty.
Blockchain is a Continuation of a Human Story
In this presentation, Warburg makes it clear that Blockchain is a relatively new technology, but it is not a drastically new concept. She explains that, “As humans, we find ways to lower uncertainty about one another so that we can exchange value.” Since early human history, when humans lived in hunter/gatherer economies, trade has been essential. As trade routes advanced and grew in distance and complexity, institutions such as banks, currencies, corporations and governments were formed to continue to manage trade. Eventually, we started relying on the internet to verify and monitor economic activity even faster. Now, with blockchain, we have the ability to interact and trade with low uncertainty through technology, rather than through governments and corporations.
What is Blockchain?
Warburg defines blockchain as “a de-centralized database that stores a registry of assets and transactions across a peer-to-peer network.” The network is essentially unforgeable as it is cryptographically linked, secured, and replicated on every network computer. This security greatly lowers uncertainty and makes it possible to radically transform our economic systems.
Warburg claims we currently face three types of uncertainty in our modern regular transactions:
- Not knowing who we are dealing with – When interacting with a seller on eBay, for example, it is possible to see what the seller has input about him/herself and the selling history. However, there may no history available or the profile information could be false. A blockchain identity, however, allows individuals to selectively reveal a number of cryptographically proven attributes that would help to facilitate trade, such as age, a government ID, etc. Rather than a website profile, blockchain allows for the use of true digital identities to reduce uncertainty.
- Not having transparency into interactions – Currently, it is difficult to be certain the product purchased is the product desired, and there is often no transparency for how it arrives. Many companies manage lots of vendors across a horizontal supply chain who utilize many databases and infrastructures. However, Warburg states that, “Using the blockchain, we can create a shared reality across non-trusting entities.” Essentially, by utilizing the blockchain, all vendors can utilize the same database without needing to trust one another or have previous relationships. This increases transparency for consumers because they can see certificates or tokens through the product’s journey.
- Reneging on deals – Blockchains allow for the writing of code that acts as a bonding contract between individuals, without the need for a 3rd party enforcer.
It is still important to keep in mind that blockchain is a relatively young and untested technology. While there have been discussions about how many global problems may be solved with blockchain, it is not possible to know yet exactly how blockchain will affect the economy. However, all kinds of businesses and institutions are working on blockchain technology because it has so much potential to positively change the world. As Bettina Warburg explains, blockchain has a lot of the benefits of traditional institutions, but in a decentralized way by converting uncertainties into certainties. As a result, we have to begin preparing for this massively innovate technology.
Click here to watch the full presentation: http://www.ted.com/talks/bettina_warburg_how_the_blockchain_will_radically_transform_the_economy