The blockchain, still in its infancy, is as puzzling to some as it is thrilling for others. Crucially, it has the potential to cut out financial institutions and third parties in the selling of goods and services.
So, what exactly is blockchain? It is a distributed database that is held across a network and stores data in blocks, which can verify information and are nearly impossible to hack. It removes the need for third-party verification and therefore disrupts any sector where this is traditionally used.
“The blockchain is an enabling technology,” explains Dan Burrus, futurist and founder of Burrus Research. “This means that you don’t need a third party any more. The network itself replaces the third-party institution. Therein lies the disruption. Whenever there is a third party involved to produce a transaction, the block chain could replace it.”
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Blockchain technology has the potential to disrupt the way that brands sell goods and services. Consumers are demanding more information and transparency behind brands, and the blockchain is a way to allow provenance to be guaranteed.
Using the blockchain is a way to broker trust with consumers because the database’s unique features are being immutable, highly secure, and fully decentralized.
According to a recent CBS.com article on cyber crime, 47% of American adults had their personal information stolen by hackers in 2014—primarily through data breaches at large companies. That added up to a staggering total of $18,000,000,000 in credit card fraud for the year, according to CBS. Although it’s difficult to determine exactly how much cybercrime costs, Mcafee estimates that the annual global cost of such crime could be over $400 billion.
As a result, the environment is ripe for blockchain technology to flip the global trade paradigm on its head and address today’s need for more secure exchange of goods and services. Driving this trend are the following factors:
Besides finance, the art world is showing early potential for the blockchain. Verifying the authenticity of artworks is a key consideration for dealers and buyers, and with the blockchain, which works as a decentralized payment ledger, verifying the authenticity of art and making it unforgeable.
A new start-up from Los Angeles from Robert Norton, co-founder of Saatchi Online and Sedition, aims to create a worldwide ledger for works of art using the blockchain. Verisart will enable artists and collectors to certify, verify and document their works without the need for a middle man.
“We believe the advent of a decentralized worldwide ledger, coupled with powerful encryption to mask the identities of buyer and seller, will be attractive to the art world,” Norton told Techcrunch. “As more art sales move online, there will be increasing demand for certificates of authenticity as well as the need to perform real-time verification of provenance. The blockchain enables potential buyers to verify the chain of title in a work without relying on any single node of verification.”
Provenance has been one of the watchwords of the Turbulent Teens, with consumers demanding to know who made their products and where. Now this information could be collected and stored—and not misrepresented—using the blockchain. Provenance is a start-up that plans to use the blockchain to verify and sell items from artisans and designers. The founders believe that using this technology will result in a paradigm shift in which, rather than having to question the origin of products, consumers will implicitly accept their origin.
“A lot of people see it as a missing piece to the puzzle of the Internet,” says Jessi Baker, founder of Provenance. “It is still very difficult to broker trust on the Internet. The blockchain provides that trust layer that has been missing.”
Citizenship has always been regarded as the status of a person who is recognized as a member of a nation state. Evidence is now emerging that points to a rethink of this model as roving consumers increasingly aspire to global identities. In most cases, this shift is being facilitated by the digital revolution.
BitNation is a start-up that aims to create a model of decentralized governance that people pay for and use irrespective of their citizenship. This can include land deeds, corporate mergers, dispute resolution, and other services that are traditionally provided by governments. At the beginning of 2015, the platform validated its first ID card, proving the existence of 24-year-old management consultant Janina Lowisz. Using blockchain, the technology behind Bitcoin, the system provided a cryptographic affirmation of Lowisz’s existence—the first small step towards a decentralized citizenship.
As we move into a new economic era enabled by blockchain technology, brands that adopt the new method rather than protecting and defending their accepted ways of working will benefit.