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Mr. Bhushan Singh
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The Future is Now
The evolution of the world in the age of the information superhighway seems to be getting faster and faster by the day.
We have seen inflexion points before in technological evolution and it’s quite possible that we are now at one of those inflexion points. In the digital age technology is at the heart of everything.
A New Race
We have heard of the Occupy Wall Street protest and complaint that as the world progresses the inequality gap grows bigger and bigger. However in this age of the internet according to Dr. Manfred Jantzen in his book Solution Leadership in Borderless Developing States, we are seeing a great global transition resulting from the intersection of Chaos Dynamics, Order Creating Structures and Change Driven Technology to give us new attractors.
The internet allowed us to exchange information as never before. While this significantly impacted the world and created a one world space which allowed the growth of online trade, social media and lowered the barriers to entry for firms wanting to go global; the system is not perfect.
Enter the world of Blockchain technology. It was created by Satoshi Nakamoto (a pseudonym) to create peer to peer electronic cash system using cryptocurrency called Bitcoin. This idea might be a bit hazy for many. You may have heard the term before and perhaps thought of it as some passing fad that will go away as quickly as it came. But you should not dismiss the idea so quickly.
First of all Blockchain means several different things depending on the context but what is common to all is that transactions are stored in a decentralized manner. In fact there are several applications now functioning on a decentralized basis. This has been described as the most significant technological innovation since the creation of the internet itself.
Blockchain is made up of nodes from around the globe which means that the information does not fall into the jurisdiction of any one country or organization. Additionally it is open source and completely egalitarian. It is not controlled by anyone. This is what may be described as the democratization of innovation if I may borrow the term from Eric Von Hippel.
Bitcoin itself is still a speculative asset, but what is important is the platform of Blockchain that it uses, has the potential to change the financial world as we know it. Blockchain allows for the use of digital currency. Blockchain also allows for the use of smart contracts which could lead to a huge improvement in contract monitoring and execution.
While the internet allows us to exchange information, Blockchain allows us to exchange value. This is the great inflexion point. It does so without being under the control of any central bank, government or financial Institution. It completely eliminates the need for an intermediary. Imagine you can transfer value from one country to another without going through any intermediary and the exorbitant service charges to go with it.
Additionally this digital money has a level of security and authentication that is even better than what exist today for the money in current circulation. It also has the possibility of being a one world currency. The exchange of value would also be instantaneous. Imagine that.
The possibility is even greater when you think of the applications. One of the problems that exist now is that it is possible for you to commit to expenditure a dollar that you do not have. Blockchain technology would eliminate that possibility as the authentication process would recognize the issue and invalidate the transaction. Blockchain is built on the trust protocol.
The system has a distributed ledger stored on computers worldwide which means that there are no central computers to hack. It is open source so it is open to innovation. The distributed ledger means that fraudsters will have a very difficult time as any attempt to modify the ledger will be recorded and invalidated. It has been said that double book keeping enabled the rise of capitalism and the nation state.
Today banks, governments, central banks, regulators and many others are trying to come to terms with the implications of this new platform. It certainly has the potential to change the financial landscape as we know it. The technology is gaining the attention and investment of many. Ben Lawsky Superintendent of Financial Services of New York in May 2015 quit his job to build an advisory company in the area of Blockchain technology. Many financial services companies are rebranding Blockchain technology as distributed ledger technology which they are trying to use to their advantage.
There are governments that have banned the use of digital currencies as some have tried to control the internet, but let the future unfold and see what happens. It may be difficult to stop a revolution such as this and still be part of the one world space. In any event, governments, central banks, regulators and financial institutions have not always lived up to the trust we have placed in them in carrying out their duties.
It is important to remember that technology by itself does not increase value- all it creates is change.
The ability of technology to create this change is called its productivity. This increased productivity if it happens - is where the value is created. Technology substitution or adoption occurs when there is an unmet or underserved need. Are we at such a junction?
Cutting the Edge?
Could we be on the cutting edge of a new innovation that will change the financial industry as we know it?
It may be quite possible. Disruptive technology (meaning that it disrupts the status quo) can be good especially- since it has the impact to benefit our one world space. As always it can be intimidating at first and we may not know as yet all the implications but the future remains bright. The future is now.