Blockchain is Not a Fad—It Might Just Be the Ultimate Enabler
Posted at Tech Vibes
In one of the all-time greatest episodes of The Simpsons, “Bart Sells His Soul,” Milhouse apologizes for selling Bart’s soul to the proprietor of the comic book store. “But look,” Milhouse exclaims. “I got some cool pogs! Alf pogs! Remember Alf? He’s back…in pog form!”
The joke is essentially a one-two punch against fads: both the then-already-forgotten Alf—a not-insignificant commercial hit in its day—and pogs, a flash-in-the-pan playground obsession that barely lasted a single school year.
It isn’t too difficult to identify a fad as it weaves its way through popular culture. Fidget spinners reached market saturation in a matter of minutes, and are currently clogging up bargain bins and convenience store checkout counters across North America. But just because you can spot a given fad doesn’t necessarily mean you can avoid it.
Any parent who has recently purchased Shopkins for their child knows that special pain of being coerced into splurging on a passing and overpriced fancy. Every generation has its fads, as well as the parents responsible for indulging them—lest they suffer the consequences of resistance.
There are, of course, more complex cases. Cryptocurrency has gone from fad to gold rush several times over. The value of bitcoin has spiked from modest beginnings to dizzying peaks, but as of this writing is in the midst of a crash. Maybe by the time you read this, it will be back to those dizzying peaks again. Herein lies the difficulty of prospecting in these “mines”: the thrill of striking it rich is often followed by the bitter hangover of over-saturation and a stock gone sour.
The roller-coaster ride of cryptocurrencies such as bitcoin is provoking no small share of skepticism and disdain, causing many to dismiss this emergent market as nothing more than a pog-like fad. This holds true also of the underlying technology that enables cryptocurrency to function: blockchain. But the volatility of cryptocurrencies should not cause us to throw the proverbial baby out with the bathwater.
Whether bitcoin ultimately lives or dies, the long-term prospects for blockchain are far rosier, and its potential applications increasingly wide-ranging and enticing.
This claim is often followed by the question: What the hell is blockchain, anyway? Simply put, blockchain is an open, digital ledger that allows groups of any size to track transactions of value to them. If you’ve ever shared and edited a Google doc along with a larger group of collaborators, you already have a basic sense of what Blockchain is and how it works.
The underlying concept here is that while you can add value by editing elements of the document, you can also see what changes are being made to it elsewhere by other collaborators —and verify their validity. The process of changing the document is transparent to everyone involved. This means each collaborator can also see what other changes are being made, who is making them and then collectively verify value (or call bullshit) in real-time.
In a traditional process, the document would be passed around without transparency. Each new draft comes into existence without the rigours of peer verification around the value of the edits that were made in order to get here. Google Docs, like a blockchain, effectively cuts out middlemen, decentralizes thought leadership and democratizes what were formerly hierarchical and centralized processes.
Pretty cool, right?
The analogy works a little bit better when you exchange content for energy, which, like content, takes some effort to create. Let’s imagine you’re one of those forward-thinking home-owners that slapped a set of PV panels on your roof to take the edge off of your electricity bill. Before you know it, there’s a string of sunny days, and your solar system is generating more power than you know what to do with. Luckily your neighbour’s teenager has been hitting the hairdryer pretty hard as of late, and she’s interested in taking some of that excess power off of your hands. Through a blockchain enabled exchange system, the two of you can sort out a price much better than that of your stodgy utility company.
So it goes for the entire block, everyone bartering for energy tailored to their specific needs, at prices negotiated at everyone’s discretion. In this situation, the blockchain allows our neighbourhood to transparently deal energy to one another—activating payment (perhaps in a cryptocurrency) if/when the energy is distributed.
It is this concept of “if/when” transparency that excites the commercially minded, as it opens the door to a future of “smart contracts” where vendors and customers can openly verify all aspects of their relationship, and ensure that value is delivered in every transaction. This only scratches the surface of blockchain’s possible applications against networked transactional relationships, and the disruption of these applications are potentially as wide-sweeping as the internet itself was more than two decades ago. So, while bitcoin may yet join Alf pogs and fidget spinners in their overstuffed bargain bin, blockchain will, in my opinion, be the indirect gift that keeps on giving for a long time to come.
Nav Dhunay is the Co-founder & CEO of Imaginea.io.