Blockchain has become a hot topic in investment circles. Recent articles I’ve seen include “Burger company launches blockchain rewards program, stock soars” (CNN Tech) and “Tea maker to become blockchain company. Stock soars” (CNN Money). Remember the late 1990s, when just putting “.com” at the end of a company name meant a windfall of IPO riches? If you missed that opportunity, maybe you now have another chance.
Is this blockchain thing just a fad, or is there something to it? In the short term, I’ll bet you all my cryptocurrency that the hype has gone beyond the reality, and the bubble will pop. But blockchain is an important technology that will make a significant impact on our lives, long after my cryptocurrency holdings have gone bust.
Blockchain came into the spotlight as Bitcoin became popular. It’s the technology that underpins the cryptocurrency, enabling people to trust it enough to buy it, own it, and use it in transactions. Blockchain is not itself the currency, but rather an electronic process by which transactions between two parties are recorded, thereby validating the authenticity and ownership of the Bitcoin. It’s an encrypted digital ledger where the transactions are securely recorded, and can’t be altered or reproduced. And it’s amazingly automatic, thanks to peer-to-peer networks and the magic of the internet.
Soon enough, the implementation of blockchain technology across the economy will redefine processes that are traditionally tedious and manual, and revolutionize how business is transacted and how records are kept. It could reduce or eliminate the need for brokers, agents, attorneys and small armies of administrators in many industries.
What are some uses of blockchain that companies are working on now?
- Restaurant company Chanticleer Holdings announced it will use blockchain to issue a “currency” for its customer rewards program. Diners will earn the currency that they can then redeem across the company’s different restaurant concepts or exchange with other people. (CNN Tech)
- Overstock.com has been accepting Bitcoin as payment and is launching its own cryptocurrency called tZERO. The company has invested in blockchain start-ups, and one project under development is to use blockchain for property registration in developing countries. (CNN Money)
- Kodak and its partner, a photography agency, are planning to use blockchain as part of an online platform that will enable photographers to protect the rights to their work and automatically receive licensing payments when their images are used. (BloombergTechnology)
- IBM and Maersk have formed a joint venture to use blockchain to track shipments of goods between parties and verify delivery, thereby reducing delays, product losses and paperwork in the supply chain. (Fortune.com)
To learn more, Harvard Business Review’s “The Truth About Blockchain” is a good introduction to blockchain and how the technology will be adopted. For a more technical discussion of how blockchain works, see Wikipedia’s blockchain article.
A few technical and financial risk challenges remain to be solved, but blockchain adoption is happening and the pace is likely to pick up quickly. That’s something to chew on while you’re enjoying your next burger or cup of tea.