Remember bitcoin? It was all the rage in late 2017, but currently languishes some 70% below its peak. This post is not about bitcoin. While its future prospects (and how to value it) remain open to debate, we believe that the technology which underpins bitcoin – blockchain – is very much here to stay. This message was reinforced by a recent event we attended with two blockchain experts from Cambridge University’s Centre for Alternative Finance.
The academics made a crucial point: there is no current consensus on what is meant by the term ‘blockchain.’ It is often used interchangeably with expressions such as shared databases, distributed ledgers and so on. Different people take each of these terms to mean different things, creating inevitable confusion, but also opportunity. At its core, all any blockchain does is permit for synchronised record keeping without having to rely on a trusted central authority.
It is also highly important to draw a distinction between public, open and permission-less blockchains – which rely on game theory and economic incentives to function – and private, closed and permissioned blockchains. Bitcoin trading falls into the former. Where the true excitement is at, however, is in the latter. Real-world deployments are already occurring. Several use cases can be found within different segments of financial services. Sure, there is exciting potential in this integral segment of the economy, but the following example - shared with us at the event – struck us most forcibly about the potential for blockchain.
Consider that to ship avocados from Mombasa to Rotterdam might typically involve 30 different parties, over 100 people and more than 200 pieces of information being exchanged. This is clearly highly inefficient. Imagine then a blockchain where much of this information can be stored safely (without it being tampered) and accessed by multiple parties. IBM and Maersk have already launched ‘Tradelens,’ which does precisely this. Other ocean carriers, ports, customs authorities and so on have also joined. Now, those avocados should be arriving to your supermarket more quickly and more efficiently, tasting fresher and maybe even costing less too...
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