The radical potential of Blockchain

Niki WilesBlockchain, the technology which underpins Bitcoin has the potential to disrupt many large and powerful industries believes Niki Wiles.

Speaking to London Futurists in a session in London today Wiles, Lead Data Scientist for the London-based digital media agency, 360i said Blockchain solved some of the biggest problems with today’s centralised services.

Big disadvantages with centralised services such as lack of transparency, resilience, security and cost, would all be resolved if Blockchain technology was used.

The big problem which has traditionally mitigated against decentralised systems was the risk of double payment, he said.

The pseudononymous programmer or programmers Satoshi Nakamoto solved this with the Blockchain protocol in which everyone on the network effectively has a copy of every transaction in sequence and there is no central repository.

“Paying with Bitcoin is like shouting in a crowded room,” said Wiles. “All transactions are seen by all.”

Despite the fact that Bitcoin has taken most of the limelight he belives the underlying technology can disrupt basically any centralised system.

DNS allocation, currently the responsibility of the central ICANN organisation is one such example. Moving DNS allocation to a distributed system would defend websites against censorship as well as make DNS much less vulnerable to attack.

In fact he sees censorship-resistant communication as of the killer apps for Blockchain. There are already services like Bitmessage which offer decentralised P2P encryption.

Decentralising cloud storage and computing could bring real benefits too – more security, less downtime, lower cost., for example, aims to be many times cheaper than Dropbox while Zennet is hoping to do the same for computing resources. Because there are no ‘sysadmins’ they should be much more secure, too.

Blockchain should prove effective in the sharing economy he believes – La’Zooz, for example is Blockchain ridesharing.

Social networks could also migrate. Twister is a decentralised social network similar to, you guessed it, Twitter.

There is even a project called Bitnation looking to see what aspects of the state could be delivered on the platform.

There are many other example – decentralised energy networks powered by solar, p2p drone deliveries, decentralised smart contracts, the list goes on.

IBM is even working on Blockchain for powering the Internet of Things.

There are problems however. Blockchain technology is very resource hungry. It takes a lot of computing resources to run the encryption algorithms at the core of the technology and because the whole database is distributed it is very bandwidth-hungry, too.

As a example Bitcoin can currently only process seven transactions every second – hardly a rival for Visa yet.

However, Wiles believes Moore’s Law is on the side of Blockchain. “Decentralised systems are likely to become cheaper and more cost-effective.”

And when they do the financial industry is ripe for change. Blockchain’s strength in transparency and the automatic enforcement of rules could be a real game-changer in a global financial system which is riven with issues. “Financial audits could be done automatically, for example,” says Wiles. “Counterparty risk could be eliminated by all banks sharing one ledger based on Blockchain.”

And because the technology is fundamentally very cheap with very low transaction costs the world’s unbanked could find a solution with just their phones.

It could even lead to the formation of Decentralised Autonomous Organisations – as Wikipedia describes them  “corporations run without any human involvement under the control of an incorruptible set of business rules.”

Things are moving fast is the Blockchain world and in many directions. The next two or three years should show which of these directions is the most promising.

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