As the price of a single bitcoin surges past $5,600 to reach record highs, the public’s attention remains firmly on cryptocurrencies. Meanwhile, economists, bankers, and professional investors are more focused on the clever technology underlying all the new cryptocurrencies popping up on the market – blockchain.
A blockchain is a publicly open ledger of transactions stored in ‘blocks’ and safeguarded by encryption. It’s like an open book on every transaction within a network which can never be altered and can be accessed by every user on the network.
Blockchain technology is the actual engine driving every cryptocurrency on the market. But it’s not a technology that’s specifically restricted to creating new digital currencies. The distributed public ledger can actually redefine every economic transaction in modern commerce.
Blockchain could ultimately redefine every aspect of the economy, from getting cash loans online through companies like Cash Stop to the housing market. Here’s how:
Perhaps the biggest advantage of a distributed digital ledger like blockchain is the way it cuts out the middleman. Right now, sending or receiving cash requires a financial intermediary. This is someone to verify and complete the transaction, like a bank. Startups like Abra want to make it easy to send or receive cash without the need for a bank account or transaction fees by using the trust-based blockchain system. This could eradicate borders and unleash truly global commerce.
Media has gone from centralized to somewhat decentralized with the rise of social media. Now anyone can create content and promote freely online and quickly create a mass network. However, content creators and advertisers still need to go through mega corporations like Facebook or Google to reach their network. The blockchain could allow music creators and vloggers to establish an independent network where their content is paid for with micropayments supported by blockchain technology. Blockchain startup Brave is trying to do that for publishers now.
Real Estate has always been a notoriously opaque market. Information is hard to gather and is often concentrated with big, powerful corporations. Deloitte, however, believes applying blockchain to real estate could make the industry a lot more transparent. The report also suggests buying or selling property could get a lot cheaper and quicker with new platforms based on the technology.
Trading stocks, bonds, derivatives, or insurance is never going to be the same if blockchain upends the capital markets. Initial Coin Offerings or ICOs are already changing the way small companies are launched and startups fund their expansion. Blockchain based ICOs are controversial, to say the least. Bankers and financial experts believe most ICOs are little more than Ponzi schemes that are doomed to fail. True believers say ICO’s will eliminate Wall Street’s role in the economy and allow everyone to raise funds through a crowdsale. Only time will tell if the millions of dollars’ worth of digital tokens sold through successive ICOs so far are worth any real value.
This isn’t an exhaustive list of industries that could be disrupted by blockchain. The technology is often compared to the internet, which could mean that when the tech goes mainstream the global economy will be reshaped in ways currently unimaginable.