This text aims at providing an optimistic view at the potential applications of blockchain. It brings hopefully more tangible ways of understanding the impacts of blockchain on our future daily lives. Blockchain’s characteristics, such as trustlessness and transparency allow to rethink social and economical interactions. All the concepts contained in this article are presented through the lenses of today’s world view; as with all new technologies, nothing is yet set in stone:
“If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said a decentralized network of information nodes that are linked using hypertext.” — Farmer & Farmer
—
You start your morning with a breakfast. While preparing it, you question your home assistant on the upcoming day: “Hey Jarvis, have you found any internship in Singapour that matches my girlfriend’s interests?”. A very complex search for an AI. The world has changed since your first encounter with Siri. Instead of asking trivial questions triggered by keywords (« Hey Siri, who won the game last night? »), your digital assistant is able to answer much more complex questions. This is due to the fact that your assistant is connected to a decentralized AIs marketplace. This allows two interesting things.
First, the marketplace allows developers to compete and get rewarded for the best machine learning models; the financial ecosystem around model validation is an incentive for researchers, which creates a positive competitive atmosphere that accelerates AI innovation.
Secondly, AIs are able to exchange data between one another, therefore being able to address more complex questions. This is facilitated by a common data structure that improves the availability and the quality of the data (or at least limiting bias at data collection).
Additionally, considering blockchain technology allows for better permissions management, AIs are able to request -by themselves- permissioned access to data, which let them handle sensitive data more easily. You have built a trusted relationship with your digital assistant, you rely on it and fear less of the things that can be done with your personal data, as the potential power that comes with holding a significant amount of data or specific algorithms or libraries of algorithms is reduced by the decentralization.
On your way to work, you take a quick detour to Starbucks to pick up your favorite beverage. Instead of paying with dollars, you use your messaging appand pay using in-app tokens. You pay using the Starbucks tokens, earning a few loyalty points for the purchase that you can reuse later. The uses of the tokens are widespread: owning them has turned you from a stakeholder (a consumer) into a shareholder and a Starbucks community member. The token you earn when buying from them makes you a part-owner of the company. It grants you the possibility to take advantage of discount deals they offer for token holders, just like you, and if you hold onto the tokens, you can vote on the future of the company: your purchasing and lifestyle choices have become your financial investments: your everyday consumer choices in the form of Starbucks loyalty rewards, brand commitments like Apple shares from iPhone purchases or your monthly gym membership. The reason these companies are rewarding you with powerful tokens is that they want to hold you close.
The tokenization of different assets allows you to diversify your investment portfolio. Last week, you even invested in the Aston Martin old-timer of your dreams: the car has been split up into thousands of tokens and you hold some of them, hoping that they will appreciate in value over time. Previously, investing in such items required a significant capital that was inaccessible to most people.
Along with your drink, you decide to buy an apple to continue building up the healthy habit your doctor insisted on. To check that you do things right, you take out your phone and scan the QR-code on the price tag: this allows you to see where the apple is coming from and check whether the storage conditions were good enough. The immutable chain-of-custody informs you that the apple originates from an industrial farm; not really the healthy & fresh apple you were expecting. You put it back and choose another one coming from a local farmer. It has a « trusted origin » label on it, which are granted to companies being 100% transparent on their supply chain. It is a bit more expensive, but at least you know why you are buying it for.
Arriving at your work, the receptionist reminds you that -as they need to finalize your file in the company- you need to provide your high-school diploma to prove that you have the skills that you claimed during the interview a few months back. Luckily, your university has recently released its latest innovation: it can now digitally issue your diploma, with the same trust than when it was in paper. All recognized institutions do that now: Hospitals issue a proof of birth to the local municipality that can issue digital birth certificates and all driving licenses are now also issued digitally. The digital transformation undergone by governments allows to record, track, and transfer land titles, property deeds or liens and can help ensure that all documents are accurate and verifiable. No need to go to the commune and wait in line to receive a paper version of your driving license, like your father used to do… « Why do universities take so long to adapt? » you wonder.
You directly provide the digital diplomas to the receptionist, using your phone, which can check the validity at any time, along with your grades and the courses you have followed: information is trusted. The documents you needed to provide are stored in a decentralized cloud, reducing the probability of widespread data loss, enabling bandwidth savings and opening the access to areas with lower connectivity.
You work as a « legal contracts engineer », a new discipline that is in high-demand and that can combine your love for civil laws and computers. Basically, your job consists of translating legal contracts established between corporate companies into computer code, so that these contracts are immutable and self-enforceable, reducing the costs of legal procedures around non-disclosure agreements between companies. Your company is actually building an app that provides an administrative system for organizations to ensure smart contracts are executed according to rules encoded on the blockchain (or to update the rules themselves); it helps other organizations’ boards to use your app for shareholder voting by proxy and collaborative proposal management.
Fast forward to the afternoon, on a global peer-to-peer banking platform, you go through a list of suggested people & projects and update your settings on interests and preferred risk level at which you would like to give small loans. Of course, others may still keep their money in banks, but why leave your assets in vulnerable centralized servers at banks, when it is more convenient and secure to manage them yourself? The platform allows you to look at a variety of projects from local development proposals in disadvantaged regions to exciting startups in high-tech cities. To decide your risk tolerance for loans you give, you may pay a little extra every month to automated risk analysis providers that operate on top of the platform and help you with deciding what your risk tolerance is.
While browsing the internet looking at these services, you remind yourself that websites have opted-out of traditional business models based on advertisements or subscriptions and now propose alternatives to monetize their content. For instance, your social media website generates revenue as you authorized it to mine crypto-tokens on its behalf, essentially paying the service through your electricity bills. Your favorite news website decided to use “NewsCoin”, a token that is stored in your browser and that allows you to pay only for what you consume, which is handy because most of the time you only read half of the articles; you don’t pay for the rest. If you run out of tokens or wish to monetize your personal data, you have the possibility to accept advertisements or allow the website to collect behavioral information that it can later sell to third parties. The dominant business model based on ads of the 2000’s is not alone anymore.
« Same for music! » you think. Indeed, the entertainment industry has turned to the blockchain to make content sharing fairer for creators using smart contracts, whereby the revenue on purchases of creative work is automatically disseminated according to predetermined licensing agreements. This allows your local band to publish its music on major streaming platforms and get paid per stream, everything being automated and open to a wider range of people. An accessible way to publish music to a large audience without bearing the costs of intermediaries (majors).
After a long day at the office, you decide to go for a drink with friends and proceed to connect to the local transportation and location network to get a self-driving car. It arrives within 30 seconds and confirms your identity with voice recognition. Once you arrive to your destination, the car will automatically collect the payment from your wallet and deduct some percentage of the different assets you hold according to your preferred settings. For example, you just paid for your car ride with .01 of an Apple share and 1 Starbucks reward point. Same for the insurance: you start paying your insurance only when you step in the car and stop paying once you step out of the car. Right after the ride, the car may notice it has to charge up, so it will drive itself to a charging point and pay the fees automatically. The car optimizes itself for profit as an independent economic unit, and pays for its energy use and repairs itself, so no company will need to own it, although a portion of its profits may always go back to the car’s manufacturer. The rest, however, will go into the city’s coffers to improve infrastructure. If the car does not make any profit because, say, the city is loaded with other autonomous vehicles, it can decide on its own to migrate to another city to generate more profit elsewhere. Decentralization brought the ability to reach consensus without intermediaries; adding to it the ability for automated decision-making, objects’ autonomy increases.
Arriving at the bar, the bouncer suspects that you are below the legal age to drink so he asks you to prove that you are over 21. Instead of providing your ID card so that he can consult your birth date along with all the information, you provide him with a proof of your age that has been validated by your municipality. In the decentralized web, rather than a siloed approach in which these identities are controlled by each centralized platform and where you need to provide whole chunks of data, the emphasis is put on a holistic approach, which is based on the key notion of self-sovereign identity, which results from self-managed data. Each user is able to choose the services that will access his data, share data more granularly, monetize some accesses, and revoke accesses when he wants. A user’s identity is multi-faceted: you can present a certain facet of your digital identity according to the context (financial, social, professional …), without having to present your full identity. Even better, you can present approved claims (e.g. the fact that the individual is above 21 yo), which reduces the exposition of personally identified data while remaining trusted. This radical change in approach from the old web (siloed) also makes it possible for data interoperability and thus allow for new models to emerge. Applications are therefore able to benefit from longitudinal data, created by the same individual throughout his life. Individuals use Facebook to connect with Google+ users because that is the application they like. Decentralized web reverses the initial logic: the individual is able to reclaim his personal data and, beyond that, its digital identity.
Coming back home, before going to sleep, you check the electricity consumption of your house on your phone. All of your smart devices are connected to a public ledger which mediates communications between them. Without a central control system to identify one another, the devices connect, interact, communicate and transact with each other autonomously to manage software updates, bugs, or energy consumption.
Good surprise! It was a sunny day so the solar panels on your roof have generated enough electricity for your neighbor, whose solar panels are temporarily broken down. You earned a bit of money during the day by selling him your electricity on the local smart grid. This extra money will surely come in handy to pay for the electricity of the computer you have running downstairs in your office: as you are not using it during the day, you are rewarded by large medical research companies to decode DNA strings, and accumulate tokens for the computing power you provide, which are added up to your portfolio. Large companies now prefer to rely on decentralized computing, which provide more computing power without the need to invest in large infrastructures and is more environmentally friendly. The amount of money that you receive to contribute to a decentralized computing platform is indeed relatively small but enough for you to have a drink with friends once in a while — You won’t get rich but it’s always nice.
Dimming the light and closing a book on your favorite topic: the history of Internet, starting in the early 80’s. What happened around 2010 is interesting: the stiffness in innovation created by centralized platforms made internet slowly less interesting and dynamic, only being stimulated by these giants that influenced regulations and the economy. Centralization has also created broader societal tensions, which stood out in the debates over subjects like « fake news », state sponsored bots, EU privacy laws, “no platforming” of users, and algorithmic biases. This paved the way for decentralized applications, which brought more advantages than just censorship resistance and trustless collaboration. By adding financial utility when application utility is low, tokens enabled the management and financing of open services.
Tokens provide a way to define a protocol, to fund the operating expenses required to host it as a service and also provide a way to create shared computing resources while keeping the control of those sources decentralized. The token networks allow to align the incentives of network participants (developers, users, maintainers) to work together toward a common goal — the growth of the network and the appreciation of the token. Blockchain brought a viable alternative to software development and another way to compete with existing platform economies.
However, the growth of decentralized platforms took time, simply because they needed to go through more product-market fit phases, since they often launched half-baked and without clear use cases: (1) product-market fit between the platform and the developers / entrepreneurs who will finish the platform and build out the ecosystem, and (2) product-market fit between the platform / ecosystem and end users. This two-stage process is what caused many people — including sophisticated technologists — to underestimate the potential of decentralized platforms.
But it is late and you go to sleep. « It’s only the beginning » you think.
Conclusion
Blockchain technology has an impressive potential and the future seems to be about incentivization. Programmable crypto-assets and smart contracts constitute a powerful way for communities to govern themselves in pursuit of common objectives. In this article, we laid out some of the potential overall use cases that the technology enables: stimulate the economy and improve the financial inclusion, improve foundational internet layers, transforming the economics of digital content, transforming the software development life-cycle, guaranteeing truly digital identities or allowing new governance systems to be used. We also tried to put forward some of the use cases that are possible with blockchain and not with traditional web, notably: (1) Being the sole owner of a digital good, digital collectible or a real asset’s crypto proxy (2) Earn money as a reward for work done (by a computer or human) (3) Store content on a decentralized network that would never go down or get censored (4) Pay for a service or good using a cryptocurrency you earned or (5) Earn cryptocurrency for data you shared.
It is possible that blockchain, together with other technologies (AI, IoT) will spark the next wave of innovation, just as Social, Mobile and Cloud did in the last ten years. It will certainly take time for the potential of this technology to unfold, as key building blocks are still being created, destructed and created again — not to mention the paradigm shift that must operate in some cases. The number of challenges, risks and open questions related to blockchain is also enormous. Wanting to offer rational solutions to social ills by means of impartial technology is not that simple. Let’s be part of the effort…?
Thanks for reading!
Liked what you read?
This article can be continued with the more realistic implications of such applications. _What would happen if blockchain helps create an unstoppable AI? How would our relationship with private data management evolve?
What if you create a single ledger for insurance companies that would be able to analyze all facets of your life? Would it be a fairer system or a more exclusive one?_The possibility to transform distributed ledger systems into the ultimate tool of corporate and authoritarian control might be too great a temptation for human nature to forgo…? Let us know if you’d be interested in such considerations.
We will be holding a series of events (in Belgium) around this theme in the coming months. If you wish to attend and know more about these events, you can subscribe to the newsletter and stay up to date.
Some inspiration:
- https://medium.com/@cdixon/crypto-tokens-a-breakthrough-in-open-network-design-e600975be2ef
- https://medium.com/@cdixon/why-decentralization-matters-5e3f79f7638e
- https://blog.ycombinator.com/the-decentralized-future-series/
- https://www.cbinsights.com/research/industries-disrupted-blockchain/
- https://www.techbullion.com/a-day-in-the-life-of-a-decentralized-future/