Blockchain technology has the potential to revolutionize the digital world by enabling a distributed consensus where each online activity ever occurred can be verified at any time in the future without compromising privacy.
Much has been written about bitcoin lately throughout world media. Streams of news are coming in everyday about the rise and fall of various cryptocurrencies. Like shares in the capital market, cryptocurrencies are used to raise capital by many crypto startups through Initial Coin Offering (ICO).
An interesting thing about these coins is that every coin is created with a promise to solve a specific problem. But not everyone has been able to keep his/her promise.
The hottest debate regarding cryptocurrency is that whether it will overtake the fiat currency as the main medium of exchange. I will not get into that debate, though economists believe even if there is a possibility of such a thing happening, it wouldn’t happen anytime soon.
It is very conspicuous, however, that much of the discussion over cryptocurrency stops at Bitcoin, the most popular and the most controversial coin in the market. But to understand the true potential of cryptocurrency we must dig deeper -- we must discuss the technology behind Bitcoin which is known as blockchain.
Blockchain can be defined as a “distributed database that maintains a continuously growing list of ordered records.” Blockchain has an established set of rules -- commonly known as protocol -- dubbed the “Trust Protocol,” in the form of distributed computations.
The current digital economy is based on the reliance on a certain trusted authority; be it the email service provider telling us that our email has been delivered; be it a social network such as Facebook telling us that our posts regarding our life events have been shared only with our friends or be it a bank telling us that our money has been delivered reliably to our dear ones in a remote country. For all our online activities, we need to rely on trusting someone. But living in this digital world by relying on a third entity for the security and privacy is threatening. What if our trusted third party sources are hacked, manipulated, or compromised?
It is here that the blockchain technology comes. It has the potential to revolutionize the digital world by enabling a distributed consensus where each online activity ever occurred can be verified at any time in the future without compromising privacy. And this feature of blockchain technology is making all the difference and bringing immense opportunity to make many things right in countries like ours. Blockchain can bring transparency in our governance system, in our business, in our politics and in many other areas where transparency rarely exists.
Let me put one example here: all of us more or less know how complicated and messy our land registry system, which is considered one of the most corrupt sectors of the government, is. Digitalization of this sector is long due. But digitizing the current system may not solve all the problems. In fact, it may bloat the existing ones. By taking away the necessity of trusting the government as an intermediary, Blockchain Land Registry System could take away many of the possibilities of corruption of the related parties and thus make most of the processes in this sector transparent. Like this, in every sector where we cannot trust the government or any other third party, blockchain can help us bridge the gap removing the trust issue in between and thus solve many of our national problems pertaining to corruption and bad governance.
S M Musa is a PhD candidate at Rotterdam School of Management, Erasmus University, the Netherlands. He can be reached at [email protected]