The implications of blockchain for society are beyond our imagination.
In the past, governments were the only issuers of currency. Now, anyone can create their own value and exchange that representation of value using a blockchain or distributed ledger system.
Speaking at Gartner Symposium/ITxpo on the Gold Coast, David Furlonger, research vice president and Gartner Fellow, said the implications of blockchain for our society are beyond our imagination.
“This is not about the technology, it’s about trust,” said Mr. Furlonger. “We now have a digital capability to represent any form of value that is privately issued – you can become your own banker, insurance agent or foreign exchange teller. What does that mean for how society operates today? What are the implications for governance, our tax system and our legal framework?”
CIOs should build a list of potential use cases for their own industry to discuss with the CEO.
A blockchain or distributed ledger is a mechanism for adding trust in an untrusted environment, originally designed for entities to transact when they didn’t know or care who the other entity was. It creates an irrevocable record of significant data and events, such as monetary transactions, property records or other valued assets.
Designed to disintermediate and disrupt
While Gartner advises caution today, analysts see massive opportunity for distributed ledgers tomorrow. CIOs should build a list of potential use cases for their own industry to discuss with the CEO.
Read More: Blockchain Combines Innovation with Risk
In March this year, analysts documented 130 different use cases for blockchain across different industries, and the number is growing rapidly. Gartner predicts that by 2022, an innovative business built on a blockchain will be worth $10 billion.
Applications of the technology to date include:
- A credentialing system between universities to provide proof of course completion and grades
- A registry for identification of diamonds where each stone’s cut, color, clarity and carat is loaded into a ledger to prevent fraud
- Tracking the origin of fresh produce like beef or milk in China
- A land title system providing proof of ownership in emerging markets
“It is important to note that these are proof of concepts or trials, not mission-critical, implemented or tested solutions that people can use today,” Mr. Furlonger said. “Bitcoin is still the only working, proven blockchain.”
Square peg, round hole
Mr. Furlonger pointed out that many of the solutions being developed using blockchain technology could be done using existing, tested and proven systems such as relational databases hosted in a cloud.
“Many of the examples Gartner is seeing we would class as ‘blockchain washing’ – the technology label has been stuck in front of an existing product solution or service,” Mr. Furlonger said.
Read More: The CIO’s Guide to Blockchain
Gartner believes that through 2018, 85 percent of blockchain-named projects will deliver business value without using a blockchain.
A slow evolution of business models
Mr. Furlonger said he is not convinced that society is ready for self-regulation and the potential for criminal misuse of the technology.
“We may all jump on board with cryptocurrencies and other blockchain enabled services, or we could have a backlash. Governments could step in and try to exercise some control. More likely, there will be a kind of ‘arctic slide’ where people will become used to one application of the technology and become increasingly comfortable with it.”
“I do believe that blockchain is going to fundamentally change the society in which we live. Not tomorrow but within our lifetime,” said Mr. Furlonger.