At Singularity University’s Global Summit, keynote speaker David Roberts posed the question, “What if machines made more money than people?” Sounds crazy…but is it? With Blockchain, could that be the way of the future?
I confess that when he asked the question, I still didn’t feel comfortable enough with the concept of blockchain to have an informed opinion on the viability of it. So I did what 77% of people do when seeking information on the Web…I Googled it…and I kept Googling it until I found articles that dissected the concept well enough that it made sense. If you are equally confused by the term, hopefully this analysis will benefit you as well…because rest assured, you WILL need to understand it—especially if you work in sourcing, outsourcing or supply chain as the potential is unlimited.
Fundamentally, blockchain allows consumers to transact directly with one another without the need for an intermediary, like a bank. If you use Paypal and select “eCheck” as your payment method to reimburse a friend for say a concert ticket, it appears to go directly from you to them. In actuality it first has to clear your bank, which can take 3-5 business days, or up to 8 days if another country is involved. Blockchain removes the middleman by using digital currency (aka cryptocurrency) which can be spent with companies or people who are set up to accept it as a form of payment. The digital currency can be converted to cold, hard cash, but with thousands of companies now taking digital payments it is not really the norm.
Technically speaking, when a transaction takes place it is recorded in a digital, public ledger and added to other transactions that were recorded at the same time, creating a “block” that must be verified. Unlike a bank, there is no single entity validating a transaction—but rather a decentralized, distributed network of outside sources. Those outside sources are called “miners” who use special software with complex algorithms to turn the block into a smaller, seemingly random set of letters and numbers known as a “hash” which is also something that links it to previous blocks. The linking is what forms the blockchain. The miners—in the case of companies like Bitcoin, for example—are incented to create the hash and close the block first because they receive extra value in the form of bitcoins when they do so. Closing the block creates security and transparency—it is equivalent to putting a wax seal on it because if it is tampered with, it is immediately visible. True confession…there is a whole lot more to it than that and if you’d like more information, read this more complete article on blockchain.
Blockchain may have launched as a concept in 2008, but it is rapidly taking hold today. Investors, Silicon Valley darlings and financial services companies are racing to find other uses beyond tracking currency. This technology is likely to take the supply chain industry by storm with applications that use digital tokens to track goods from production to shipment to delivery. Other blockchain technologies for smart contracts will likely provide more transparency in enforcing service level agreements in multi-party transactions. The applications of blockchain technology for the supply chain are daunting and potentially limitless. I’m sure that we will be hearing much more about blockchain at upcoming SIG Global Summits, so stay ahead of the trend and join us at our next event.
But back to the original question, “what if machines made more money than people?” Is it possible? With the advent of blockchain and more specifically, technologies like Ethereum, it could very well be possible. We know that with artificial intelligence and cognitive computing, every day things like your phone or even cars (such as Tesla) can learn. Imagine the possibilities with blockchain…if your Tesla can learn based on sensors located on the cars, what is to prevent them from machine “earning” vs. machine learning? Could the car earn money (value) as a driver-less shuttle and then use that currency to get a tune-up? Why not?
Blockchain today is like cloud services were eight years ago. We were nervous about them…we didn’t understand how they would practically apply to us. We were sure we would never embrace them, and yet now we all have computers that save more of our documents in the cloud than on our hard drives. They’ve become ubiquitous. Stay tuned for more on blockchain because, like cloud services, there is little doubt that eight years from now, it will become part of our everyday vernacular!
For more on blockchain: