Not a day goes by without an event focused on blockchain. Last month alone there was a Dutch Blockchain Conference, Microsoft organised an event, and the European Commission organised an event on ‘Blockchain for the social good’. For those who embrace this new technology the sky is the limit.
Bitcoin is currently the most famous but also the most notorious application of the blockchain technology. There are concerns about the use of this digital currency on the dark web, its potential to launder money and the intransparent role miners are playing in the price fluctuation of Bitcoin. However, most believers focus on what blockchain can mean for our societies beyond its use as a virtual currency: Imagine the economy without a middleman or the financial system without a clearing house! Say goodbye to banks and notaries, and even inefficient states or governments!
By using blockchain technology, individuals could take care of financial transactions or register property without having to rely on a trusted third party. One could register health data on the blockchain, which would enable citizens to check which doctors have accessed and used their data. Votes in elections - or any other decision making process - could be recorded on the blockchain. The possibilities are endless, is what the evangelists claim.
How does all this work? The blockchain enables the creation of a distributed ledger, a database of transactions that is available to everybody. Any form of asset can be recorded in a block, which is subsequently aggregated or ‘chained’ to the next block using a cryptographic signature. This type of ledger is safer compared to other databases, because there are multiple shared identical copies of the same ledger. Unauthorised changes or tampering would raise red flags. Recently, the Distributed Autonomous Organization was hacked, but this is essentially an experimental crowdfunding platform or venture capital fund, not the blockchain itself. Still, the hack raises some uncomfortable questions about the governance of smart contracts based on the blockchain.
According to blockchain-believers, the technology can create a fairer, more sustainable world, which will empower ordinary citizens. A recent new initiative tries to achieve exactly this and wants to use blockchain technology to eliminate corruption and ensure fair elections.
It sounds exciting and promising, yet many of the expectations surrounding such a positive revolution remind us of the excitement about the internet itself. And although the internet has brought a lot of exciting developments, new technologies are certainly also used as an extension of governance and business models, which do not always have the public interest at heart. In order to assess the true potential of blockchain technology, we will have to be aware of its negative applications as well. For instance, what would be left of the empowering potential of the blockchain when an authoritarian regime would record and manage all assets of its inhabitants in the blockchain?
Technological innovations are often a great reason for enthusiasm, we should approach them with an open mind but keep our feet on the ground.