Forget Bitcoin: Here is Blockchain Reloaded
The Blockchain will revive with the second generation of the technology. In the long term, it can be expected to pervade the fabric of society.
The current Blockchain does not work to specification but an entirely new generation of the technology hopefully does and I expect it to be stress-tested by 2025.
Products include Algorand and Ethereum 2. Enterprises will try and use them to their business advantage, especially in Healthcare, Media, Utilities, and Finance. As it always happens with applications of technologies, results will be varied and only a thin minority will be successful for the first ten years or so.
But there is so much more about the Blockchain, all subject to the actual working of the new Generation.
Why it did not work
The original Satoshi Nakamoto Blockchain did not fulfill its promises because it can not be made decentralized, scalable, and secure all at the same time.
Scalability is hampered by the need to have every participant, typically equipped with an ordinary personal computer, running a full node that verifies every transaction. On the other hand, relying on just a subset of powerful nodes that verify transactions sacrifices decentralization.
It was attempted to solve the dilemma by having different applications live on different chains and using cross-chain communication protocols. However, though decentralized and scalable, such architecture is not secure, because it is prone to minority attacks that can use code vulnerabilities to procure a majority in the whole network and jeopardize decentralization.
This is what led MIT’s guru Silvio Micali (Algorand) and ex-child prodigy Vitalik Buterin (Ethereum 2) to design radically new products, and others to follow suit.
This is what I call the Second Generation. The years through 2025 should provide enough leeway for users to check if it can actually unchain Blockchain’s full potential.
A Wikinomics megatrend
Compounding with the Internet, the use of blockchains will eventually lower the costs of collaboration to a point where stable aggregates (called firms) with decades-long life cycles and rigid ecosystems may no longer all be as necessary as they are today.
Many will be replaced by the dynamic formation and dissolution of opportunistic bonds of capital and competencies – up to the individual level. This is enabled by the internet and various collaboration technologies on top of it. Among these, blockchains, allowing for identity certification, smart contracts, and secure p-2-p money transfers.
In 2030, business will start becoming a more dynamic process than today, including a fine-grained fabric of transient and evanescent encounters between entities that develop trust at the transaction level.
And the Blockchain is more than that: it’s a political palette. Smart societies will use colors to compose their own wishes. At increasing degrees of complexity, Blockchain applications will be used for
- Dispute resolution
- Self-managed online personal identities
- Secure e-voting
- Fighting online manipulation like fake news
- Participatory government forms, through the direct involvement of citizens in public administration
- Justice administration
- Ready-to-wear democratic tools for countries emerging from outdated and ineffective political systems
- Uses thus far unimagined
Less hoopla, more culture
For this potential to unfold, it takes more than solid, reliable technology. It takes insight, vision, culture, competence.
Over the next several years Blockchain concepts will undergo more scrutiny, and eventually be absorbed and modified, by jurists, sociologists, political scientists, economists, and political leaders.
This will mitigate the naive enthusiasm and hoopla of today’s Blockchain fanatics and shepherd the apparatus to a more rational place in the structure of society. (See, e.g., here or here. Also see ‘Democracy and Governance’ here).
Due to the inherent complexity and the lack of user testing, there currently is no guarantee that the Blockchain’s new generation does work to specification and can support large-scale applications.
However, since in the long range blockchains will be constituent of economy and society, it is worth spending at least a modest investment to familiarize yourself with the new software. Beginning no later than 2025, get your hands on a blockchain and play with it.
Use an emerging new-generation product, such as e.g. Algorand or Ethereum 2, or more mature blockchain-inspired technologies like private distributed ledgers. The latter can serve as either tools for useful applications and/or training camps for the more ambitious projects to be based on the newer technology.
Paolo Magrassi Attribution-ShareAlike 4.0 International (CC BY-SA 4.0)
I am the author of this article and it expresses my own opinions. I have no vested interest in any of the products, firms or institutions mentioned in this post. Nor does the Analyst Syndicate.