Former Treasury Secretary Larry Summers has come out and said that uses of blockchain, the technology underpinning Bitcoin, is "overwhelmingly likely" to change the financial industry. McKinsey & Company recently posted an interview with Don Tapscott, CEO Tapscott Group where he is quoted saying "I’ve been at this 35 years, writing about the digital age. I’ve never seen a technology that I thought had greater potential for humanity." Large companies could change their systems to blockchain - sometimes called 'distributed ledger technology' - making them run more efficiently. It could be the biggest shake up in the way large banks operate since the first clearing house. But... So what? What does blockchain mean for me?
(The examples I will give are focussed more on finance but there are many more benefits)
First things first a quick definition of blockchain for anyone who doesn't know (I will try and make this as simple as possible.) Blockchain is like a beaded necklace. Each bead - or 'block' - is a record of an action - that could be someone paying for something or handing in homework - the action isn't important. What is important is that the action is 'proven' to have happened because of the beads immediately before and after it. This necklace - or 'chain' - can never be destroyed. So a blockchain is an indestructible digital record of actions. Thats the basics, at least.
So what does all this mean for you? Well, lets talk about siloed money. Moving money around can be tricky business, this is down to anti-money laundering initiatives - or AML for short. These regulations make moving big chunks of money around difficult, with good reason. But if you have signed up to multiple financial products and you have multiple credit sources or bank accounts this can be a real problem. The verifications can be a big pain point. You just end up with money spread out in multiple locations with very little liquidity.
Blockchain can help relieve some of this pressure by creating a ledger of transactions that cannot be destroyed or altered. Proof of where the money came from and where it went to. This increased liquidity doesn't require an intermediary to process and authenticate these transactions.
Equally, on the point of signing up to multiple financial products... For every product you sign up to you need to be verified: you need to prove that you are who you say you are. Another regulatory thing called 'know your customer' - KYC for short. Blockchain technology could be used to create an unchangeable dossier that proves that you are you! Your bank account, passport, gas bills... Even your amazon account and your medical history could be used as more proof - or blocks - for your chain. By giving financial companies access to this data to complete mandated KYC forms we could make signing up to financial products quick and easy, maybe even a great experience!?
.. These examples are all well and good, but there is something more important here, something pretty serious...
Recently I saw Norris Koppel, CEO of Monese, talk about 'getting the unbanked banked'. He spoke about people 'falling through the cracks', particularly with asylum seekers, where lack of proof prevented them from getting a bank account and, in turn, getting their life back on track. The talk made me realise how identity is such a precious thing that we all take for granted and how beneficial a personal identity blockchain could be for the world.
These are just a few examples - there are no doubt hundreds more. If you are working on one or think of more, leave a comment, or if you have any questions, ask away!