What's new here?
What is happening now is similar to the early days of the internet revolution, when the growth of websites and email made it possible to transfer, communicate and share data more quickly and cheaply than ever before. But since the internet was invented it has had the problem that nobody can be completely sure they can trust who they are communicating with online. On the internet, trust is a problem.
The invention of blockchain has changed this. It means that any kind of transaction across the internet can be automatically verified, without any need for administration or guarantees from any central authority. Simply explained, blockchain uses a decentralized chain of computers that work together to approve exchanges made on the internet, before verifying them and recording them onto a decentralized database, in a way that cannot be altered later, and which is open for everyone to see. Blockchain has solved the problem of trust for online exchanges. It is an extraordinary breakthrough that has created the conditions for the next generation of the internet.
The first internet revolution was about the transfer of information. The ability to transfer, communicate and share data by email or websites completely changed the way the whole world operates. Most businesses, such as advertising, media, and entertainment, were disrupted and changed forever. And entirely new businesses emerged, fueled by the network effect that the internet created, such as Google, Amazon, and Facebook. And on top of that, almost every industry adopted different ways of using the internet and adapted their activities in ways that changed their business processes and the way they provided services to their customers. Think of banking, or healthcare, or education. The invention of the internet completely changed the way the whole world operates.
But the creation of blockchain has even bigger implications than the invention of the internet because it goes much further. It is not just about the transfer of information, it is about the transfer of value, and all the associated automated workflow processing around that. Blockchain is a general purpose technology that can be used to create the trust and confidence that is needed for people to exchange value with each other directly. This means that third party intermediaries that are currently controlling valuable information from a central position will become much less needed. And that will lead to new ways of working, both between and within companies and organizations, which will cause disruption throughout the global economy.
Blockchain also needs to be understood in the wider context of technological change. Improvements in artificial intelligence, the internet of things, and other technologies are converging into networks of intelligent devices that can automatically sense, respond, move (autonomous vehicles and drones), make things (3D printing), and communicate across the internet. Blockchain provides the automated financial and administrative system that is needed for this convergence to take place. And the same pattern of disruption and the same exponential wave of innovation that took off as a result of the invention of the internet has already started to repeat itself, largely because of the invention of blockchain.
In the early stages of the development of blockchain, the close connection between so-called cryptocurrencies like Bitcoin became a distraction, because the bad publicity around inappropriate and illegal activities that were being undertaken with cryptocurrencies, meant that the good aspects of the technology did not become well known. But over time that has changed, and now almost all major companies, such as for example Dow Chemicals, General Motors, IBM, Microsoft, Nestlé, Shell, Tetra Pak, Unilever, and Walmart, to name only a few, have either already started using or are in the process of adopting blockchain.
And just as with the early days of the internet, companies and organizations that are slow to integrate the implications of this new technology into their business strategy are at risk of being left behind by the new wave of innovation.
What does this mean for sustainability and social impact?
A large and growing number of companies and organizations from all over the world are already taking advantage of new opportunities to use blockchain technology to create positive social and environmental impacts. And the list of successful use cases is increasing all the time.
Blockchain is being used for: charitable donations; remittances; finance for small businesses; inclusive finance; impact investing; transparency in the fairness of labour agreements and environmental sustainability of produce in food supply chains; reporting in war zones; the creation of incentives for the efficient use of new and renewable forms of energy to combat climate change; improving access to education; increasing access to water; organising land title registries to reduce corruption; and providing refugees with verifiable identities to improve access to vital services and reduce the risk of corruption in humanitarian aid.
Blockchain is also being used to create new currencies, such as Bitcoin. The way in which Bitcoins are produced uses very large amounts of electricity, and that has drawn criticism and skepticism. But there are solutions to this problem. Bitcoin and blockchain are not the same thing, not all uses of blockchain are energy intensive, and alternative blockchain platforms with lower energy consumption are already being used.
Blockchain can reduce bureaucracy and fraud, make organizations more transparent and democratic, help to track the origins and movements of products, and encourage people and institutions to adopt fairer and more environmentally sustainable practices. Blockchain offers a major new opportunity for transformational change, and Adaptify can help you to use blockchain to improve social impact and accelerate sustainability.