Blockchain’s impact on society will be as transformative as the web’s
By Jim Harris
On April 30, 1993 Tim Berners-Lee working at CERN in Europe publicly released code that created the world wide web. The impact over the last 25 years has been transformative as the web now profoundly influences our modern life. In the same way, Blockchain will have a transformative effect over the next 25 years.
Blockchain broke into global consciousness when Bitcoin spiked to $19,783 on December 17, 2017. At the time the market capitalization of all cryptocurrencies peaked at more than $800 billion. Because of this Bitcoin – and more widely cryptocurrencies – became the poster boy for blockchain. But crypto is just one application of blockchain. Here are three applications illustrating how blockchain will transform greatly differing industries.
In 2006 three people died and 200 fell ill after eating spinach contaminated with E. Coli. The US Food and Drug Administration (FDA) could not be sure which bags of spinach, from which sources, were contaminated, so it recommended that Americans avoid eating any fresh spinach altogether. The recall took two weeks to trace to the source of the problem and during that time all spinach on the shelves was pulled and destroyed. The crisis cost the industry $74 million.
In reality, the contaminated produce involved one supplier’s production from one day on a single line. Blockchain use can avoid this wholesale recall and resulting loss. And it took months for people to trust spinach in supermarkets.
Imagine a technology that could instantly trace the problem back. That is the promise of blockchain. The supply chain and logistics is a $62 TRILLION a year industry. Blockchain will have a transformative impact on it.
The remittance market is a $600 billion a year market. What is it? Well, if you have a Filipino nanny she will send $200 every other week back to her family in Manila. The banks and Western Union on average take 11.18% of that. That’s usurious!
The remittance market is actually larger than foreign aid from developed to developing nations (I find that disturbing).
So why are the poorest people in the world paying outrageous fees?
Blockchain can facilitate that transfer for 0.25%, but your Filipino nanny is not likely to be a Bitcoin miner. So she will go to a service that will take advantage of the underlying 0.25% cost structure and charge her 2% – which is 5.5 times less than traditional financial institutions.
The time we use the most electricity in southern Ontario is on hot summer days when everyone’s air conditioning is running. It’s called peak demand.
So how does the electric utility cope with peak? By building a $250,000,000 peaker plant that runs only 8 hours out of 8,760 hours a year. Is that a good asset utilization?
But imagine, instead, the utility reaches out to your WiFi-connected thermostat – a Nest or an Ecobee (the better Canadian equivalent) – and says will you power down your AC for just five minutes and we will pay you $1.62 in the form of a credit on your next power bill?
The reason we need technology to do this is for $1.62 you can’t put a human in the middle of that negotiation. There isn’t enough margin. Secondly, a call center can’t scale. This negotiation would happen instantaneously with a million homes in southern Ontario.
So the first 333,333 homes would power down for the first five minutes. The second third for the next five minute slot, and the final third for the third five minute period. Then a 15 minute block has been built, which can be repeated four times, dampening demand for one hour.
Blockchain technology would ensure that 1) my house actually powered down for the first segment and 2) that $1.62 was put as a credit on my account.
Which is more politically saleable – building a quarter billion dollar peaker plant that is used only 0.1% of the time or buying $20 million of power on spot markets from US coal fired plants contributing to climate change, or putting $20 million into the pockets of Ontario electricity consumers and taxpayers?
If you’re stressed about the amount of change you will be experiencing, think about this: 150 years ago 80% of jobs were in agriculture. Today it’s less than 2%. So farm automation did not destroy the economy. But what is certain is that going forward, jobs, the nature of work, entire industries and society itself will all change.
Jim Harris is the author of Blindsided which focuses on disruptive innovation. It is published in 80 countries worldwide and is a #1 international bestseller. He speaks internationally at more than 50 conferences and seminars a year. Subscribe to this YouTube channel at http://bit.ly/2lFJB5F. You can follow him on Twitter @JimHarris