The word ‘blockchain’ comes with an undercurrent of hype because it’s associated with the digital currency Bitcoin, which has climbed $1,500 in value in just two weeks – from $6,450 in early November to nearly $8,000 by mid-month. But the technology itself has potential outside of Bitcoin, and can be used in innovative new ways to transform traditional industries.
Until recently, payments sent over the internet relied on a small number of trusted intermediaries, such as banks and other financial organizations. This changed in 2009 with the arrival of Bitcoin and its underlying technology, blockchain, which transformed online payment and distribution.
Blockchain is a decentralized ledger, a database anyone can access, making it radically transparent. This has huge potential for finance, insurance, publishing and music – markets where trust in transactions is crucial.
This month Icelandic musician Björk announced that her new album will integrate blockchain in partnership with the British startup Blockpool, according to Bitcoin.com. Titled Utopia, fans will be able to purchase the album with the digital currencies Bitcoin, Ethereum, Dash and the lesser known Audiocoin. Album buyers choosing Audiocoin will receive 100 Audiocoins as a bonus, which can be converted into dollars. Album sales have been in steady decline and Björk is one of few musicians – alongside Imogen Heap – innovating with blockchain.
From adblock to blockchain
Another industry facing an uncertain digital future is publishing. Much online content is free, so publishers resort to advertisements to stay afloat, a strategy complicated by the rise of ad blockers. Magazine publisher Dennis is looking to improve ad-trading transparency using blockchain. According to Digiday, it wants to create an SSP (single-shared platform) prototype so that publishers and buyers can see where their money is going. It has the backing of several high-profile news outlets, including the Guardian, Financial Times, CNN International and Reuters.
Financial services also find the technology compelling because it dodges the share-taking middleman, with potential to make services more secure and efficient, all of which have long-term cost benefits. As blockchain’s verification is handled using algorithms, human error should be minimized, if not eliminated. According to service firm PWC, nearly every major financial institution experimented with the technology in 2016. Tech company R3 is working with more than 100 financial institutions – including HSBC, Deutsche Bank and Morgan Stanley – in the research and development of blockchain.
However, the hype currently outpaces the development and its uncertainty is just as high as its potential. It will take years, the Harvard Business Review reported, to transform the global world of business. Blockchain, the report added, is still evolving and will face many challenges, among them security, scalability and regulatory risk.