Question

Give an argument for how blockchain technology (NOT bitcoin or cryptocurrencies!) might fundamentally disrupt the nature of economic transactions and the role of government. Do you think it plausible?

Answer should be between 2-3 paragraphs. Thank you!

Answer 1

The blockchain is basically a distributed database. Think of a giant, global spreadsheet that runs on millions and millions of computers. It’s distributed. It’s open source, so anyone can change the underlying code, and they can see what’s going on. It’s truly peer to peer; it doesn’t require powerful intermediaries to authenticate or to settle transactions.

Most blockchains—and Bitcoin is the biggest—are what you call permission-less systems. We can do transactions and satisfy each other’s economic needs without knowing who the other party is and independent from central authorities. These blockchains all have a digital currency of some kind associated with them, which is why everybody talks about Bitcoin in the same breath as the blockchain, because the Bitcoin blockchain is the biggest.

But to me, the blockchain, the underlying technology, is the biggest innovation in computer science—the idea of a distributed database where trust is established through mass collaboration and clever code rather than through a powerful institution that does the authentication and the settlement.

he financial-services industry is up for serious disruption—or transformation, depending on how it approaches this issue. For the research for Blockchain Revolution, we went through and identified eight different things that the industry does: it moves money, it stores money, it lends money, it trades money, it attests to money, it accounts for money, and so on.

Every one of those can be challenged.

You pick any industry, and this technology holds huge potential to disrupt it, creating a more prosperous world where people get to participate in the value that they create. The music industry, for example, is a disaster, at least from the point of view of the musicians. They used to have most of the value taken by the big labels. Then, along came the technology companies, which took a whole bunch of value, and the songwriters and musicians are left with crumbs at the end. What if the new music industry was a distributed app on the blockchain, where I, as a songwriter, could post my song onto the blockchain with a smart contract specifying how it is to be used?

Maybe as a recording artist posting my music on a blockchain music platform, I’ll say, “You listen to the music, it’s free. You want to put it in your movie? It’s going to cost you this much, and here’s how that works. You put it in the movie, the smart contract pays me.” Or how about using it for a ring tone? There’s the smart contract for that.

This is not a pipe dream. Imogen Heap, who’s a brilliant singer-songwriter in the United Kingdom, a best-selling recording artist, has now been part of creating Mycelia, and they’re working with an amazing company called Consensus Systems, that’s all around the world, blockchain developers, using the Ethereum platform; Ethereum is one blockchain. She has already posted her first song onto the Internet. I fully expect that many big recording artists will be seriously investigating a whole new paradigm whereby the musicians get compensated for the value that they create.