Forget Bitcoin – Lets talk Block Chain!

“Today, power is gained by sharing knowledge, not by hoarding it” – Dharmesh Shah, Hubspot

November 7 2016, 8 PM: A televised address by the Prime Minister of a large democracy was beaming across the nation, brewing hope that a new era of cashless economy would be ushered in. As my phone was constantly buzzing from the reiteration of the ban on the higher denomination notes from various groups on whats-app, I was trying to get a grip on the “hows” more than the “whys”. Digitisation, certainly brings in some accountability and record but the “infallibility aspect” casts a dark shadow of aspersion affirmed by the failure of huge banks and malpractices abound that audaciously recorded frauds through digital systems.

The Whys, of-course seem quite evident. Cash was modelled into the system in the first place owing to the inefficiency of an archaic system – “The barter:

For if we go back a few years, actually a great deal of years, Adam Smith proposed that Cash was an instrument sought after by both transacting parties, and was easier and standardized in terms of value, thus, to be used as an instrument to replace barter. For instance, if I was to produce furniture and you were to produce Rice, there is only so much of furniture that you would be willing to accept in lieu of my constant and consistently perennial demand for rice! This would lead people(Me) to stock up on items that would be more acceptable to the transacting parties(You) such as Salt/Sugar/other pulses as a more opportune medium to carry on with the transaction. Now, even stocking up on Salt or sugar or oil, exchanging for my Rice would be quite cumbersome, worse if I was to be painting or sculpting rather than producing rice!

A brilliant idea at that time, but, over the years, a bit of this utopian concept has been marred by the financial turmoils, free market failures, pointing tarnished fingers at the creditworthiness of the person who promises the value of the piece of paper(Government) and on the trust between the trading partners(you and I).

As John Currin said: “It’s a huge thing when people realize across the culture that paper money is paper. And that there’s no fixed value – it’s all political. That all value is set by a political authority, basically.” 

There have been revolutions of sorts to replace paper based money, presumably controlled by a few powerful (Socialists would argue: hideously evil) stakeholders in the hotbeds of power.

This idea of a revolt against the institution has been linked to the pursuit of Happiness in a lot of societies from time to time and with spirituality in many.

For instance, in a small village in Auroville (Pondicherry), members of the community (Cult) believed that cash begets evil and decided to run a parallel economy of no cash. Nearly all internal transactions between units and Aurovilians were and are still done through electronic transfers using the accounts linked to their Auro-Cards. People can purchase from around 200 Auroville’s commercial centres and other shops using their account number. Even Akodara in Gujarat, developed as part of the Prime Minister’s vision of digital India with the help of ICICI foundations does not use cash for transactions.

Even as early as the 19th century, Owenites, who regarded themselves as the Utopian socialists proposed a currency system and pricing based on the labour hours input rather than paper. More recently, LETS in the Commox valley or the Ithaca took forth this idea and regarded man hours as the currency rather than some printed paper. Still others decided to return to the olden ways and relied heavily on the good old barter system. In Spain (Catalonia), people took to barter more eagerly than transacting in paper cash.

Bartercard, for instance is a renowned barter exchange in Australia and New Zealand .

In Fact, if you are a company or start-up looking to expand your business (referential marketing) using the barter –you may want to click on one of these:

http://faida.com/ http://www.barterindia.in/ http://barterkiya.com/ http://barterbazar.in/

The global financial meltdown of 2007-2008 perhaps spurred the acceleration of the line of thought of decentralising money itself .The result was an ingenious system, yet which ensured that this whole idea of money was decentralised, peer validated and controlled by people. Bitcoin was a global phenomenon, originating supposedly in the east and adopted across the West- thanks in part to social media, and internet. It was seen as a phenomenon to replace governments and put power back into the hands of common man. If you wish to mine your own bitcoins- all you need is computational power (Good Laptop), Mining rig,wallet, pool and mining program for yourself. These guys here (https://99bitcoins.com/beginners-guide-to-mining/)will make your life simpler.

Forget Bitcoin – How about BLOCK CHAIN?

Arguing about the efficacy and adoption of bitcoin could probably be a topic for some dry, drab and uninteresting day! (Yes! So much of banter about paperless money!! Did I just say – Dry Day?). Don’t alt+tab yet because, my conviction is that Bitcoin has given birth to something more interesting.. Something massive with a potential to have a bigger impact on businesses across the globe than bitcoin itself.

This video can perhaps help you get a whiff of what block chain is all about: Tip: Skip to 5.45 sec

For those who assimilate better when words are printed rather than spoken, here is a brief: In one of the recent sessions on blockchain, I heard Shalini Kapoor from IBM define blockchain as: “An Operating System for the Business”. If you think that is bold- a few others equate the Blockchain to the internet itself.

As bold as it might seem, it makes perfect sense, since transactions are at the core of any business- financial or otherwise, and an algorithm, if you may, to govern and detail the rules of how the transactions should occur is a crisp definition of an operating system.

To break it down, blockchain is a digital ledger in which transactions made are recorded chronologically and publicly. At the crux of this are two concepts:

1)     Distributed Ledger: The concept of shared ledger dwells on the principle that there be one source of truth that is verifiable and traceable since all transactions are reported to all the concerned party as soon as they happen and are verified through a shared ledger promoting transparency

2)     Smart contracts: Smart contracts is the piece of code that governs the business rules of the transaction, things like who are the parties that can participate, what constitutes a legal contract and other such basic validations put in place through code

The concepts of Traceability, Infallibility, Provenance, Finality, Immutability, and Consensus are embedded into the blockchain, thus making it a natural choice for recording and verifying business transactions.

Why the fuss? Show me where it is used..

If you are still wondering about my impudence in jumping insolently from bitcoin to blockchain, I guess a sheer look at the massive possibilities of what can be achieved through block chain will suffice to provide an explanation without any altercation.

If Email is Bitcoin, Blockchain is the Internet

While there are sites that list over 101 different companies applying blockchain to business, listed below are just a few of the interesting ones that I compiled.

While there are a lot of stellar stand-alone companies that are revolutionising their industries using blockchain, there are also accelerators like Monax, that are helping businesses scale up quickly using blockchain technologies through SDKs.

One company: http://kyc-chain.com/ provides identity management for KYC through block chain technology that banks can use. Still other companies such as Canada’s Ledger Labs provide block chain consulting and services such as strategy, training, development and security in the block chain domain. In fact, a company: Ardor has started a new buzzword – “Blockchain as a service” borrowing from the SAAS fame.

Even major technology companies such as Microsoft, IBM and a host of others have started offering block-chain platforms and services.

Riding this wave of decentralisation, there are a slew of companies and tools that can help transform the current business model and revolutionise the world into adopting a dream Utopian state which promises to transfer power from the governments to the people. The dream is real and the vision is powerful, but the success of this wave will depend entirely on the ecosystem that adopt it. Just like the internet or the mobile revolution, the potential will be derived only if there are enough adopters, which will happen when the applications deliver value in real sense.

The possibilities seem to be endless…and as always, I wish to explore how this would benefit the HR space – where does HR fit into this puzzle, which will be the topic of my next post…

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s