Blockchain Reaches a Tipping Point - CIO Journal. - WSJ

Blockchain Reaches a Tipping Point - CIO Journal. - WSJ
- http://blogs.wsj.com/cio/2016/08/05/blockchain-reaches-a-tipping-point/

A few weeks ago, theA World Economic ForumA (WEF) published its annual list of theA Top Ten Emerging TechnologiesA for 2016.A The technologies on the listA have been worked onA for years, but their inclusion in the list indicates that each has now reached a market acceptance tipping point where its impact can be meaningfully felt.A BlockchainA is one of the technologies in this yearas list, selected by the WEFA panel of global expertsA because of its emerging potential to fundamentally change the way markets and governments work.
What does it mean for an infrastructure technology like blockchain to have reached such aA tipping point?A The WEFA reportA compared the blockchain to the internet, noting that aLike the Internet, the blockchain is an open, global infrastructure upon which other technologies and applications can be built.A And like the internet, it allows people to bypass traditional intermediaries in their dealings with each other, thereby lowering or even eliminating transaction costs.a
I agree with this comparison and find it useful to help us understand how blockchains might evolve over the years.
In my opinion, the internet reached its tipping point of market acceptance in the early to mid-1990s due to the confluence of three key factors:
Letas explore how these lessons might apply to the blockchain, whichA first came to light around 2008 as the architecture underpinningA bitcoin.
LedgersA constitute a permanent record of all the economic transactions an institution handles, whether itas a bank managing deposits, loans and payments; a brokerage house keeping track of stocks and bonds; or a government office recording births and deaths, the ownership and sale of land and houses, or legal identity documents like passports and driver licenses.A Theyare one of the oldest and most important concepts in finance and other mission critical transaction applications.
Letas take a look at the key factors now driving the blockchain to its market acceptance tipping point.
Our current methods for securely managing personal and proprietary information are proving inadequate as evidenced by the all-too-common data breaches, identity theft and large-scale fraud around the world.A And in our increasingly digital world, applications must be robust enough to handle trust-less transactions, where no parties need to know or trust each other for transactions to complete.
BLOCKCHAIN: Catalyst for Massive Change Across Industries
Earlier this year, President ObamaA issuedA anA Executive OrderA establishing theA Commission on Enhancing National Cybersecurity, withA the chargeA to recommend abold, actionable steps that the government, private sector, and the nation as a whole can take to bolster cybersecurity in todayas digital world.aA TheA Fact SheetA accompanying the Presidentas Executive Order clearly articulated the challenges we face:
aFrom buying products to running businesses to finding directions to communicating with the people we love, an online world has fundamentally reshaped our daily lives.A But just as the continually evolving digital age presents boundless opportunities for our economy, our businesses, and our people, it also presents a new generation of threats that we must adapt to meet.A Criminals, terrorists, and countries who wish to do us harm have all realized that attacking us online is often easier than attacking us in person.A As more and more sensitive data is stored online, the consequences of those attacks grow more significant each year.a
Another problem is that a number of key financial and government legacy systems are rather inflexible and inefficient.
In a recentA NY TimesA article, tech reporterA Quentin HardyA nicely explained the inefficiencies inherent in our current payment systems.A aIn a world where every business has its own books, payments tend to stop and start between different ledgers...each time it [a payment] moves to a different ledger, the money has a different identity, taking up time and potentially causing confusion.A For some companies, it is a nightmare that canat end soon enough.a
Emerging technology solutions.A Blockchain innovations have drawn on advances from a number of disciplines, includingA cryptographyA for secure communication, storage and data access; mathematical models likeA game theoryA that enable cooperation and decision-making among non-trusted parties; andA distributed computingA methods that enable large numbers of distributed systems and institutions to coordinate their actions and interact with each other to achieve common goals.
Blockchain technologies have been explained in a number of ways.A AA reportA published earlier this year by Citigroup, describes blockchain as aa distributed ledger database that uses a cryptographic network to provide a single source of truth.A Blockchain allows untrusting parties with common interests to co-create a permanent, unchangeable, and transparent record of exchange and processing without relying on a central authority.a
The report then compares blockchain technologies to the internet.A aIf the Internet is a disruptive platform designed to facilitate the dissemination of information, then Blockchain technology is a disruptive platform designed to facilitate the exchange of value.a
The urgent need to collaborate.A In my opinion, what has brought blockchain to its tipping point is the realization that these critical problems can only be addressed by the close collaboration among companies government and research communities around the world.A You could sense this consensus emerging over the past year by the growing number of newspaper and magazineA articles, as well asA governmentA andA businessA reports.
While a tipping point might have been reached, itas too early to know to degree to which blockchain will become a major transformational innovation.A A But, weare hopeful that the necessary ingredients are now in place to propel blockchain forward.
Irving Wladawsky-Berger worked atA IBM for 37 years and has been a strategic advisor to CitigroupA and to HBO.

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