Tim Berners-Lee, the inventor of WEB, wanted it to be “universal, free, free, and transparent.” 28 years later, Tim Berners-Lee, himself, admitted that the technology has not “realized its full potential” limited by three factors: misinformation, targeted advertising (commercial and political) and the opaque dominance of algorithms that misuse personal data.
The combined value of Google and Facebook is $3,800 billion, equal to the combined GDP of France and Italy. This excessive concentration of financial resources and personal data is a danger to competitiveness and our freedoms.
For the Internet to be more free, transparent, and provide trust and security, it must be less centralized. Everyone should be able to control their own “digital destiny”. This is precisely one of the greatest promises of blockchain technology. But not only.
Originally, the desire for decentralization and financial confidence
In 2021, according to the World Bank, $589 billion was transferred to low- and middle-income countries. For this influx alone, the brokerage amount collected by the banks is over $37 billion. An intolerable note for many, notably Satoshi Nakamo, the inventor of blockchain technology.
During the 2008 financial crisis, imagine creating a digital currency, Bitcoin, which could guarantee peer-to-peer financial transactions based on a decentralized infrastructure, and thus without an intermediary.
To do this, it must invent an exchange technology that simultaneously guarantees non-intermediation, trust, transparency, inclusiveness and security. Blockchain technology was born. It’s a major technical achievement but also a powerful technical thought that shakes our concept of a trusted third party and our relationship to governance.
Taking the time to understand the intrinsic performance of this technology allows us to understand how it corrects some of the Internet’s excesses, destabilizes many of the orders in place, and offers us the potential for a permanent transformation of many sectors.
Data exchange and recording technology
Blockchain is basically a technology for exchanging and recording data. You have to imagine it as a book, its pages are ‘blocks’ and each line is a ‘transaction’. Blockchain is an original book that brings together co-editors, authors, contributors, and readers.
Participating publishers are called “the contract”: they guarantee the integrity of the book and each has an updated copy. Co-authors are called “minors”: they write the new pages of the book, ensuring that each line is valid. For their part, the contributors propose new lines, that is, the transactions that they provide on the blockchain network.
In January 2022, the Bitcoin public blockchain was simultaneously available on over 14,000 nodes. It contained about 19 million blocks and brought together millions of “miners” who pool their computing resources to contribute to the writing of this book.
The strength of this technology is based on four fundamentals:
Data blocks form an immutable chain, all of which are backed up simultaneously and in real time on thousands of decentralized nodes. This distributed infrastructure makes the blockchain and its contents immutable and extremely fault-tolerant. All nodes must go down at the same time to be inaccessible.
The identity of all users is confidential but the history of all transactions since the first block is transparent and public. Each registered user has a private key and a public key (linked to an encryption principle). All user transactions are attached to the public key. To the private key attached to the right to perform transactions.
- cipher security
The blockchain includes a strong crypto system. Every block that is added is encrypted as well as all the transactions it contains. Moreover, like the pages of a book, each block is connected to the previous group. Thus, a hacker who wishes to alter the content of a transaction, will not only succeed in hacking this block but, at the same time, all the blocks that precede it and everything that follows it. According to the principle of this encryption network, the entered information cannot be tampered with.
- decentralization of trust
The blockchain does not have a central control body or a trusted third party. Governance is distributed and operated through a number of participating actors and federated through a mutually acceptable consensus system.
From Digitizing Money to Digitizing Trust
Since Bitcoin in 2008, many public blockchains have appeared such as Ethereum, Litecoin, Tezos, Binance, Cardano… There are also semi-private or private blockchains, exclusively for a specific institution, but also blockchains. With interest in cooperation and facilitation of exchanges between them.
The uses are multiplied in many sectors: financial, gaming, energy, sports, health, transportation, Metaverse, arts … And the transactions between the parties are not compensated by the use of legal tender, but by the use of cryptocurrency.
Today, more than 9,500 cryptocurrencies are referenced. Its market capitalization exceeds $1700 billion with a daily trading volume of about $80 billion. This model is accelerating the entry of players into traditional finance alongside states, who are de facto drawn into a race for regulation.
Just as Internet technology has democratized and digitized information, this new technological age is digitizing economic value, but it does not stop at currency. In fact, Blockchain technology is capable of digitizing any form of asset (called a token): a currency, a resource or access to a service, a copyright, a share of capital or real estate, a vote, an identity, or a diploma. Their exchanges naturally become transparent and efficient, which greatly reduces the frictions, lags, and costs associated with established brokers.
Introduced to the art market in 2020, NFT is the most popular principle of coding. It secures ownership of the work and creates new models for distributing value between the creator and the buyer. In 2021, the traditional art market represented a turnover of $17 billion. Meanwhile, the crypto arts market has crossed $40 billion.
Health, Public Sector, Real Estate, Training… The Multiple Applications of Blockchain
In the field of health, blockchain is ambitiously challenging how our health data is stored and shared. It facilitates the interoperability of information systems of health actors (segmented and aggregated). It is a strategic solution of the future for drug tracking and anti-counterfeiting.
In the public sector, the potential is huge. Since 2011, Estonia has adopted blockchain within its information systems to allow for the unified authentication of citizens, the security of their personal data and the monetization of administrative services. Estonia is preparing to launch its own “Estcoin” token that would allow anyone to invest in the country. Say goodbye to bonds and treasury bills.
In many countries (Finland, USA, Honduras and Australia in particular) initiatives are being multiplied to facilitate and secure access to administrative services, digitize and attest public documents or certificates, health care, social transfers, voting and citizen participation. In terms of cost optimization, efficiency of allocated resources and monetization of uses, this technological contribution is undoubtedly the shock that departments need to build a modern public service, i.e. efficient, participatory, smooth and safe.
Blockchain technology is quite recent but its technical development is very fast. It asks questions, challenges our relationship of trust, and invites us to rethink it. Blockchain tends to redefine the “trusted third party” and chart new rules for governance, both within and between organizations, where transparency, inclusion and security will not only be goals, but immutable rules.