Blockchain Reality Check: Which Promises Can It Keep?
A quick look at some of the news coverage about blockchain would likely give someone the impression that it’s a miraculous technology capable of solving myriad problems faced by various industries. But, which of the claims seem likely to hold?
Blockchains are Unhackable
One of the things about the blockchain that made many people extremely excited was the claim that it is unhackable. Unfortunately, hackers proved that wrong by infiltrating them. Additionally, security analysts have found bugs associated with smart contracts on the blockchain that allowed hackers to keep requesting money from accounts.
However, some companies are proactively responding to current and possible threats by building solutions that use artificial intelligence (AI) to monitor for suspicious activity regarding transactions, allowing people to intervene when necessary.
The distributed nature of blockchain content may make it more difficult for hackers to obtain valuable information, and that’s a plus. But, anyone using the blockchain now or thinking about doing so must not fool themselves into thinking it is hack-proof.
Perhaps such progress is partially what led Chalmers Brown, the chief technology officer and co-founder of payment processing company Due, to make the following prediction: “I see more focus being placed on the powerful potential of blockchain for financial and non-financial applications. More investment is being put toward building out tools and platforms built on blockchain for identity verification, other security measures, contracts, payments and more.”
Due’s technology includes proprietary security features built on the blockchain. Whether a blockchain contains payment information or other details, increased security measures are valuable things to implement.
Blockchain Increases Supply Chain Transparency
Blockchain advocates assert that the technology could bring greater transparency to all members of the supply chain. For example, a company receiving a shipment could follow its progress through different countries or regions. Or, a customer concerned about sustainability could see that produce originated from a farm that upholds ethical practices to preserve the environment.
Numerous case studies show the blockchain can do what it promises concerning enhanced transparency. Walmart recently tested its usefulness for tracking Chinese pork and mangoes from the United States.
The blockchain allowed adding certificates of authenticity, which builds more trust in the product. Before using blockchain, it took Walmart a week to trace the origin of its mangoes; today, the company can do it in 2.2 seconds. The company uses this technology to follow the process of more than two dozen products from five suppliers, and plans to investigate options further soon.
Blockchain Technology Needs Fewer Intermediaries
Another promise the technology has proven is it can help people conduct transactions with no or fewer middlemen. Take smart contracts, for example: They use the blockchain to set and enforce the terms of contractual agreements. Smart contracts also can learn from earlier agreements and change as the underlying assets do. As such, smart contracts help businesses by increasing productivity and ensuring compliance.
Another example is money transfers: The blockchain could make those transactions faster and cheaper, and not require visits to dedicated locations to make transfers.
Even so, some companies are holding off moving to blockchain platforms. In late 2018, Taavet Hinrikus, co-founder and chairman of TransferWise, admitted: “We’ve looked at different blockchain technologies, but yet we haven’t found anything which enables us to do what we do in a way that is cheaper or faster.”
Hinrikus’ comment emphasizes why companies should investigate blockchain usage on a case-by-case basis and not as a blanket fix.
Blockchain Will Be World-Changing
Some of the people most eager to praise blockchain’s promise insist it will forever reshape the world. However, researchers at Princeton University caution that it’s not possible to realize the technology’s full potential or the best ways to use it in these early stages. The academics point out there’s a significant amount of exaggeration and false claims surrounding blockchain, and people must be careful.
Ultimately, the experts at Princeton think the technology deserves further investigation to determine how it might alter the world. One of them compares it to the internet: It undoubtedly improved many things—and, indeed, changed the world—but it didn’t solve all issues—and made some of them worse.
Today, any statement that confidently predicts the technology will change the world in a particular way is premature. Some of the narrow predictions people make will come to pass, but others won’t, due to still-unknown challenges.
Keeping a Realistic Perspective
Blockchain news stories will continue, and it’s understandable why people want to understand what’s happening with the technology. However, as they digest the content, people should strive to exercise their critical-thinking skills.
Blockchain has plenty of promise, but the fact that it’s an emerging technology means that some pitfalls will become evident, too.
