From fine wine to lottery: blockchain technology is taking off

Comment: Blockchain technology is involved in more and more industries, and users control their own private information, which effectively reduces information exposure. The emergence of smart contracts can replace middlemen and manually authorize relevant standards. If these standards are not met, they will be automatically cancelled. Through the open platform of blockchain, accurate market forecasts from experts around the world can be collected. Whether blockchain technology is profitable will be answered in the next few years.

Imagine a world where you could vote with your phone, buy a house in hours or use no cash.

Some scenarios can be realized through blockchain communities. The technology of Bitcoin cryptocurrency is not new and has been around for decades. It is just an encrypted database distributed on a computer network. But the difference is that it will only be updated with everyone's consent. Once entered, the entry information will not be overwritten, which makes it very safe and reliable.

Terry Roche

Terry Roche, leader of fintech consulting firm Tabb Group, said:

"For the first time, blockchain is being recognized as a legitimate threat to the status quo. The technology has spawned a new generation of startups looking for new applications, from peer-to-peer lending to smart contracts."

No restrictions

For example, OpenBazaar allows people to sell anything to anyone, anywhere in the world, using Bitcoin. Unlike eBay or Amazon, users don't visit a website but a project that connects them with potential buyers or sellers. Developer Brian Hoffman told the BBC:

“Our goal is to provide a more private, secure and flexible market to the current world market, which will not be controlled by the interests of a certain company, but will be controlled by the users themselves.”

According to OpenBazaar, removing the middleman means no fees, no limits, no need to create an account, and you can share as much private information as you like. The software is still in its experimental stage and has been downloaded nearly 20,000 times in the first three weeks.

Smart Contracts

Another exciting development in the industry is smart contracts, which can automatically verify that the terms of a contract have been met and once payment has been authorized, all real-life transactions can be done without the need for middlemen. This result cannot be eliminated in a blockchain database, and some people (perhaps speculatively) believe that this technology could one day make lawyers unemployed.

Companies like San Francisco-based Smart Contracts and Hedgy have already built exchanges based on this concept, with applications in financial and trade markets.

Emmanuel Viale, managing director of Accenture Technology Labs, said that through smart contracts merged with the ‘internet of things’ (LOT) – smart devices connected to the internet – blockchain technology could be applied to more than just the financial sector.

“You could have a solid fit tracker that sends the calories burned or steps taken to the blockchain. The data is encrypted and the identity is unknown. Just like home medical devices. The blockchain can establish a connection with health experts, coaches or medical institutions, and smart contracts can be established to build related services, whether it is a fitness plan or chronic disease treatment.”

As another example, startup Hellosent believes smart contracts and IoT devices can be used to detect shipments of premium wine.

Sensors continuously measure the temperature and humidity of the wine during transportation, and if either falls below the level recorded in the smart contract, the payment is automatically canceled.

Blockchain Platform

Some companies are even developing their own versions of blockchain. For example, Ethereum is a decentralized blockchain-based platform that developers can use to create their own applications, cryptocurrencies, and virtual organizations.

Mihai Alisie

Co-founder Mihai Alisie says giants like IBM, Microsoft and Samsung are already investigating its possible uses.

“These new applications give users full control over their data, privacy and funds, making the web ecosystem one where applications can be trusted because of the code that powers them and runs transparently on the Ethereum blockchain,” he said.

Ethereum developers have created a wide variety of new projects, from lotteries to financial options exchanges, gaming peer-to-peer domestic energy trading platforms. Mr Alisie said:

“From financial systems to governance systems, there’s a whole new world waiting to be created. I call this the crypto renaissance.”

Predict the future?

An interesting Ethereum-based platform is Augur

Sounding reminiscent of the Borg and Star Trek, it taps into the "wisdom of the crowds" - collective intelligence - to predict the outcomes of future events.

Tony Sakich, Augur’s director of markets, said: “The goal is to build a global prediction market platform that can leverage every expert in the market to create the most accurate prediction tool in history.”

It is still in the preliminary stage and is undergoing Beta testing.

Of course, many blockchain startups may never get off the ground, and some of the tech’s predictions seem far-fetched, to say the least. Earlier in Davos, the head of a European bank argued that blockchain technology could spell the end of cash.

Due to the influx of venture capitalists, investments in blockchain-related companies increased from $3 million to $4.74 million ($3.35 million) between 2011 and 2015, potentially triggering the dot-com bubble.

Network capacity is also decreasing, and blockchain database management takes up a lot of computer capacity.

Blockchain boss Peter Smith warned that the technology could “take the ship to orbit before the rocket fuel runs out”, just as complaints about slow transaction speeds reached the highest levels. That said, there’s still a lot of innovation to go on, Infosys Finacle’s head of innovation and disruptive technology concluded:

“Whether blockchain technology can be profitable is still unknown. But such a day will come soon, not in ten years, but in the next few years.”