It’s a technology that could transform the global economy but even advocates admit it’s not easy to get your head around.
“When somebody says ‘oh blockchain? It’s decentralised distributed cryptographically immutable ledger’ – who understands that?”
Heidi Pease, founder of LA Blockchain Lab, clearly understands but to help demystify the technology for those less tech-savvy, the American-based innovator is visiting New Zealand for the Tripartite summit, part of Tech Week.
Despite how intimidating crypto-jargon can be, Pease had no background in tech before getting into Blockchain – she didn’t even use social media.
Now she ‘eats sleeps and breaths’ blockchain and believes it could not only transform our relationship with money but also lower social barriers.
While Blockchain is best known as the technology supporting digital currencies like Bitcoin, its applications can be far more varied.
Blockchains are (in very simple terms) shared databases containing anything from hospital records, news articles, financial transactions or pieces of digital art.
Thousands of computers around the world collectively process transactions in a blockchain database, instead of one central institution, such as a bank or an online marketplace like Amazon.
Blockchains are ‘immutable’ and ‘cryptographically secure’, meaning basically impossible to hack or tamper with, because each transaction is checked by every computer in the blockchain network.
As Pease put it, Blockchain eliminates middlemen and ‘trusts code over people’. She compares current transactions to listening to a sports match on the radio while blockchain attends the live event.
“If you have hundreds of thousands of people viewing that actual play, you don’t have to just trust one particular announcer that could possibly manipulate the game. Now you’ve got hundreds of thousands of fans, each one of them witnessing the actual transaction.”
Blockchain doesn’t just securely store data, it can be programmed to automate many transactions using a ‘smart contract’. Pease says this can be uniquely beneficial to people who work online.
“Once you put your material online it becomes digital and it’s stolen. Blockchain is something that can help protect that artist’s work.
“Say I’ve created some content. And if I get five hits on Facebook or social media then this contract will automatically pay me a dollar…the smart contract will take care of the administrative minutia.”
In Febuary IBM trialled sending a shipping container to China with paperwork loaded onto a smart contract. The transaction process at the border, which usually takes up to a week, was completed in one second.
While Pease says the financial applications of Blockchain are promising, the fact Blockchains are almost impossible to hack means they can also strengthen privacy online.
“Data is the currency of the 21st century…Right now our data, whether we like it or not, is being sold every day and we don’t even know that we’re contributing. Why is it that other organisations are making a profit off our information?”
Pease says Blockchain can also help close the digital divide for the two billion people in the world who don’t have a bank account and struggle to engage with the digital economy.
“Banks do not want to deal with the costs of persons with a lower amount of money. Blockchain lowers those transaction costs and people can now participate in a digital economy as they’ve never been able to before.”
She urges policy makers in New Zealand to embrace the potential of blockchain and says we are uniquely placed to do so.
“I think New Zealand with its size, and its flatter layer between government and private business means there is a lot more options to manoeuvre and be flexible. If New Zealand chooses to embrace this technology, you could be a leader.”
Watch the video.