JWT Coffee & Donuts: The Future Of Digital Is Block Chain: Hareesh Tibrewala
All of us are fond of future-gazing. If you do this sitting on the road side, you are called an astrologer. If you do this wearing a suit sitting in an air-conditioned office, you are called a consultant. And there are no statistics to demonstrate that one profession has a better strike rate compared to the other. And between these two full-time future gazers, lie the rest of us.
So what is the future of digital? Is it the emergence of messaging apps that give you the privacy of email, at the same time the openness of a social channel? Or is it Artificial Intelligence? Or is it augmented reality? I believe it is all of the above. But then these ideas are all evolutionary. They are already here in some measure, and will get perfected in the near future. But if there is something that is revolutionary, that can impact digital like nothing has in the last couple of decades, then it is Block Chain. Let me help you understand what is Block Chain.
The moment one utters the word Block Chain, one thinks (unfortunately) of Bitcoins (or crypto currency). The fact is that crypto currency is just one of the 25 different applications of Block Chain. And in my opinion it is actually not the most important application of Block Chain.
The Internet for the past two decades has been the Internet of Information. I have some information. I host it on a server (web server). Someone else wants the information. He (the browser) access the server, the server gives out the information. However what the server is giving out is only a copy of the information. The “actual” information continues to remain with the server. Thus the owner of the asset (asset in this case being information), sees no diminishing of his asset value even when others get copies of the information. What is interesting about the Internet of Information, is that anyone can access information from anyone else, if the giver is willing to give the information. It needs no permissions, transcends geographic boundaries and is 24x7. You just need to have the URL of the website and you can access that information. No intermediaries, no controls, no approvals needed…and access to the entire 3bn Netizens. Generally speaking, Internet of Information enables free flow of information, if we exclude outlier cases like China or North Korea.
Now what if I could transfer assets of value, in much the same way, across the Internet like I transfer information. Today if I want to transfer to you 100 Rupees, it is important that when I give this you, my “ledger” balance reduces by 100 and your “ledger” balance increases by 100. But in today’s world I need a trusted 3rd party (a bank) to unequivocally say that my balance has come down by 100 (and thus my asset value) and your bank balance has gone up by 100 (and thus your asset value). And the same holds true when I want to transfer other valuable assets, and these could be financial assets (stocks, a piece of land, bonds) or assets with IP (music, book) or assets like a vote. And every time we need a trusted third party, like a bank, a depository, the government (for land records and votes) to ensure that transfer of assets results in the necessary impact in one’s individual asset ledgers.
But the problem with these ‘trusted’ third parties is that they are monopolistic, charge a lot of money and then of course they themselves start creating frauds. This is where block chain steps in. Using block chain, when an asset is transacted, the transaction is broadcast to number of computers simultaneously (in an encrypted fashion such that only the parties involved in the transaction are able to access actual details of the transaction). These computers who store the information are called ‘Miners’. And anyone who has tons of computing power can become a Miner. And since the same information is being stored with numerous Miners, there is no longer any monopoly (no excessive record keeping charges), far higher security (for someone to create a fraud he needs to necessarily be able to change the information at each Miner), and complete democratization of the financial system. The only transaction cost that the miner gets is the cost of electricity to keep these big computers running.
Imagine 10 years from now, you want to buy a piece of land of Dubai. Using drone technology you can see the piece of land sitting on your laptop. And if you choose to buy it, create a contract using Block Chain technology for purchase of the land, transfer the money to the sellers’ ledger, and the piece of land gets credited to your ledger. No banks required to transfer funds, no government registration required to demonstrate ownership of land. And the world becomes one big Internet of Value, one big global market
Block Chain also has some interesting applications for communications and media industry. Violating IP for content will almost become impossible. A content creator, using Block chain, can set policies for usage of content and receiving payments against the same. There can be a separate pricing, say if someone wants to stream a song and listen to it one time. Another pricing is someone wants to download and have the luxury of listening to it many times. And yet other price is someone wants to use the same song in a movie. And now anyone across the globe, without actually getting in touch with the content creator, can use the content after making necessary payment. All this is possible, because block chain allows micropayments (something which is very difficult right now with our complex banking systems and intermediary costs) and also because Block Chain enforces a trust protocol across the globe.
And assets are not just financial assets. Ones’ own behavorial data is also an “asset”. Lately there has been a lot of talk of data on Facebook and other social channels being used for marketing. As consumers, it is we who create digital footprints and thus data. But we don't seem to have much control over this data that we create. And other platforms like Facebook and Google actually monetize this. But what if using Block Chain, we are able to create smart-contracts with micro-payments that give us complete control over the data that we create. And we set rules as to who can access this data, how long, for what purpose and at what cost. This now means that I can monetize my own digital footprints, as per my rules, instead of a 3rd party doing this. All this is possible using Block Chain technology.
This, in my opinion, is the future of digital.
- Authored by Hareesh Tibrewala, Joint CEO, Mirum
Disclaimer: The views expressed here are solely those of the author and do not in any way represent the views of exchange4media.com.
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