Source: Answer of the question at Quora, "How is blockchain technology going to change the world?"
Author: Mark Helfman, a cryptocurrency commentator and author of Consensusland: A Cryptocurrency Utopia.
Blockchain has a very simple application: it lets you update data without the risks, costs, and complexity of a clearinghouse, database, or third-party. As a result, you can remove middlemen from many types of transactions while also improving the chances your transaction will go through the way you intend. With blockchain, you can guarantee everybody will follow the same rules in the same way all the time. The rules are baked into the system, nobody can change them without the consent and active participation of others who manage the blockchain.
If that sounds boring, it is. And that is why it’s such a compelling technology. The world exchanges $200 trillion to $1 quadrillion worth of “things” all the time. Almost all of those exchanges go through some intermediary. You can replace many of those intermediaries with blockchain technology.
If you’re wondering why bitcoin and cryptocurrency get so much attention, it’s because these are public blockchains that anybody can use, as opposed to permissioned blockchains that have some central authority. Both types of blockchains solve the same problem. The difference is, permissioned blockchains restrict access. Everybody can use cryptocurrency.
How will this change the world?
Right now, the big feature people are latching onto is the “one universal record” that blockchain enables. This has implications for international shipping, law enforcement, and healthcare, and any industry that spends a lot of money tracking the movement of documents and things. You can now let anybody handle any document with certainty that the document will not be forged, records will not be lost, and ownership will change hands only when the system allows. If everybody loses contact, they all know they have a legitimate, authentic record of what’s going on and a way to ensure that when they reconnect, everything’s in order. That’s a big deal.
Some other ways blockchain will change the world:
- Decentralized exchanges replacing traditional brokers and traders.
- Distributed apps that enable traders and investors to easily create trading platforms or switch between trading platforms. Think “AirBNB” for finance (in this analogy, TD Ameritrade, Merrill Lynch, etc would be “hotels” losing money). You no longer need the services of a brokerage for clearing, processing, certifying, etc.
- Amazing potential for micro-trades.
- Frictionless movement of massive amounts of money within a portfolio.
- Streamlined accounting for businesses that have subsidiaries in countries that use a different currency. All entities will hold a cryptocurrency or a blockchain-based stablecoin as a sort of universal reserve they can draw on-demand, rather than keeping a stash of local currency on-hand.
- Universal manifests of shipping contents.
- Free, instant money transfers to anybody anywhere anytime.
- Peer-to-peer lending across borders.
Intellectual Property / Piracy
- Time-stamped, verified, universal record of patents, copyrights, and trademarks.
- Tamper-proof digital tags identifying ownership and smart contracts that restrict use to only sanctioned/approved purposes.
- RFID-enabled product labels with contents recorded on blockchain. It will be impossible to smuggle goods or sell counterfeit products.
- Universal records of cargo movements, exit from the country of origin, entry to the destination country.
- Secondary markets to buy or sell surplus energy.
- Cryptocurrency-enabled energy sharing among smart appliances.
What do all these applications have in common?
You can decentralize anything without sacrificing control.
We’re only scratching the surface of blockchain technology and it will take a long time for people to wrap their heads around this new technology that’s not very good yet. If it succeeds, it will not improve the status quo. It will replace the status quo.
These types of paradigm-shifting technologies always take a while to develop. In the 1830s, it was hard to know how the world would change once you could power anything by connecting a wire (electricity). In the 1870s, it was hard to know how the world would change once you could move anything by installing a small, self-fueled, portable engine (internal combustion). In the 1970s, it was hard to know how the world would change once anybody can instantly send information directly to anybody else anywhere in the world (internet). In 2019, it’s hard to know how the world will change once you can exchange anything with anybody, anywhere, anytime, with certainty everybody will get the result they expect.
I wrote a book, Consensusland, to help you understand how the world might look when it runs on blockchain technology. It’s an allegory about a fictional country that runs on cryptocurrency, and everything in the book is based on actual technology that exists now. If you read it, I’d love to hear your thoughts.