All too often, blockchain is regarded as a technology for financial services.
Bitcoin’s peer-to-peer payments were the first popular application of blockchain. But blockchain has the potential to shake-up so many other industries.
I discussed this with Seamus Cushley, director of blockchain and digital at PwC, who leads a team of 25 experts, working closely with clients to build solutions that unlock the commercial value of blockchain. Prior to PwC, Cushley was formerly a founding member of Bitnet (now Rakuten).
Seamus is proud to note that Belfast has a higher concentration of blockchain experts than almost anywhere else in the world.
“Blockchain is regarded by many as the second generation of the internet – and it can be just as disruptive as the invention of the internet was,” said Seamus. “Today Belfast is known as a cyber hub. In the near future it will be a blockchain hub for multiple industries.”Why should we care about the blockchain?
Seamus says, “It’s about trust. Blockchain technology establishes trust between two people, organisations or entities to enable an exchange of value, via a secure transaction. Before blockchain, you had to use a trusted intermediary - typically a bank, lawyer or government.”
“If you consider that a new ‘transaction’ is created every time you use the internet to do anything, and you can create currencies to trade goods, you can see how wide its impact can be.”
“Any value system – not just money – can be replaced by blockchain technology.”And it creates an irrefutable record. How?
Cushley emphasises, “A key security feature of blockchain is that the infrastructure and data are not held on one server – they’re decentralised and distributed. The data is held on all the network servers of all the players involved in a transaction.”
That means, in order to hack a blockchain, hackers would need simultaneous access to all the servers in the chain. That seems so unlikely that a blockchain is, by its nature, a considerably more secure data store. To add a new record to the chain, all the network servers need to verify it, so it will be equally protected against fraud.Who is PwC creating blockchain solutions for?
“We work with global brands across a range of industries, and most of that work is highly confidential,” said Seamus. “We’ve worked on a major project with the Bank of England which provided technical expertise and support to the Bank’s own technology specialists on blockchain, and we also created a working blockchain prototype for the London Market Target Operating Model (TOM) Innovation Exchange. This project demonstrated that exploiting blockchain technology can reduce costs and speed up the payment process in the specialist insurance market.”What industries do you see the blockchain disrupting?
Seamus said, “Blockchain technology has a number of components that when combined together create an innovation that has the potential to disrupt every industry it touches. From land and property transactions to cross-border freight shipping and personal identity documents - any situation where high-value or sensitive information needs to be held securely and protected from fraud - that’s where blockchain solutions come into their own.”
He continued, “In insurance, blockchain can make policy claims management more efficient. If you think about it, insurance is about sharing information securely. If I ‘own’ my personal insurance profile it will turn the market on its head. Imagine yourself creating a profile of your insurance needs and then asking the market to bid on your business.”
That’s just one example of adding transparency to a market, where power is given back to the consumer.What about retail markets, pharmaceuticals or agri-food?
Seamus said, “Any market that relies on supply chain management and security, like the food industry, would benefit from blockchain as it can be used to verify the provenance of a product. Recent food scares have made consumers more demanding of traceability. Customer confidence can be restored by using blockchain ledgers to ensure the supply chain traceability - literally from farm to fork.”
Arc-net, which we wrote about last month, is one example of an agri-food startup in NI using the blockchain to authenticate food products.Will the impact mainly be in the background, or will consumers feel the difference?
Seamus said, “In music, the impact is visible because your favourite artist gets more of the money you spend on their music. The licensing, DRM and royalties system can use the blockchain. There are so many intermediaries in music, which artists can bypass, if they have the power to license and authenticate their own files.”
“Another would be your home utilities. If you have a surplus of electrical energy at your property, you could transfer energy to a neighbour who needs more energy, and be paid with a digital currency.”
In this model, the utility provider becomes just a network – just a utility provider.
Seamus said, “Exactly, it’s about creating efficiencies. The network and data are resilient, they can’t be taken down or fraudulently converted.”What about the question of privacy? If the blockchain creates a more open, transparent world, does that mean that we’ll have to agree to even more online monitoring of our behaviours – via cookies and so on – than we already do?
Seamus explained: “The data isn’t necessarily open to the whole world. A blockchain creates trusted networks and you have to be able to control how you enter the trusted network. Not too long ago, trust was community-based. You’d trade goods with your neighbour because you knew them. Then that all became decentralised with the likes of eBay, and the ability to buy from anywhere. Innovation in technology means we‘re coming full circle, back to community-based, or consensus verification.”
Seamus said, “Check out this TedTalk on trust by Rachel Botsman.”What’s been the sticking point so far?
Seamus explained: “The 100 year old problem with blockchain – that has now been solved – was how do I ensure that I haven’t spent my token twice? Now we can ensure this.”
“Before blockchain, the only way to establish trust between multiple untrusted parties on the internet was to use a trusted intermediary. Without that trust, someone could potentially spend the same dollar multiple times, sell an asset they didn’t own, or assert that blood diamonds originated from a conflict-free zone. Now we can ensure this.”Why does it seem hard for people to grasp blockchain?
“It represents such a sea change. Our team at PwC spends a lot of time informing and educating. It’s hard for people to wrap their heads around how to sell traditional services in a world of disruptive technology. It’s getting them to see that disruption as providing opportunity to do things better,” he said.
Seamus cites the example of Kodak, which invented the digital camera but didn’t bring it to market for fear it would damage their lucrative traditional film business.
He concluded: “Blockchain is a truly disruptive technology. As our world becomes increasingly digital and distributed, we need technology that can scale while providing the necessary security, trust and accountability. We believe blockchain is that technology.”