According to a white paper recently published by the World Economic Forum, the distributed ledger technology called blockchain will soon give rise to a new version of an internet type network that could be more disruptive and transformative than the current internet. In much the same way the current internet ushered in a new era of communications and information flow, this next generation internet powered by blockchain technology will lead to a shift from an internet of information to a new internet of value. This will happen as blockchain technology allows global peer-to-peer networks of billions of devices to guarantee integrity of value without the need for trusted third party intermediaries. The potential of this new blockchain based internet is immense.
As many observers note, no other architecture offers such a radical alternative to how things work today. These high-concept secure decentralized databases, known as blockchains, will allow many online services to have distributed ownership that are not controlled by a central authority. Decentralized databases made possible by blockchain protocols could make obsolete the data hoarding megacorporation’s whose business model is based on selling data mined from users or creating centralized marketplaces. A number of startup blockchain organizations are already working on the next generations of decentralized ride-sharing aps, social media platforms and marketplaces to replace the likes of Uber, Facebook and Amazon. Platforms that allow users to control access to their own information and profit from the use of that information.
Blockchain technology grew out of the financial crisis 2008 – 2010 and was created to operate a digital currency called Bitcoin that could function and be used to trade and store value outside the normal financial infrastructure. A currency that was not controlled by a trusted third party, one that could not be devalued for political or financial reasons. One that people could trust as a store of value and exchange knowing that the network was controlled by the users and not by a centralized authority.
Bitcoin, a technology that has proven over the past decade to be remarkably resilient and secure, was a great way to prove that blockchain technology works. Digital currencies, however, are quite frankly one of the least interesting applications for this new technology. From the various blockchain applications and platforms that are currently being tested and in use, we’re seeing the seeds of a new form of internet emerging that’s based on decentralized platforms. These new blockchain platforms, such as Ethereum, EOS, Stella Lumen and IOTA, will allow all types of applications to operate in a secure and decentralized environment.
So what does all this mean? Today, the biggest issues impacting the current internet system is security, hacking, data mining, privacy and theft of data. The current internet protocol designed in the early 80’s, was designed as a platform to allow simple communication not security. The current internet runs on data that is stored in centralized databases. One of the greatest challenges today is keeping that data secure from hacking and theft. As hackers and thieves become more sophisticated, this becomes a greater and greater challenge. Blockchain technology will allow the next generation of applications, databases and financial transactions to exist in the public domain without the need for a trusted third party such as governments, banks and large tech companies. The need to have centralized databases that are vulnerable to data thief and privacy breaches will be eliminated, thereby ushering in the next generation of the internet and disruptive forces.
William Small, JD, CCIM is the Manager of Zenith Blockchain Technology Fund, LP, an investment fund focusing on emerging blockchain technology investments. If you are interested in receiving his reports on investing in blockchain technologies, you can reach him at (970) 925-3866, or at firstname.lastname@example.org.