The Only Way to Ensure That the Blockchain Revolution is Successful is Through Security
We are on the cusp of a blockchain era – one in which blockchain technology can drastically transform our day-to-day lives and how business is run. Users these days have two very differing opinions on our technological future. On the one hand, people are cognizant of cybersecurity and extra cautious, given recent attacks like WannaCry and Petya. At the same time, people put their trust in so many services almost recklessly – just a few years ago, the thought of being picked up by a stranger on an app and riding in their car would have been almost unthinkable; now it’s done without any hesitation.
And yet, this willingness to trust a network of others is precisely the reason why blockchain is becoming a more widely-accepted method for everyday transactions. Blockchain is a mass consensus using a network and smart code to establish trust rather than going through a third party. It eliminates intermediaries to create virtually instantaneous transactions.
In my previous column, I explored how security requirements become imperative as blockchain goes mainstream. This time, I’m doing a deeper dive into a few major industries on the brink of change: financial services, manufacturing and entertainment.
The financial services industry is, in many ways, rather antiquated. You make a purchase using your credit card, the bitstream goes through a number of computers, some even legacy mainframes, and then the settlement is made a few days later. Why shouldn’t this be an instantaneous transaction? You can make a phone call from halfway across the world for free and almost instantly, but you can’t send money in the same way. A need to simplify these transactions has led to solutions like PayPal, Venmo, Square and Apple Pay. I expect further disruption as businesses look to reduce transaction costs and eliminate the need for this form of payment processors and verifiers. While third-party oversight can give the illusion of an added layer of security, in many ways it can actually be an added layer of vulnerability, as it introduces one further middleman that could potentially fall victim to some form of attack. Peer-to-peer transactions eliminate this middleman, lessening the risks associated with having information being passed from one intermediary to another.
Retail and manufacturing are equally ripe for change. Manufactured goods are notoriously insecure because of susceptibility to counterfeiting. High margin and/or luxury goods, in particular, are targeted because of their high price tags and profit margins. Because of its decentralized nature, blockchain allows for objective verification down to the transistor level. Blockchain can ensure the integrity of the supply chain so that each transistor or component can be easily monitored or recalled, if necessary. Imagine retailers being able to pinpoint the location and manufacturing stage at any time in any part of the world, or consumers having the ability to verify the authenticity of their purchase through a public ledger.
Then there’s the entertainment industry, a prime example of how blockchain can bring about improvements. Content distribution and purchasing, such as buying a song or movie, triggers a complex series of transactions, resulting in less money for the artist for his or her content. Blockchain could enable artists to become direct distributors and reap the financial benefits of working directly with fans. In addition, with blockchain, entertainment companies can improve copyright tracking, making it more difficult to distribute pirated materials. Piracy drastically reduces the value of the commodity, so implementing a public ledger system grants the ability to track where all the content originates from and ensure its value is maintained.
Financial services, manufacturing and entertainment are just three examples out of many. Almost every industry can improve efficiencies with blockchain. But what will make blockchain a success is ultimately security. If this technology is going to be widely implemented into common transactions, customer reassurance of security becomes imperative. Security technologies can no longer remain an afterthought and not only will they have to be embedded into everything we do but also impact everything we do. No matter how innovative blockchain technologies are, these innovations will have an ephemeral shelf life without a secure foundation. We’re teetering on the brink of a revolution, but the only way to ensure it’s a successful one is through security.