Congressional hearings on Libra, Facebook’s new cryptocurrency, and a renewed regulatory focus on digital currencies have blockchain back into national headlines, raising questions about security and accountability.
While these questions are important, let’s not forget: Blockchain has more applications than Bitcoin and Libra. As with artificial intelligence, social media and even the internet itself, this innovation has the potential to transform our most basic institutions and industries, increasing security and connectivity.
Blockchain can create a “trust-less” system — a system that removes the intermediary. Instead of a transaction going through one central authority — such as a bank, app or online database — several parties to a transaction may have access to the transactions (without any identifiable information visible). This allows individuals to start transactions with one another without referring to the central authority.
That innovation is not only revolutionary — it’s democratic.
And it’s safer. Think about the endless headlines of data breaches over the past few years. Bad actors manage to breach servers of the centralized authority, putting sensitive consumer data onto the dark web, where it’s bought and sold. By decentralizing these transactions, it becomes virtually impossible for thieves to illegally access data.
Finance was the first industry disrupted by blockchain. Innovators used blockchain to transform how we spend, exchange and save money. But other applications quickly followed.
Just last year, Walmart applied for a patent to use blockchain to run smart home technology. Most smart home technologies are connected by an Internet of Things (IoT) ecosystem, where your lights, dishwasher, refrigerator and thermostat all run and generate data through the internet. Applying blockchain to this system would decentralize it, preventing thieves from hacking into your connected home.
On a larger scale, blockchain could increase the security of smart cities, too.
Remember the sudden blackouts that threw parts of Manhattan into darkness and confusion in July? Decentralizing our power grids through blockchain could prevent similar crises and help coordinate traffic, transportation and other public services, making our cities more resilient. More, it would help government use resources more sustainably and ease the increasing strain on urban areas.
Health care will improve as well; a recent study estimated that blockchain solutions in health care would hit $1.7 billion by 2026. By decentralizing health care data, blockchain can put control of their sensitive data back in the hands of the patient. And because blockchain operates with zero-knowledge proofs — a system that allows two users to verify a transaction without actually sharing the information in question — it’s ideal for monitoring drug supply chains. Pharmaceutical companies can track a drug through each phase of the chain, ensuring the components adhered to environmental standards such as temperature and that no counterfeit elements were incorporated.
Retail companies also stand to benefit. The weaker infrastructure supporting loyalty cards makes it easier to commit fraud and data theft through a loyalty program than with a traditional cash transaction. Implementing blockchain could strengthen such programs, allowing companies to offer consumers a wider variety of deals — while preventing security breaches.
The applications of blockchain are limitless, spanning across sectors and industries. The sooner we can start using this promising innovation, the better — we’re far from the only country interested in these solutions, and our international competitors will make the most of our delay.
It’s encouraging that Congress is investing the time and energy to better understand blockchain. My hope is they’ll support the innovators who want to use this technology to make our world a more secure, more democratic place.
Gary Shapiro is president and CEO of the Consumer Technology Association and a New York Times best-selling author.
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