How is technology beneficial to us?
Possible benefits of blockchain technology
What is blockchain and why do we think this technology from the financial services sector is so interesting?
Blockchain stands for the second generation of the Internet. The first was the Internet of Information. The second relates to the Internet of Values. Put simply, blockchain is just a distributed ledger or database that enables individuals and companies to carry out payments, transactions and peer-to-peer deals without the intervention of an intermediary. The underlying principle is trust between foreign parties.
Blockchain reduces the cost of building trust, a role traditionally played by banks or other financial institutions. As much as this possibility motivates the organizations concerned, it also drives the fear that it could lead to a large number of upheavals.
What advantages does blockchain technology offer private individuals?
It is a misconception that only businesses are affected by this technology. That is not right. It also has a significant impact on consumers and individuals. Perhaps you are one of the 2 billion people in the world who are denied access to financial services. Blockchain lowers the barriers to financial integration. This means that those affected finally have the opportunity to store and move values and in this way to participate in the economic system. Or maybe you're a journalist or a songwriter and want to make sure you are paid appropriately for the added value you create. With the help of blockchain, there are ways to ensure that artists get their money's worth first when the creative content is consumed.
However, you may be one of the 70 percent of the world's population who owns land but has no legal means to file a claim because government records are unreliable, or worse, the government does not ensures the enforceability of these claims. With blockchain you can set up land registries that are easy to protect. And this creates enormous economic opportunities.
You may live in Germany and have solar panels. At some point you would like to sell energy to your neighbors at market prices instead of feeding it back into the power grid at a low price. Now you can get into a business between individuals by taking advantage of blockchain.
What are the main risks associated with this technology?
There are numerous lists out there as to why blockchain may not be able to reach its full potential. In the book mentioned, we identified 10 obstacles. How is the whole thing controlled? How do you protect yourself from governments suppressing it? What if it turns into a job killer? What if criminals infiltrate the system? These are all important questions. But do these dangers mean that blockchain is inevitably a bad concept? Or is it just about the problem of how to implement it? Is the opportunity so significant that we are trying to solve these challenges? It turns out that they can be managed if one can find a suitable means of control.
Are you curious and want to learn more about blockchain technology? Here is the entire presentation by Alex Tapscott and Michael Eitelwein, Allianz, from DLDsummer 16.
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