Back in 2011, Marc Andreessen famously wrote “Why Software is Eating the World“. Today the idea that every company needs to become a software company has seeped into every aspect of our lives, changing the way we live, eat, interact, and commute. We shop on Amazon, we ride Uber to get around, we order food with efood, we find places to stay with Airbnb and we search on Google when we have a question. Few of us could have imagined the impact software would have on our day-to-day lives. Along with this innovation, we’ve seen some side effects. Some of the biggest companies own almost nothing and employ almost nobody. First it was software, then it was mobile, and now its bitcoin, blockchain and decentralization.
Ilias Louis Hatzis is the Founder at Mercato Blockchain Corporation AG and a weekly columnist at DailyFintech.com.
We are at the start of a cryptocurrency paradigm shift, that will bring a wave of decentralised networks. This movement has been building over the past few years and goes beyond Bitcoin, other cryptocurrencies or even open source software and blockchains. Bitcoin is just one use case.
Ten years ago there were no alternatives to government issued currencies. In 2008, Satoshi gave us Bitcoin and last year Facebook introduced Libra. Critics became advocates with JP Morgan Chase leading the pack. JP Morgan may be cautioning their clients against crypto, but they are simultaneously one of the largest corporate leaders in this space, launching the JPM Coin and their Quorum blockchain project, which may soon merge with ConsenSys.
Almost every sector is looking at blockchain, with governments terrified of being left behind and are scrambling to catch up. Maybe it’s because they understand that if they don’t scramble new countries will emerge. Yes, new countries.
Balaji S. Srinivasan, in his conceptual model “The Network State” has a basic idea: “Just like every company is becoming a software company, every country will be forced to become a software country.” Srinivasan explains that eventually we’ll see new countries emerge from crypto-communities: “Same people, different places, same beliefs”. Interesting!
Blockchains that are capable of deploying smart contract, will digitize just about every asset and process. We will have digital versions of everything, stocks, bonds, fiat currencies, loyalty points, software licenses, concert tickets, insurance policies, derivatives and things we haven’t even thought of yet. This is a $90 trillion dollar opportunity.
The tools and infrastructure that’s needed by developers to build, deploy, and scale blockchain products is in place. Unless you are building a blockchain or consensus algorithms, using blockchain technology is well within reach of any developer. Seventy-five percent (75%) of the respondents in the State of Enterprise Blockchain Study, think blockchain will be as ubiquitous as cloud by 2025.
But, just like software continues to eat the world, blockchain and decentralization could end up eating software. Bitcoin and Ethereum could make Uber look like Pong. You could have a smart contract handle the money and do the payouts. While blockchain technology relies on software, it offer a new level of durability, interconnectivity, and most importantly, processing power. Because it uses open protocols, anyone can connect, participate, and innovate. That means that with a cryptocurrency like Bitcoin, which was designed to be a peer-to-peer electronic cash system, you can extend the technology to do other interesting things.
Bitcoin introduced two things: digital scarcity and decentralized computing that requires minimal-trust. The significance of Bitcoin’s core technological innovations go beyond the creation of a digitally native money. They enable a new, structurally superior economic model for the software industry. While, software, the cloud and apps are amazing platforms to scale technology, cryptocurrencies provide a radical new layer of transactions and trust on top of these new connections.
Bitcoin and blockchain can enable new forms of governance that decentralize business hierarchies, disrupt the decision making process and organizations , forcing them to be more transparent and accountable. It is too often the case, that the organizations we trust, let us down. Trust in software services from companies like Facebook, Google, Amazon, Microsoft and others will be come under the microscope.
Think of the drama about user data over at Facebook. Say what you will about crypto, but I think you’ll agree that there’s a lot of room for improvement, especially when it comes to software. While software has been immeasurably successful at improving a lot of things, it has only barely started to scratch the surface of the world of trust. Establishing a web of trust, that is programmable and its guarantees come from something more fundamental than a human institution, a mathematical guarantee, is the most important piece of the crypto puzzle.
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