Blockchain – a matter of trust
Blockchain is a technology vastly misunderstood by the small fraction of the general public that know it’s something different from cryptocurrency (the most public – and last year at least, the most publicly disastrous – application to run on a blockchain basis). Ronny Tome, founder of the Ducatus blockchain, is advocating for blockchain to be applied in a range of other ways, and for the ways in which it’s already in use to be more widely understood.
In Part 1 of this article, he explained that blockchain has a significant role to play in reducing the level of necessary trust in any number of transactions. We asked him how the technology was already – relatively silently – impacting lives and businesses, and how its use could be expanded to benefit us.
Chains of government.
Blockchain is already used for many things which people don’t know. I mean, if you’re using your mobile phone, you don’t know the technology behind it. Let’s take banking – banking could be put completely onto the blockchain. And in Dubai in the UAE, they’re starting to put the entire government sector, including the land registry on blockchain.
The renaissance of blockchain?
A lot of governments and institutions are already starting to use blockchain for data processing, data storage and other things. People don’t know, because nobody talks about it. So again, the whole point of blockchain is that once it’s coded, you don’t have any work with it anymore. So that’s also obviously a challenge because right now, what the blockchain can do in a fully automated way takes the work of multiple people. Once the blockchain is coded, you don’t need those people anymore.
So, as with AI, which is taking over a lot of job roles in, say, copywriting, technology will take over a lot of these roles, with blockchain being used for data processing. But will the normal user of a digital bank know that all this data is stored on a blockchain or not? Probably not. And they don’t need to know – we don’t need to understand the tech behind our tech, as it were. We just need to know the use case and how to actually use it in our day-to-day life.
Last year was a bad year in terms of the cryptocurrency side of blockchains – the side most people know. Did that damage public trust in terms of you the reliability of the technology? And if it did, what needs to happen to win that trust back?
The human factor.
It’s strange the way people think about this. If you think about the incidents that did the most damage, like the Terra Luna and the FTX incidents, those big chaos factors that gave media outlets the chance to make cryptocurrency sound like it’s only for scammers, the issues were down to greedy humans, not the tank. In cryptocurrency, there’s a chance of making a lot of money very quickly. And when people are coming in, they might initially have the right kind of intentions, but when suddenly hundreds of millions of dollars are flowing towards you, a lot of people are tempted to try to find ways of keeping more than they should. And by doing so, they are going to drive the whole project into the ground and will end up in jail.
So what needs to be done?
I think we need operators, we need businesspeople who are following best practice, who are not blinded by the big money involved. Which means we need people who have experience in the business, putting in place the right kind rules and same principles as we do in other businesses.
We need some standards in place, both to work towards preventing repetitions of 2022, and to educate people so that they know what to look for and see a scam or a bad project in the early stages and not after it’s been operating for two or three years and billions of dollars have disappeared.
It would be useful too if people would stop over-promising on the get-rich-quick potential of cryptocurrency. But we also need proper information about what blockchain is, what cryptocurrency is, what it can do, and what you need to be careful about.
So do we need to regulate the industry? Would that help to re-build public trust?
Regulation vs speed.
Yeah, it definitely needs some kind of regulation. I mean, I don’t know, and nobody knows right now, what the regulation needs to look, but governments are giving it a try. Singapore is regulating, Australia, Japan, even the US, but they’re going one way today and another way next week. Nobody really knows what to do. And the thing is, the decision-making processes in our governments are just far too slow.
They’re making regulations based on what they know in cryptocurrency today. By the time they have brought out the regulations, 6-12 months down the road, cryptocurrency is developing so fast, they’ll be behind the curve. So we need to find different ways of dealing with this. But there should be a set of standards and regulations, where people can move if you step outside of them. And if you try to scam, if you try to cheat, then you’re gonna get hit with the full force of the law, like in every other business would, but you need that bit of freedom to move because governments aren’t able to keep up with this.
We’ve said there are a couple of issues for blockchain, in that people either don’t know that it’s working behind the scenes, or that they conflate it with something else – usually cryptocurrency. So what are the main problems that blockchain needs to overcome to achieve its potential? Is it being more understood? Is it getting more public education about what’s actually happening there? Or is there something beyond that?
The power of the small.
I think it’s about it being more understood – and being more adopted as well by small and medium businesses.
The big companies are starting to use blockchain already. But that doesn’t “normalize” it fast enough. To do that, you need to get the restaurant owner or the shop owner on the street to use it and understand it.
You can use blockchain with an application as a second layer on it, a token or a smart contract or an NFT or whatever, to raise funds, to create certain kinds of memberships and loyalty programs, to offer special benefits of discounts or points.
All those things are already in the market anyway, from frequent flyer miles to supermarket loyalty discounts. But whatever you want to do in that way, it can be done and managed on blockchain.
Bonfire of the Accounts.
But if they’re doing it already without blockchain, what’s the secret sauce that blockchain can add that makes them need it?
Efficiency. Blockchain eradicates the trust factor, and it’s highly efficient. Blockchain is for everybody. Imagine selling Product X in your store, and each sale of Product X is recorded on the blockchain. Instead of hiring an accountant and an auditing firm that does an audit once a year, you would actually have all the data available at any moment in time, by just clicking a single button.
How? A smart contract could pull all the sale data from the blockchain and it will be there.
Hold the phone! Did you just make accountants redundant?
Now you’re getting it! And once we get to that level of adoption, then people will be seeing all the different possibilities of blockchain. Right now, you talk to people about blockchain, they think you mean cryptocurrency and they recoil in fear and confusion, and the conversation goes nowhere.
There are millions of possibilities with blockchain, but we need people to get involved and want to do this.
OK, so if the turning point, the pivot point is the adoption of the tech by small and medium businesses, apart from the delight that is the Bonfire of the Accounts, how do we get them on board?
An expanding ecosystem.
Good question. What we’ve done is build an entire ecosystem of blockchains. We started one in 2017 that was based around Bitcoin, then we created a second that was based around Ethereum.
So we started to build an entire ecosystem around our blockchains, from a digital banking app in Europe, to an e-commerce site, to a centralized training exchange. Now we’re building the metaverse (another topic that people don’t understand!). Blockchain plays a big role there too, because all the digital assets inside the metaverse are based on blockchains. We’re building an NFT marketplace. We are actively approaching traditional businesses and we cooperate with them, giving them a lot of sweat equity, giving them something before they invest their money, so they can learn more about how blockchain can benefit them before they part with their money – especially in this economy.
That’s how we’re going about bringing blockchain to the small and medium business community. Roll that sort of ecosystem out across the economy and you might well speed up the understanding and the adoption we need to get much more of the world using blockchains.
25 September 2023
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