In what can be considered to be the funniest and maybe most awkward moment during Mark Zuckerberg’s two-day congressional hearing, Senator Orrin Hatch asked: “So, how do you sustain a business model in which users don’t pay for your service?”
Zuckerberg smirked but responded by saying “Senator we run ads”. The ‘smirk’ signifies how easy it is to get confused and even cheated if we fail to update our understanding on how companies operate, especially those thriving in the digital era.
Quite a number of pundits will consider Zuckerberg’s answer to be an oversimplification of the truth. In the digital era, the new currency is big data- extremely large data sets that may be analysed computationally to reveal patterns, trends, and associations, especially relating to human behaviour and interactions.
But why care about ‘big data’, especially as a member of the ‘online community’?
Trust has always been instrumental to facilitating investments and transactions that enable economic growth. Banks provide multiple physical branches and use reputable employees and technology to ensure consistency and transparency of financial transactions. The same applies to institutions in other sectors, governments and people. For example, companies secure public trust by building a brand personality that projects reliability and quality, while employees secure job positions by highlighting relevant skills, high grades, impressive work experience and references. In a nutshell, trust comes before any transaction is implemented.
Over the past few years, the digital era has ushered in companies that use a sharing economy model (which basically means peer to peer based sharing of goods and services online) to provide services to customers. Ride-hailing companies, online hospitality platforms, and even social media sites provide their services in exchange for our data- name, age, educational, financial and work history.
These companies are entrusted with sensitive information housed on their servers, which of course can be hacked or manipulated by people with malicious intentions. As technology evolves, the frequency and severity of these attacks have increased. Remember the story of Russian interference in the United States elections? Or how 3 billion Yahoo email accounts were compromised in 2013, oh and let’s not forget the Ashley Madison data breach.
Cybersecurity and internet privacy should be addressed when designing a secured online community, but what can blockchain technology bring to the table?
Blockchain technology came to prominence as a result of the rise of one of its products- cryptocurrencies.
Why were they so noteworthy?
Well, with blockchain technology information can only be distributed not manipulated. Cryptocurrencies were powered by blockchain, which is a digital and decentralized ledger that is programmed to record financial transactions.
The transactions are duplicated across a network of computers, meaning information can continuously be updated but only when network participants agree the information or transaction is valid through a process called consensus. Plus, transactions are time stamped and secured through the use of cryptography, so let’s just say it’ll be really hard to corrupt such a system.
The unique selling proposition of blockchain is the fact no central authority houses the information, an initiative that encourages accountability and transparency. It’s easy to see why this appeals to the financial sector, but blockchain’s technology can also be used to facilitate trust in other sectors of the economy, which is imperative when considering the evolution of the digital era.
Let’s take a look at some of the trends to watch out for in 2019
When trying to wrap your mind around a ‘blockchain based identity’, the key word here is “centralization”. Giant tech companies sometimes offer services for free or at an affordable price in exchange for our data. Sadly, the data is hacked by cybercriminals or even sold for a whole lot of money by big companies who don’t seek your permission.
A concentration of personal data in the hands of a small group of companies is dangerous. It is, therefore, no surprise that developers aim to create a self-sovereign identity. This is simply an online identity which is fully controlled and maintained personally by the individual.
Here, your data is stored cryptographically on a blockchain within an internet browser and can be used on any website you intend to visit. This eliminates the need for you to provide sensitive data to any third party.
Supply Chain Management
You’re probably familiar with headlines that expose companies that have to recall some of their products as a result of a particular defect or those that apologize for violating human rights. It’s a situation that puts a dent in their reputation and bank accounts.
In retrospect, the companies come to realize a glitch in the supply chain was the culprit. In today’s business environment, transparency and fair trade influence the customer’s decision. With the help of blockchain technology, companies can improve the efficiency of their supply chain by taking advantage of its ability to store, maintain and most importantly validate information in real time.
Global companies with complex supply chains need technology that increases traceability, reduces cost by limiting dependence on several stakeholders, monitors and addresses weak points on the supply chain proactively and ensure transactions are conducted on a secure and immutable platform.
Perhaps the most common example of a smart contract in the physical world is a vending machine. No humans needed, just put in the required amount and the desired product is delivered.
In the digital world, it is a computer code running on a blockchain. It is automatically enforced when the programmed set of rules accepted by the stakeholders have been met.
Smart contracts are often used to improve supply chain management, share projects and even implement crowdfunding campaigns. Since the information or transactions are stored in a blockchain, it enforces a decentralized business model, meaning smart contracts are designed to replace third parties.
President Trump’s consistent complaints of voter fraud certainly show that even older democracies strive to increase voter turnout and ensure the transparency of the voting process.
Online voting has been suggested by pundits as a way to encourage transparency and increase voter turnout. Voting systems implemented with blockchain technology can enhance voter integrity and ensure election security.
Cross-border remittances using blockchain technology offer senders and recipients a secure, quick and cost-efficient option. Its decentralized nature removes the need for intermediary banks (a more expensive alternative)and allows guaranteed real-time transactions across borders.
The role of remittances in the alleviation of poverty has been highlighted by researchers. After foreign direct investment, remittances sent by migrants are ranked as the second largest source of external inflows to developing countries.
Given its role in fostering economic growth, blockchain is a tool that could address challenges and reshape the remittance industry.