The technology industry is about to be disrupted in ways few could have anticipated. Consider the Internet of Things (IoT): by some estimates within a few years there will be hundreds of billions, perhaps trillions, of internet-connected devices doing everything from driving us around to monitoring our health to generating power, from heating our homes to organizing our affairs. These devices will need a native digital medium to communicate value and sensitive data securely, at zero-cost and at lightning speed. Indeed, the internet of everything will need a ledger of everything to ensure continuity and coherency.
There’s also the legal character of these machines to consider. Picture, for example, using a trusted source of real-world data (an oracle of sorts) to supply information in a smart contract (eg. An IoT thermometer in a shipping container tied to a shipping insurance contract).
Any centralized client-server with accounts or log-ins for authentication of the IoT sensor would be at risk of all the same hacking vulnerabilities of the digital infrastructure we use today. Denial-of-service attacks and account information breaches would weaken the use of these tools. These vulnerabilities pose complex questions as we integrate machines into our responsibilities and obligations.
The push transaction of a machine authenticating itself through the possession and use of a private cryptographic key is a useful form of consent. It avoids the issues presented by a centralized account administrator. Identity and authentication established this way promises to satisfy the legal character machines need to participate in these contracts, integrating them into the Internet of Value.
Or how about the sharing economy? Companies like Uber and Airbnb and others have come out of nowhere to capture the imagination of people everywhere, but they are not real sharing models at all. In fact, they are successful simply because they don’t share — they aggregate excess capacity through a centralized intermediary and re-sell it to a willing market. Oddly enough, it turns out that blockchain can replace a lot of those functions – and everything from identity and reputation to contracts and payments can be radially simplified. With a distributed application, you could have a true sharing economy model where those who create value are fairly compensated for the value they create.
Because a blockchain can process both static data (a database) and dynamic data (transactions), it represents an evolution in systems of record. Such a system of record can navigate and manage the many relationships and state changes of property being used in yet unimagined commercial ways.