We need to understand the main social impact of the blockchain

Tim Berners-Lee, the inventor of the WEB, wanted it to be “universal, free, free and transparent”. 28 years later, Tim Berners-Lee himself admits that technology has not “realized its full potential” limited by three factors: disinformation, targeted advertising (commercial and political) and the opaque domination of algorithms that abuse personal data.

Google and Facebook have a combined valuation of $ 3.8 trillion, the equivalent of the combined GDP of France and Italy. This hyperconcentration of financial resources and personal data is a danger to our competitiveness and our freedoms.

To be freer, more transparent, a trusted and secure provider, the Internet must be less centralized. Everyone must be able to take control of their “digital destiny”. This is precisely one of the biggest promises of blockchain technology. But not only.

Originally, a desire for decentralization and financial confidence

In 2021, according to the World Bank, $ 589 billion was transferred to low- and middle-income countries. For this flow alone, the amount of intermediation raised by the banks exceeds 37 billion dollars. An unbearable observation for many and, in particular, for Satoshi Nakamo, the inventor of blockchain technology.

It was during the financial crisis of 2008 that he imagined the creation of a digital currency, Bitcoin, which could guarantee peer-to-peer financial transactions based on a decentralized infrastructure, therefore without intermediaries.

To do this, it must invent an exchange technology that simultaneously guarantees disintermediation, trust, transparency, inclusion and security. Blockchain technology was born. It is both a great technical feat, but also a powerful technological thinking that shakes our conception of the trusted third party and our own relationship with governance.

Taking the time to understand the intrinsic workings of this technology allows us to understand how it corrects some Internet excesses, destabilizes many established orders, and offers us lasting transformation potential for many industries.

Data exchange and recording technology

Blockchain is primarily a technology for exchanging and recording data. You have to imagine it as a Book, whose pages are “blocks” and each line is a “transaction”. Blockchain is an original book that brings together co-editors, co-authors, contributors and readers.

The co-editors are called the “Nodes”: they guarantee the integrity of the Book and each keep an updated version. The co-authors are called “Minors”: they write the new pages of the Book, ensuring the validity of each line. The contributors, for their part, propose new lines, or transactions that submit to the blockchain network.

As of January 2022, the Bitcoin public blockchain was simultaneously available on over 14,000 nodes. It had about 19 million blocks and brought together millions of “miners” who pool their computer resources to help write this Book.

The power of this technology is based on four fundamentals:

The data blocks form an unalterable chain, the totality of which is saved simultaneously and in real time on thousands of decentralized nodes. This distributed infrastructure makes the blockchain and its content immutable and highly fault tolerant. All nodes should go down at the same time to make it inaccessible.

The identity of all users is confidential but the history of all transactions made since the first block is transparent and public. Each registered user has a private key and a public key (linked by a cryptographic principle). All user transactions are attached to the public key. The right to perform transactions is attached to the private key.

  • Cryptographic Security

The blockchain incorporates a robust cryptographic system. Each block added is encrypted as well as all the transactions it contains. Also, like the pages of a book, each block is linked to the previous block. Therefore, a hacker who wants to modify the content of a transaction, must not only be able to hack this block but also, at the same time, all the blocks that precede it and all those that follow it. According to this crypto mesh principle, the information entered is tamper-proof.

  • The decentralization of trust

The blockchain does not have a central control body or a trusted third party. Governance is distributed and operates through the number of actors involved and federated through a consensus system accepted by all.

From the digitization of money to the digitization of trust

Since Bitcoin in 2008, many public blockchains have emerged such as Ethereum, Litecoin, Tezos, Binance, Cardano … There are also semi-private or private blockchains, exclusive to a specific organization, but also consortium blockchains, which bring together different organizations with the interest in collaborating and facilitating exchanges between them.

Uses are multiplying in many sectors: Finance, Games, Energy, Sports, Health, Transportation, Metaverse, Art … And the transactions between the parties are remunerated not using legal currency, but cryptocurrency.

Today, more than 9,500 cryptocurrencies are referenced. Their market capitalization exceeds $ 1.7 trillion for a daily trading volume of around $ 80 billion. This paradigm is accelerating the entry of actors into traditional finance as well as states, effectively dragged into a race for regulation.

Just as Internet technology has democratized and digitized information, this new technological era is digitizing economic value, but it doesn’t stop at currency. Blockchain technology is, in fact, able to digitize any form of asset (called Token): a currency, a resource or access to a service, a copyright, a share of capital or real estate, a vote, a identity, a diploma. .. Their exchanges naturally become transparent and effective, drastically reducing the frictions, slowdowns and costs associated with consolidated intermediaries.

Introduced to the art market in 2020, NFT is the most famous tokenization principle. He ensures the ownership of the work, invents new models for the distribution of value between the creator and the buyer. In 2021, the traditional art market represented a turnover of 17 billion dollars. The cryptocurrency market, meanwhile, has surpassed $ 40 billion.

Health, public sector, real estate, education … the multiple applications of the blockchain

In health, blockchain ambitiously challenges how to store and share our health data. Facilitates the interoperability of health actors’ information systems (which are fragmented and plural). It is a strategic solution for the future for the traceability of medicines and the fight against counterfeiting.

In the public sector, the potential is immense. Since 2011, Estonia has adopted the blockchain within its information systems to allow the unified authentication of citizens, the security of their personal data and the fluidisation of administrative services. Estonia is even preparing to launch its own “Estcoin” token which would allow anyone to invest in the country. Say goodbye to bonds and treasury bills.

In many countries (Finland, USA, Honduras, Australia, in particular) initiatives are multiplying to facilitate and secure access to administrative services, digitization and authentication of public documents or diplomas, health care, social transfers, voting and citizens’ contribution. In terms of cost optimization, efficiency of allocated resources and fluidisation of uses, this technological contribution is undoubtedly the shock that administrations need to build a modern public service, that is, efficient, participatory, fluid and safe.

Blockchain technology is young but its technical evolution is very rapid. It questions and challenges our relationship to trust and invites us to rethink. The blockchain tends to redefine the “trusted third party” and designs new governance rules, within and between organizations, where transparency, inclusion and security will not be just objectives but immutable rules.