We must understand the major societal 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, concedes that the technology has not “realized its full potential” limited by three factors: misinformation, targeted advertising (commercial and political) and the opaque domination of algorithms who misuse personal data.

Google and Facebook have a combined valuation of $3,800 billion, the equivalent of the combined GDP of France and Italy. This hyper-concentration of financial resources and personal data is a danger for competitiveness and for our freedoms.

The Internet, to be more free, transparent, provider of trust and secure, must be less centralized. Everyone must be able to take control of their “digital destiny”. This is precisely one of the greatest 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 collected by the banks is more than 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 an intermediary.

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 major technical feat but also a powerful technological thought that shakes up our conception of the trusted third party and our very relationship to governance.

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

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 of which is a “transaction”. Blockchain is an original Book that brings together co-editors, co-authors, contributors and readers.

The co-publishers are called the “Nodes”: they guarantee the integrity of the Book and each hold an up-to-date version. The co-authors are called the “Minors”: they write the new pages of the Book, ensuring the validity of each line. Contributors, for their part, propose new lines, that is to say transactions that they submit on the blockchain network.

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

The power of this technology is based on four fundamentals:

The blocks of data form an unalterable chain, the entirety of which is backed up 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 would have to 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). To the public key are attached all the transactions of the user. To the private key is attached the right to execute transactions.

  • Cryptographic security

The blockchain incorporates a robust cryptographic system. Each block added is encrypted as well as all the transactions it contains. Moreover, like the pages of a book, each block is linked to the previous block. Thus, a hacker who would like to change the content of a transaction, will not only have to succeed in hacking this block but also, simultaneously, all the blocks which precede it and all those which follow it. By this principle of cryptographic mesh, the information entered is tamper-proof.

  • The decentralization of trust

The blockchain has no central control body or 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. , bringing together several organizations with an interest in collaborating and facilitating exchanges between them.

Uses are multiplying in many sectors: Finance, Games, Energy, Sport, Health, Transport, Metaverse, Arts… And, transactions between parties are remunerated not by using legal tender, but cryptocurrency.

Today, more than 9,500 cryptocurrencies are referenced. Their market capitalization exceeds 1,700 billion dollars for a daily trading volume of around 80 billion dollars. This paradigm is accelerating the entry of players in traditional finance as well as States, de facto drawn into a race for regulation.

Just as Internet technology has democratized and digitized information, this new technological era digitizes economic value, but it does not 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, an identity, a diploma… Their exchanges naturally become transparent and effective, drastically reducing the frictions, slowdowns and costs linked to established intermediations.

Introduced in the art market in 2020, the NFT, is the most famous principle of tokenization. It secures the ownership of the work, invents new models for the distribution of value between the creator and the purchaser. In 2021, the traditional art market represented a turnover of 17 billion dollars. The crypto-arts market, meanwhile, was over $40 billion.

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

In health, the blockchain ambitiously challenges how to store and share our health data. It facilitates the interoperability of the information systems of health actors (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 fluidification of administrative services. Estonia is even preparing the launch of its own “Estcoin” token that 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 citizen contribution. In terms of cost optimization, efficiency of allocated resources and fluidification of uses, this technological contribution is undoubtedly the shock that administrations need to build a modern public service, that is to say efficient, participative , fluid and secure.

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