Over at the Cheeky community, a.k.a. Yoga for creativity, I was recently asked to share my opinion on what I believed to be the next breakthrough in Blockchain applications. This is the brief opinion I shared.
I don’t think I’m particularly good at predicting future trends.
But before I dive into my answer, let me share a brief introduction about the innovation brought forward by Bitcoin and the Blockchain. The fundamental innovation is peer-to-peer (p2p) value transfer over the net. That doesn’t sound like much, but it’s a big leap forward. Prior to Bitcoin, the only way to transfer value (such as money) over the net was by trusting a third party, like a bank or credit card company. (Think of how prior to the Web, the only way to send information across the planet was via the Post Office or logistics companies).
Technically, the blockchain tech was first to introduce an elegant solution to technical problems that prevented p2p value transfer up to this point; namely the Double Spend Problem and the Byzantine General’s Problem (technical, but quite interesting to learn a bit about).
Put another way, blockchain tech enabled digital scarcity: If I send you a selfie, I haven’t transferred the picture to you, I’ve simply created a copy of that picture and sent you that copy. Each one of us now owns a separate copy of the picture. That doesn’t work for digital cash or any other valuable good. We shouldn’t be able to copy them. Hence, digital scarcity.
As for future blockchain applications, my perspective is that it is a base-layer technology, i.e., it falls lower in the technology stack, with consumer applications being at the top of the stack (these are the things we directly interact with, like Facebook and Google). Therefore, I think the most personally impactful applications of blockchain tech are the ones that we can’t yet imagine, because they will be built several layers on top of the blockchain tech.
Here’s a more practical way to think of the above.
Referring to an overused analogy, Blockchain tech is to Value Transfer, what TCP/IP is to Information Transfer. When TCP/IP (a communication protocol that enables the transfer of information across the Internet) was released (almost) no one could imagine that we would eventually use this relatively simple base-layer technology to create a monolithic network where a billion people stalk each other virtually (Facebook), or a collaboratively written encyclopedia (Wikipedia), or share selfies across the world, etc. For that to happen, we had to first build other technologies (i.e., layers) on top of TCP/IP such as HTTP, HTML, a good enough browser, and so on, until we were able to build those really “cool” consumer apps.
So, in our current state, except for a few visionaries, we can barely see over the horizon and are only able to list “obvious” first order applications of Blockchain tech. The real exciting ones are the non-obvious ones, built on top of technology that is built on top of Blockchain tech, or even further up the chain. Many people are happy speculating about what those will be, I’m happy waiting and seeing then enjoying them when they arrive.
If you’re interested in diving deeper into this, I recommend reading Vitalik Buterin‘s writing, a great source of inspiration on these topics, and a 20-something whiz kid. (You can search for his writing on CoinDesk, Bitcoin Magazine, and the Ethereum Blog).