Martha Myron

Bitcoin, blockchain and the new revolution

  • Fourth industrial revolution: blockchain is the basis for virtual currencies like bitcoin, and it has the capability to transform many services in the world of finance and beyond

Disruptive change is here and with it comes a multitude of new buzz words ranging from blockchain and bitcoin, to ether, alt coins, and Power Ledger.

Most frequently associated with finance, blockchain technologic consciousness is sweeping the globe.

The rapid acceleration in trading activities in bitcoin and other cryptocurrencies, together with associated offshoots such as exchanges, bitcoin futures, initial coin offerings and the like, have brought intense focus from investors, industries, and the media.

Bitcoin is the highest profile digital currency. At the time of writing the value of one bitcoin was above $9,500, which represents a more than 950 per cent increase in value since the start of the year.

But it is not all about bitcoin. There is blockchain technology, the platform of mathematical coding cryptography that supports these new, versatile applications that are rapidly changing our world, as we shall explore in this new series.

So, what does all this mean to us?

In his recent book The Fourth Industrial Revolution, world-renowned economist Klaus Schwab, founder and executive chairman of the World Economic Forum, said: “We are at a fundamental change in the way we live, work and relate to one another. It is a new chapter in human development, enabled by extraordinary technology advances commensurate with those of the first (steam), second (electricity) and third (computing) industrial revolutions.

“These advances are merging the physical, digital and biological worlds in ways that create both huge promise and potential peril.

“The speed, breadth and depth of this revolution is forcing us to rethink how countries develop, how organisations create value and even what it means to be human.”

According to the World Economic Forum’s Schematic Mapping Global Transformations, the fourth industrial revolution involves:

• Disruption to jobs and skills with significant job creation and job displacement. Workers need to be repurposed, across industries and with an eye to the skills required in the fastest-growing fields.

• Innovation and productivity. The impact of new technologies on productivity is not being captured by traditional tools.

• Inequality and social stability issues. New technologies are deepening inequalities.

• Agile governance. New technologies are outpacing regulatory frameworks. Fourth industrial revolution technologies can be harnessed by governments to govern better, become more accessible and increase transparency and trust, not to mention better track public assets. Close collaboration with businesses and civil society will be necessary to make that happen.

• Security and conflict. Fourth industrial revolution is changing the nature of conflict because of the ability to disrupt, confuse or destroy communications and decision-making capabilities, meaning any network or connected device from military systems to civilian infrastructure such as electricity grids or water supplies.

• Fusing technologies. Collaboration between disciplines is opening new frontiers.

• Business disruption. Traditional businesses are being challenged as the relationship between businesses and their customers is shifting to on-demand, always connected models powered by the easy access of mobile communication.

• Ethics and identity. Innovations are redefining what it means to be human by pushing the limits of lifespan, health, cognition and other capabilities in ways once confined to science fiction.

All this comes from the discovery, invention, and innovation of blockchain technology.

I love the challenge of understanding new concepts, and I’ve spent a lot of research energy on this topic, with great feedback also from very astute RG readers. Blockchain is not easy to grasp. There seems no tangibility — it is something that exists more in the mind than the physical. That’s a tough concept for those of us who are still accustomed to physical tangible money transactions and the like.

Credible financial gurus have voiced serious doubts, but there is increasing capitulation among the various sectors due to client demands for access to these new digital security technology markets.

Blockchain technology is real and we need to understand it. But there are many aspects and questions, including:

• Affordability for the individual. Everyone needs a computer or smart phone.

• Hackers stealing digital currency and records. As an example DAO, or Decentralised Autonomous Organisation, an experimental virtual crowdfunding venture, turned into “Dead On Arrival.” Find out more by reading The New York Times story: “A hacking of more than $50 million dashes hopes in the world of virtual currency.” There is a link to the report in the sources section at the end of this article

• Lost or stolen digital currency, and the correction of errors are also concerns. Can the average person learn to verify the transactions, reverse a mistake, and figure out how to protect the integrity and safely store these digital records?

• Blockchain is totally reliant upon machines to operate, but machines can breakdown or become obsolete. Machines need to be programmed and need human intelligence, innovation and intervention. They also need electricity power, and lots of it. How will this new demand for our already expensive electric grid workout?

• Loss of satellite connectivity due to malfunctions, but more worrying, a take down by missiles or a random celestial event such as an asteroid collision.

• How does a blockchain company profit? Is it simply the process of selling customised blockchain applications, just like buying Quicken or other software package?

• Do we have plans for educational skills upgrade, including mathematical-heavy focus and computers for every child in our schools?

• Bermuda’s launch to become a leading edge provider of this new technology will generate the need for technically astute highly proficient math-focused careerists. Do we have enough or will this mean more guest workers?

This is the future now. Are we ready?

In the next instalment I will look at the applications of blockchain technology and digital currency sweeping the globe.

Sources:

World Economic Forum’s Mapping Global Transformations: https://goo.gl/yudKwP

The Fourth Industrial Revolution, by Klaus Schwab, Amazon. https://goo.gl/bw7RY9

CoinDesk article: What is blockchain technology? https://www.coindesk.com/information/what-is-blockchain-technology/

The New York Times article: A hacking of more than $50 million dashes hopes in the world of virtual currency. https://goo.gl/KT9VhW

Martha Harris Myron CPA CFP JSM: Masters of Law — international tax and financial services. Pondstraddler Life, financial perspectives for Bermuda islanders with multinational families and international connections on the Great Atlantic Pond. Contact: martha@pondstraddler.com