BLOCKCHAIN IS NOT A NEW TECHNOLOGY |
In the ‘Blockchain’ series the author takes us into the understanding of blockchain and its impact on our society. | ‘Blockchain is not a new technology’ shows us that blockchain is a set of technologies allowing another way of using regulations for electronic transactions and the supervision. The impact on our society is high. Just like for example the impact of the change in payment method – from payment with coins and paper money to electronic transfer.
Discussing the topics for the curriculum at the university we came to Blockchain. It appeared to us that it is seen as a new technology following the hype structure of all new technologies. True, Blockchain uses technology, but not new technology.
The introduction of blockchain can be compared to the introduction of electronic money transfer. We are talking about the 80’s in the last century, but that introduction still has a major impact on how money is used and on all the international regulations related to it. Electronic transactions are necessary for our economy and social life, but there have to be regulations regarding the use of those transactions and the data in those transactions. The problem is that regulations can lead to a costly global supervision system.
NEW TECHNOLOGIES |
A well-known new technology is the transistor. After its invention by Bell Telephone Laboratories in 1947, many new technologies were introduced. Normally these new technologies follow the hype curve, which means that everyone jumps on the bandwagon in the beginning. Then it appears that finding the right business model is not that simple and many organizations had to drop out. But those who did find the right business model, started making a profit and becoming major players in the market.
Current examples of new technologies are business intelligence using data science and data analysis, and artificial intelligence. Both were introduced a long time ago, became interesting new technologies when storage and computer power became cheaper, but failed until recently to have a great impact in the market.
ELECTRONIC TRANSACTIONS |
On the other hand, the changeover from paper transactions to electronic transactions has not followed this hype structure. The introduction of electronic transactions in money transfer and electronic data interchange has happened smoothly since the 80’s in the last century. There are some major platforms for electronic money transfer. Nobody wants to go back to a paper-based system for money transfer on the contrary, it is seen as a necessary infrastructure. So apparently there is a difference between the introduction of new technology based on new functions using data, and the introduction of new technology as an infrastructure for transactions with data.
Till now electronic money transfer transactions followed the standard protocols using data exchange. The regulations implemented are to avoid fraud and illegal actions. There is a supervisor system in place to check whether an organization is using illegal electronic transactions.
Blockchain is a set of technologies which allows another way of using regulations for electronic transactions and the supervision. These technologies are not new but using them has a major impact on electronic transactions using data in general. We have to be aware that data for instance about profiles and social networks are valuable. So every time we transfer those data to other systems without conditions, we allow those systems to earn money by using their value. Just an email address is already worth to steal. So now we are not just talking about electronic money transfer, but about electronic data transfer regarding personal data.
Governments will develop regulations and demand supervision. This is normally the process: there is some new criminality so new regulations, laws, are developed and supervision is installed by the government. This is costly because it can lead to governmental organizations, who only exist because of the supervision. It can even lead to corruption when regulations and supervision are linked.
Using blockchain allows for electronic data transfer with implicit supervision, because it is built into the transfer system. This means that when the system contains all the regulations it is impossible to make illegal actions on the data in the transactions. So blockchain is not the same as a new technology allowing cryptocurrencies. It is using existing technologies allowing for systems with implicit supervision, including electronic money transfer using crypto currencies.
This is the basis for the new post bachelor course Blockchain fundamentals, starting 6 February 2020 at The Hague University of Applied Sciences. In the course we do not focus on the technology, but on the functionality, how to use blockchain in organizations allowing for data transfer according to the regulations like the privacy law.
Steef Peters (prof. dr. S.C.A. Peters) is Partner & Board Advisor RIVIONT and joined in August 2019. His area of expertise is strategy and social innovation and the translation of new technological possibilities into revenue models and business processes. He supports Executive Boards and Organizations with Business Transformation, Organizational Change and Innovation. He is interested in developing academic models, supervising research and providing education.
Simultaneously Steef is finishing his book about his 3D talent matching algorithm aiming effective investments in groups using all available capabilities. In his research he combines the relation between financial capital, human capital and social capital, developing a model how people in a group could influence each other and how that is related to the capabilities of each person, relevant for organizational decision-making regarding investments in financial, human or social capital.
Guest lecturer and designer of the Blockchain and GPDR training at The Hague University of Applied Sciences.