I may have mentioned this before in this column, my favourite tweet on Blockchain is: “Blockchain is the answer, now tell me the question?”. Fueled by the unceasing hype around Bitcoin and cryptocurrency, Blockchain has been regarded as the silver bullet solution for everything – hacking, threats to democracy, poverty and world hunger. There is no doubt that it is a fundamental, new digital technology which, along with Artificial Intelligence, will shape the world to come. However, unlike AI that appears to be solving big problems, it has seemed that Blockchain is a hammer looking around for a nail.
Over the past few weeks, however, we have seen new nails swiftly emerge out of the woodwork, if it may. A quick primer on: Blockchain is widely known to the technology behind bitcoin, which it is. But that is akin to describing the Internet as the technology behind email. True, but the Internet is much more than that. A blockchain is a distributed database shared among a network of computers, all of which must approve a transaction before it can be recorded. So, it is essentially a universal ledger of digital records (or identity)—one that is shared between various parties. It can only be updated by consensus of a majority of the participants and can be traced back to its origin. Once entered, this information can never be erased. It is these properties of consensus, provenance and immutability that makes this technology unique.
Last week, the venerable auction house, Christies, sold a digital artwork in form of a jpeg file, by the artist Beeple, for $69mn. A week before that, the Canadian artist Grimes auctioned $6mn worth of ‘digital art’ in the same way. Jack Dorsey, the founder of Twitter, is auctioning the first tweet ever “just setting up my twttr” for approximately $2.5mn. All of these are purely digital, and instantly replicable, the way all digital stuff is. You can go and find Jack’s first tweet or take as many copies of Beeple’s work as you want. However, irrespective of how many copies you take, only one person owns this piece of art or music or tweet. These kind of goods are called NFTs, or Non Fungible Tokens, and each one is a blockchain entry, usually in the Ethereum Blockchain, that represents a unique item that cannot be interchanged with another. Because of the properties of the blockchain, this ownership is immutable, until further sold. It is like a Van Gogh painting, only one person can own the original, though you can take as many prints as you like. Or a piece of land – any number of people can walk on it, but only one person owns it. What blockchain-powered NFTs have done is to open up a huge new market for art, artists and collectors to monetise their creativity.
On the 8th of March this year, millions of transactions got hit in India, as the ubiquitous OTPs stopped pinging on people’s mobile phones. It was estimated that nearly four hundred million of the billion daily OTPs did not materialize, hitting banking, ecommerce and even vaccination transactions. The reason: A new ‘SMS scrubber’ was launched, a part of an effort by the government and telcos to weed out the millions of spam SMSes. While it did not work on the first day, and had to be withdrawn, it surely will when the glitches and bugs are ironed out. The interesting fact: the scrubber is architected on a distributed ledger blockchain platform. Another nail found.
As COVID slowed down the world but accelerated change, vast swathes of education became digitally delivered, fueling an ed-tech boom. Digital education required digital degrees, and these need to be unique, non-duplicable, secure and immutable. If one can tokenize art and music, so can educational degrees, preventing fraud and process delays. Universities worldwide have started experimenting with ‘Blockchain degrees’, and the NFT phenomena will only accelerate this trend. The same principle applies to health-care, perhaps the industry du jour in these times of COVID. There is no greater time when there has been a greater need for having universal electronic medical records (EMRs), Health records on blockchain have been the Holy Grail, with the security, transparency, privacy benefits that it brings, but this has been excruciatingly difficult to do. The hope is that a crisis like COVID will bring the right incentives for this to happen at a country level (say a Health Stack in India, or an Aadhar card for Health), and hopefully at a global level, as we realise that a pandemic knows no national boundaries. Countries will soon start issuing Vaccine Certificates, and as we need secure, non-duplicable globally-accepted ones, Blockchain could be the answer. Estonia has already started experimenting with these.
All this digital and blockchain activity has been rocket-fuel to the biggest and most universal use case of Blockchain, crypto currency in general and Bitcoin in particular. This ‘tokenised money’ has rocketed off the charts, driving frenzied trading around it. It has been the lone nail so far, some say it is perhaps the last nail in the coffin for conventional money. However, as we emerge from the pandemic, expect to see blockchain technology to go beyond crypto, just as the Internet has gone far beyond email.
(This article was published as a column in Mint on Mar 18, 2021)