Culture and Communications in a Blockchain World

Blockchain is 2016’s major new buzzword. But what exactly is it, and why should we all care?

At its simplest, blockchain is a decentralised public ledger, run across a network of servers, that users can access and amend. So far, so Google Docs. The exciting bit comes when you realise what you could do with this kind of information infrastructure when you start to think big.

By creating multiple, secure but accessible copies of the same data, blockchain essentially eliminates the possibility for fraud, subterfuge or downright lying in environments where trust may traditionally be more than a little opaque.

From providing the software behind the cryptocurrency Bitcoin to revolutionising access to and regulation of government-held data, blockchain has the potential to usher in a new era of transparency and interconnectivity on a global scale.

In fact, in Estonia it’s already being used to power everything from health record management and government oversight to online notarisation and the digitisation of the nation’s cultural institutions.

To help you get to grips with just how exciting blockchain is, we’ve written a new whitepaper: Culture and Communications In A Blockchain World. Take a look now to find out what blockchain could mean for all of us, across banking, e-government, and society in general over the next few years.

Executive Summary

In this paper, we explore the increasingly popular topic of blockchain, how it works and what it can be used for, although we don’t dwell on the technicalities because there is plenty of information about that elsewhere. We have looked at how it promises to transform the relationships between brands and consumers, and governments and citizens, and how, as a communications agency specialising in financial and professional services, our role and our remit to clients might change in this new landscape.

From its inception as the technology behind the world’s first true cryptocurrency, Bitcoin, blockchain is going mainstream. The big brands are embracing it in principle. The regulators are trying to keep up without, refreshingly, destroying its spirit. Governments are hoping it will lead to a whole new era of civic engagement but at the risk of further disenfranchising whole swathes of the population. Meanwhile a new generation of start-ups stand on the cusp of pioneering a unique sharing economy but still need the reach and resources of the big brands.

As the Chinese curse goes, we live in interesting times. Just how interesting those times are going to be is debated in this paper.

Welcome to Blockchain

The concept of blockchain was first postulated in 2008 by the mysterious Satoshi Nakamoto (not his real name, although there is plenty of speculation as to his true identity) as the open-source software behind the cryptocurrency Bitcoin. It was designed to make transactions quick, cheap, easy and, most importantly, trustworthy between people who didn’t know or trust each other on the dark side of the Web.

Like a crowd-sourced book-keeping ledger, the blockchain is a decentralised digital platform that records ownership and transactions, who has paid who (although identities are anonymised as ‘keys’), how much and when. It uses duplicated ledgers across a variety of servers, meaning if one is compromised the data is still intact. When the parties involved sign-off a transaction, details of it are sent to every computer (or ‘node’) in the Bitcoin network, where it is simultaneously and independently verified by applying an algorithm known as a ‘puzzle’. This is the equivalent of having a group of independent witnesses to a single event. Nodes that perform this authentication function are known as miners and are rewarded with Bitcoins, as an incentive to keep the blockchain going and the system operational.

When the transaction is verified, the data is coded using complex cryptography which means it cannot be changed or erased once it's added to the blockchain. Over time, as the blockchain grows, and as more nodes join the network, so does the assumed strength and security of the system.

Whilst ‘the’ blockchain is all about bitcoin, the processes and principles of it are being adopted by a wide range of organisations and institutions, from financial services, health and transport, to manufacturing, computing, legal and professional services, and retail.

They are looking to private blockchains, also known as sidechains, to which a limited number of people have access but which work on the same principles and deliver similar benefits. According to Chad Cascarilla, CEO of New Yorkbased blockchain and Bitcoin company itBit: "In a public blockchain, you’re trying to get everyone all over the world to agree to changes at the same time. In a private one, you’re not. You’re really just saying you trust everybody that’s on that network because you’ve all agreed to join it. You don’t have these same computational issues that you do when it’s public."

Every business which relies on probity, privacy and security for its reputation and its regulatory compliance will have a blockchain project in the pipeline – or at least be taking it seriously at the highest levels of the organisation. That includes every multinational bank, the consultancies and the global investment community, which in 2015 invested a record $13.8 billion in fintech, of which $474 million was in blockchain and Bitcoin start-ups, according to a joint report by KPMG and CB Insights.

What is particularly interesting is the speed at which the banks have come together to agree that blockchain is the way forward, and are collaborating around standards and best practice.

WHY BLOCKCHAIN IS SO EXCITING

The reason why blockchain has created such huge interest is because it offers the promise of addressing some of the key challenges and pain points experienced by organisations who rely on their record-keeping to be trusted by their stakeholders, or who use trusted third-party authorities as the arbiters of transactions.

Blockchain is often referred to as a ‘trustless’ technology, because the concept of emotional security has been replaced by mathematical certainty. A blockchain-based ledger makes it much more difficult to tamper with transactions or records, meaning it can reduce fraud or identity theft and enable regulatory compliance. It can help to reduce reliance on third parties acting as middle-men, meaning it can speed up transactions and reduce processing costs. It delivers greater transparency because all parties to the blockchain have shared access to the data on it, so it can prove the provenance or authenticity of a product, or an item in a supply chain and provide a traceable record of ownership.

Carry on reading our new paper Culture and Communications in a blockchain world, where we have taken a good long look at blockchain, not so much how it works because there are plenty of other articles and papers to serve that purpose, but how it is going to change our relationship with the banking system, with brands and with the authorities.

We have looked at the current and potential applications for blockchain, from health and financial services to civic engagement and supply chain management.  We have also looked at the sharing economy blockchain has the potential to create and what the market dynamics of such an economy mean for us as an agency and the clients we serve.  Lastly, we have explored the irony of how a technology that was envisaged by its creator as a means to disintermediate the authorities is being used as a way of monitoring and controlling our actions and movements and that its unique strengths may one day become its downfall.