Opinion: four blockchain companies that could switch everything from accounting to money transfers
Published: May 11, two thousand sixteen Four:44 p.m. ET
Don Tapscott and Alex Tapscott explain Consensys, Chain, Abra and Bitfury
The very first generation of the digital revolution brought us the Internet of information. The 2nd generation — powered by blockchain technology — is bringing us the Internet of value: a fresh platform to reshape the world of business and convert the old order of human affairs for the better.
Blockchain is a vast, global distributed ledger or database running on millions of devices and open to anyone, where not just information but anything of value — money, but also titles, deeds, identities, even votes — can be moved, stored and managed securely and privately. Trust is established through mass collaboration and clever code rather than by powerful intermediaries like governments and banks.
To be sure, much needs to happen to fulfill the promise of blockchain. For one, the technology must scale to meet the high expectations placed on it. Governing the protocol is still an open question, but we see these as implementation challenges that will be overcome.
Already, an intrepid and visionary crop of entrepreneurs is applying this revolutionary fresh technology to convert industries from financial services to media and everything in inbetween. Here are a few of the most promising we got to know during the research for our book “Blockchain Revolution”:
Consensus Systems is a venture production studio, building decentralized applications on the Ethereum blockchain. It sounds low key, but if implemented, the applications that Consensys (as it is known) is building would wiggle the windows and rattle the walls of a dozen industries. Projects include a distributed triple-entry accounting system, which could upend the audit and accounting businesses of the Big Four.
In double-entry accounting, a debt and credit are recorded on each side of the balance sheet. In triple entry accounting, a third time stamped entry uploads to a blockchain. It’s semitransparent and immutable and thus gives auditors and other stakeholders much better visibility into the health of a company.
Other projects are a decentralized version of the massively popular Reddit discussion forum that has been plagued of late by controversy over centralized control as well as a document formation and management system for self-enforcing contracts.
Consensys is also building prediction markets for business, sports, and entertainment; an open energy market, which is already being implemented in Park Slope, Brooklyn with energy company LO3; a distributed music model to rival with Apple and Spotify; and a suite of business instruments for mass collaboration, mass creation and mass management of a management-less company.
Additionally, Consensys launched an enterprise consulting arm called Consensys Enterprises, which counts Deloitte, Microsoft MSFT, +1.49% and Manulife Financial MFC, -1.71% as a few of its many customers.
Perhaps no other company has done more to bring blockchain to Wall Street than Chain Inc. Adam Ludwin, the company’s founder and CEO, sees a once-in-a generation chance to entirely and fundamentally switch the way financial markets work.
Chain is building a suite of blockchain-based contraptions for banks, stock exchanges, credit-card companies and other major industry participants that will enable them to stir, store, trade and manage financial assets quickly, securely and with less risk to the system.
Already, the company is working with Nasdaq NDAQ, -0.62% Citibank C, -2.19% Visa V, +1.85% Orange ORA, +0.32% and others on real-world commercial implementations of the company’s blockchain solutions. “All assets in the future will be digital bearer instruments running on numerous blockchains,” Ludwin told us in an interview for “Blockchain Revolution”.
On May Five, Chain took another big leap forward by releasing an open source blockchain protocol that it has built with a group of leading financial service firms. The protocol, called Chain Open Standard 1, or Chain OS1, is designed to be massively scalable, secure and needing just one 2nd to clear and lodge a transaction, versus the average of ten minutes using the bitcoin blockchain, another public open blockchain.
With a name like Abra, one would expect to see a little “Cadabra,” and the company doesn’t disappoint. Abra is building a global digital asset-management system with retail-banking functionality like payments and savings on the bitcoin blockchain. Abra sees opportunities in the global remittance market, estimated to be $600 billion in size.
Today, most people who want to send remittance must go through a long, costly and frustrating process, using legacy systems like Western Union, where payments can take a week to clear and lodge and the average fees are upward of 10%. Abra will enable anyone with a mobile phone and an Internet connection to rafter dollars, pesos and bitcoin to another person for around 0.25%, a fraction of the cost today.
Using the bitcoin blockchain to create a seamless user interface and secure and efficient back-end is only one of Abra’s big innovations.
Because most people in the developing world pay in cash, Abra will also make it ordinary to convert from their platform to a local currency. Anyone who uses Abra can become a teller, suggesting to interchange virtual money for physical money. Using reputation systems, GPS and other sharing-economy innovations, Abra can turn its network into the largest ATM network in the world. It took Western Union a century to build a network of 500,000 agents. Abra will exceed that in year one.
Bitfury, founded in 2011, is one of the “old guard” of the industry, a term we use somewhat lightly given the rapid evolution of blockchain technology. Began as a mining company — a network participant who validates transactions and secures the network — Bitfury has since evolved into a fully integrated, full-service blockchain security and technology rock-hard. It has developed proprietary hardware and software solutions that have helped the blockchain world scale both quickly and securely. The company is also a pioneer in blockchain analytics, platform development and is working toward scaling public blockchains through its involvement in The Lightning Network.
Recently Bitfury has announced a fresh property rights registry initiative. Today, billions of people in the world lack clear and enforceable title to their land, preventing them from fully participating in the global economy. Land titles on the blockchain would create a superior alternative to a system where records often go missing in centralized databases or filing cabinets and can be altered by unscrupulous and corrupt officials.
The Republic of Georgia has partnered with Bitfury to develop blockchain land titles for the National Agency of Public Registry. If effective, it would make Bitfury the global standard.
Don Tapscott is the author of fifteen books about technology in business and society. His son Alex Tapscott is CEO of Northwest Passage Ventures, a rock-hard that helps startups in the blockchain space. Their book “Blockchain Revolution: How the Technology Behind Bitcoin is Switching Money, Business and the World” was published on May Ten. Bitfury and Chain are two of the sponsors of the authors’ book tour.