Today we are going to talk about blockchain, chain of blocks in French, because it is a technology which is revolutionizing the economy and which will therefore greatly disrupt many sectors of activity in the years. coming.
A few days ago I was at a dinner party with some friends and one of the people around the table started talking about blockchain. So I was curious because I’ve been working on the blockchain for a little over a year now and I learned two things from this dinner: the first is that everyone had already heard of it and the second is that globally nobody had understood anything about it. So what is blockchain? I get asked this question almost every day now and the truth is that there are lots of different definitions. So I’m going to give you one even if you’re going to see the definition, that’s not the most important thing. The blockchain is a technology for storing and transmitting information that is secure and transparent and that operates without a central control body.
Concretely what does it look like and well a blockchain it is a register which contains information of the data of the transactions and this information will be grouped in block that’s why we call it a chain of blocks in English a blockchain and this register it has a particularity is that it is not stored on a central server but that it is held by many computers at the same time. The register will therefore be stored on a large number of servers called network nodes and that is very important because it makes it more difficult to attack. If one of these servers stops working, all the others continue to store the registry. But above all, the blockchain works without a central control body.
What does it mean ? Well that means that there is no centralized entity, a company, a person who has control over the register. It is an algorithm that will allow all users to agree on the state of the register to be brought. So usually once I’ve said that people look at me and say, « so what’s a revolution? » Well, it’s a revolution because the blockchain allows peer-to-peer value to be exchanged without an intermediary. And there you are going to tell me yes but peer to peer already exists with the internet in particular and it is true with the internet I can send you information by e-mail directly from peer to peer. Except that this information will be duplicated. If I send you a photo for example, in fact I send you a copy. You, you will have access to this photo but I too will always have access to it and that poses no problem when it comes to a photo, a video, information in general but that poses a big problem when it comes to value. Because if I send you 20 euros it is very important that I no longer have access to it. And so all the peer-to-peer that has been made possible by the Internet finds its limits when it comes to sending something of value whether it is money but also loyalty points, votes, train tickets, shares, etc. And so today, to send value to each other, we use large intermediaries (banks, governments, etc.). Except that these intermediaries are not perfect.
Last example to date, a few weeks ago in November the Indian government decided overnight that the 500 and 1000 rupee notes were no longer valid. So overnight 80% of the currency in circulation is no longer worth anything! There, through this example, we realize that these major intermediaries in whom we sometimes place our trust can make decisions that are not necessarily in our interest. So the question that arises is: wouldn’t there be a way to send value without these intermediaries? And it is to this question that a person whose identity we still do not know and who is known under the pseudonym Satoshi Nakamoto wanted to answer in 2008. 2008 you remember it’s the economic crisis the banking system is faltering people no longer trust their banks and Satoshi Nakamoto publishes a white paper where he details the functioning of a digital currency that works without a bank a pair digital currency at par. This digital currency, he calls it digital he calls it bitcoin. Bitcoin today if we combine the value of all Bitcoin tokens in circulation it is worth more than 11 billion dollars. Bitcoin has a price that is established by supply and demand (a Bitcoin is worth around 700 euros) and it is a currency that does not belong to any country, to any government or to any bank; it belongs to all its users.
And to make this digital currency work, Satoshi Nakamoto invents a computer protocol that will allow all users to agree on the history of transactions that have been made in Bitcoin and it is this underlying protocol that we calls the blockchain. And indeed this invention is revolutionary; for several reasons. Already because it allows a rebalancing of access to resources. It allows 2 billion unbanked adults to have access to financial services and to exchange currency. It is also for this reason that today 90% of the volume of transactions made in Bitcoin take place in developing countries because in these countries it is very easy to have a smartphone but it is much more difficult to have a bank account. But more broadly, the blockchain is revolutionizing the transfer of money. Suppose we all together want to make a transfer for a friend in the United States who needs it tomorrow morning. We all already know how it’s going to be… Already it’s Friday night so the agency will be closed. then it will be an American rib so it will take longer in short it is almost impossible with a classic bank it will take days and in addition there will be quite significant transfer fees. Well with the blockchain, especially with Bitcoin, with Bitcoin and other cryptocurrencies, I can send money internationally in minutes and at almost zero cost. But currency is just one application of the blockchain. It’s the first, it’s the historical application, especially with bitcoin, but it’s not the only one because if we manage to create trust between individuals to exchange currency, we also manage to create trust. on other elements. First example.
In some developing countries it is sometimes extremely difficult to prove that you are the owner of your land or your house. Either because there is no cadastre to list who owns what. Either because there is a cadastre but it is in the hands of unstable governments who can modify it as they please. Imagine that overnight someone comes to your house and tells you no, this house is mine and you have nothing to prove the contrary. Well in Ghana there is an NGO called BitLand which has created a decentralized register operating on blockchain and allowing the existence of title deeds to be certified. And as this register is distributed and no one can unilaterally decide to modify it, so thanks to the blockchain we will allow individuals to prove more effectively that they are indeed the owners of their land. Second example, the music industry. If you are an artist you create a song you want to sell it on a download or streaming platform, in general you pay a fairly high commission of around 20 to 30% and an annual subscription but above all your remuneration comes at the end chain, that is to say that the platform will first collect all the income before redistributing part of it and you will be the last to be paid. But with the blockchain we could allow artists to manage their rights in real time and to be paid automatically when a work has been consumed in bulk as soon as a song has been added or downloaded and therefore it would allow artists to regain control over their works.
So of course there are applications in almost every industry. With the blockchain, we could create local communities, for peer-to-peer electricity exchange. This is, for example, what is being tested not far from here at Confluence. With the blockchain, we could better protect our privacy by giving citizens control over their personal data. In short, all these applications which are very utopian which seem very utopian are indeed being tested and they suggest a new world where we could self-organize thanks to technology by doing without intermediaries in which we would no longer trust. And somewhere it makes sense to prefer to trust an algorithm rather than an intermediary because the algorithm is less subjective because it belongs to the community that manages it but once we have said that we still comes up against a lot of questions. We talk about eliminating intermediaries but today an algorithm cannot manage everything. The blockchain can certify the existence of title deeds of course, but it cannot check if your title deed is authentic since it cannot read the document it cannot come to your home to check that you are in your home of which you are the owner. So we can already answer a question that I am often asked, no, the blockchain alone will not completely replace notaries.
And then the sinequanone condition for a service to exist is that there is someone, a community, a company that creates this service. We are talking about an Uber without Uber thanks to the blockchain. So indeed we could thanks to the blockchain automate direct transactions between drivers and passengers without going through the account of a central company. But at some point, my driver, I don’t order it telepathically, so there has to be a service that allows me to access it. Same if I want to make transactions in Bitcoin actually I do not go through a bank but I go through an exchange platform which allows me in a very intuitive very fluid way to buy bitcoins to exchange them. And so what we see is that all the intermediaries that we seek to eliminate with the blockchain and we recreate them elsewhere and it is moreover for this reason that today very many large companies s are very interested in blockchain because they see it as both a threat and an opportunity.
If the blockchain makes it possible to facilitate relations between individuals, it also makes it possible to facilitate relations between companies. For example on a complex supply chain where there would be multiple partners or to optimize contractual relations. And so companies will seek to appropriate this technology. They will create prototypes, they will build consortia sometimes even they will build their own blockchain. And what we see is that very often their approach is part of an incremental logic; that is to say, we don’t disrupt all of a sudden, we don’t evolve step by step. We transform slowly, we appropriate the technology and that’s the whole paradox. The blockchain initially is not a technology that is added to existing systems. It is a new model in its own right based on the concept of transparency, decentralization and trust.
So do not believe that the blockchain will be the solution to all problems. I am often asked: how can blockchain be useful to a particular sector or profession? But the blockchain was not created to be useful to a category of sectors or a category of trades. It can be, but on condition that some radically modify their business model. Let’s take a comparison. At the beginning of the 1990s/2000s when the Internet developed, all industries wondered how they were going to use this new technology. And at the time, the music industry said it was creating DRM (Digital Right Management) to prevent everyone from sharing the songs when it could very well have created innovative services like Deezer like Spotify.
So obviously a posteriori it’s a little easy to say what should have been done, but what we see all the same through this example is that too often we seek to use technology to protect what has been acquired rather than to challenge them and transform everything in depth. Well, like the Internet in the 2000s, blockchain has the potential to radically transform our organizations and our society. And so the question we have to ask ourselves now is what do we want to do with it? How do we want to transform our society? the blockchain will most likely be the exchange infrastructure of tomorrow. It is therefore time for each of us to take part in its construction whether it is during our free time during our work or even during a simple dinner. So if you have understood the main role of the blockchain, it will be to allow exchanges to be certified without going through a trusted third party and that will have enormous consequences on our economy. It must be understood that all the trades which today only serve to guarantee transactions are clearly destined to disappear. And to complete my remarks, I would like to give you an excerpt from an interview with Christian Poyau, president of the Medef’s digital transformation commission so that you can have the opinion of a professional on the subject then, as promised, I will give you my notice. We find ourselves just after in the third part… All trades at one time or another can be involved in this blockchain. That is to say here we are going to say that the web has enabled communication between everyone now, well everyone, many people on the planet are connected, we exchange everything we want (from information, data, images, etc.).
But today we are not sure of this transaction I send it is it well received? Can the other person opposite be sure that he has validated it, etc.? And that transaction can be just something frivolous or something monetary or something that actually acts as a property or whatever. Even the certification of a work of art for example. There you go, and so blockchain is something that, based on the principle of the web, makes it possible to certify exchanges. I owe you 100 euros the blockchain will validate that I paid you well and that no one can dispute it. Before, I had to go through this trusted third party (in this case a banking establishment).
The blockchain will say no Mr. Poyau paid 100 euros to Mr. Soumier and no one wants to dispute it, neither you nor me in quotation marks. So the fields are indeed huge. Because and Mr. Poyau and Mr. Soumier agree they put it in this large register which is in fact kept by millions of Christian computers it is the crowd which in fact guarantees that this contract has indeed taken place that he is accepted by both parties and it is the crowd that makes it impossible for anyone to attack him. Exactly it is the multiplicity of chains, finally of chain blocks that makes it work. So when we go further it can raise much broader questions in terms of exchanges, the role of the state because the state is ultimately omnipresent, so especially in France but in a whole bunch of transactions, with the blockchain we dilutes this notion of State and we can of course make exchanges between countries between people from foreign countries so it also goes much further. This is why once again the Medef is obliged to take an interest in it because we have plenty of buzzwords in this world of digital transformation; some are more or less consistent. We are firmly convinced that the blockchain is really a major subject in which we must get involved and by the way, France is once again rather well positioned because we have internationally renowned researchers who we have a lot startups on the subject etc. So above all let’s not miss the train it’s not something that will revolutionize our lives there tomorrow morning but after tomorrow and after tomorrow we are completely convinced of it. A sentence that I found while preparing the whole of this day there very regularly we are in front of the blockchain today as in front of the Internet 30 years ago. Yes ! Do you validate that? Yes yes absolutely. I am firmly convinced of it! Yes it is a major revolution. Once again we had the paper after we had the transmission of the paper and there we validate the transmission between people.
It is once again a way of validating all the exchanges on the Internet which are obviously only growing and exploding at the moment. So ! So for all those who would like to know a little more about blockchain technology to know how it works? What is his role ? Can we hack it? What are the sectors of activity that it will strongly disrupt?