Recently, I was having dinner with a group of friends and someone started talking about blockchain. Since I had been interested in this technology for over a year, I was intrigued. What struck me was that everyone at the table knew about blockchain, but no one seemed to have any real knowledge of it. Blockchain is a form of technology that allows information to be stored and shared securely, without relying on a central authority. It is transparent and secure, making it an efficient way to store and transmit data.
To be clear, what does a blockchain look like? It is in fact a ledger that contains information about transactions. This data is organized in blocks, hence the name « blockchain ». What makes this ledger different from others is that it is not stored on a single server, but that several computers hold the records simultaneously. The ledger will be held on different servers, called network nodes, which is essential because it makes it more difficult for attackers. Even if one of the servers fails to function properly, the other nodes will still hold the ledger. Most importantly, the blockchain is not dependent on a single government agency.
To be clear, what does a blockchain look like? To be precise, it is a ledger that stores the details of transactions and these details will be combined into a single block, hence the name « blockchain ». This ledger has a unique feature: instead of being kept on a central server, it is stored on several computers at once. The ledger is distributed across many servers, called network nodes, which is essential to make it more resistant to attack. If one of the servers fails, the other nodes maintain the ledger. Most importantly, the blockchain does not depend on a single governing entity.
In other words, the registry is not governed by a single entity, but by a system of rules that allows users to agree on the state of the registry. This often leads people to ask, « What does this mean for us? » Simply put, blockchain technology allows people to exchange value with each other without relying on third-party intermediaries, which is a revolution in itself. I can send you information directly over the internet on a peer-to-peer basis. However, this implies the creation of a duplicate file. For example, if I send you a picture, I’m actually sending you a copy; we will both have access to it. When it comes to sending something of selected value such as money, loyalty points, votes, train tickets, stocks, etc., the peer-to-peer capabilities of the Internet have their limits. For example, if I send you 20 euros, it is important that I don’t have access to it anymore. This is not a problem when it comes to photos, videos or other information in general. But when it comes to transferring value, there is a big problem.
Today, we depend on large intermediaries such as banks and governments to send value from one side to the other. However, these intermediaries are not perfect, which prevents us from using the peer-to-peer capabilities of the internet for things like money transfers, loyalty points, votes, train tickets, stocks, etc. Therefore, to transfer value, we still need to use these large entities. The shortcomings of these intermediaries mean that, although peer-to-peer activities facilitated by the internet are possible, it is not always possible to transfer valuable items such as money, loyalty points, votes, train tickets, shares, etc. This is why we rely on larger organizations, such as banks and governments, to transmit valuables – although these entities have their own shortcomings.
At the end of November, the Indian government suddenly declared the 500 and 1000 rupee bills no longer legal tender. This means that 80% of the currency in circulation became worthless overnight. This example shows us that the big companies we sometimes trust are not necessarily acting in our best interest. This begs the question: is there a way to transfer value without relying on these intermediaries? In 2008, an anonymous person known as Satoshi Nakamoto tried to provide an answer to this problem. That year, the economic crisis hit and banking systems became unreliable, leading people to lose confidence in their banks. To remedy this situation, Satoshi Nakamoto published a white paper explaining how a bankless digital currency can be managed with equal value for both parties. This digital payment system is called « Bitcoin ». If you add up the value of all the bitcoin tokens in circulation, you get a total of over $11 billion. The cost of a Bitcoin is determined by supply and demand (currently about 700 euros), and it is not managed by any nation, government or bank: all users own it.
Satoshi Nakamoto created a computer protocol that would allow all Bitcoin users to agree on the history of transactions made with the digital currency. This protocol, known as blockchain, is an incredible invention that has revolutionized the world. Bitcoin has proven to be beneficial for a number of reasons. First of all, it equalizes access to resources. It gives 2 billion unbanked adults the ability to use financial services and exchange currency. This is probably why 90% of bitcoin transactions take place in developing countries, as it is easier to have a smartphone than a bank account in these countries. We can all agree that blockchain technology is revolutionizing the way money transfers are done. To illustrate this, let’s consider what would happen if we were to make a transfer for a friend in the United States who needs it by tomorrow morning. Since it’s already Friday night and the branch is closed, and since it’s an American bank, it will obviously take longer than usual. Blockchain, especially with bitcoin, allows people to send money around the world quickly and cheaply. However, the use of this technology does not stop there; it can be used to create trust between individuals for more than just monetary exchanges. As an example, bitcoin was the first application of blockchain, but not the only one.
In some underdeveloped countries, it can be extremely difficult to prove ownership of one’s house or land. This is due to the lack of a land registry to list owners, or the fact that the registry is controlled by an unreliable government that can change it at will. Imagine being told one day that you do not own your home and you have no proof to the contrary. In Ghana, an NGO called BitLand has developed a distributed registry that uses blockchain technology to authenticate ownership of property titles. Because this registry cannot be changed unilaterally, the blockchain offers individuals an effective way to prove that they own their land. The music industry is another example. If you’re an artist and plan to sell your song on a streaming or download platform, you’ll likely have to pay a hefty 20-30% commission as well as an annual subscription. In addition, the payments for your work will be split at the end of the chain, which means that the platform collects all the profits from the sales before sharing some of it with you.
Blockchain technology has potential applications in almost every sector. For example, peer-to-peer electricity trading is being tested near Confluence. In addition, blockchain could give citizens more control over their personal data, improving privacy. These ambitious projects point to a future in which technology will allow us to self-organize without depending on intermediaries we don’t trust. It is understandable to prefer to rely on an algorithm rather than a third party because the algorithm belongs to the collective that controls it and is therefore less subjective. However, this raises many questions because an algorithm cannot handle every situation. For example, the blockchain can verify that property titles exist, but it cannot determine whether they are authentic because it cannot read them. No, blockchain technology alone cannot substitute for notaries since it cannot physically move to prove that one is the rightful owner.
For a service to be viable, there needs to be a group or company providing it. Blockchain technology has allowed us to bypass the need for an intermediary company in transactions between drivers and passengers like Uber, but someone still has to facilitate my connection to my driver. Rather than going through a bank, if I want to exchange bitcoins, I go through an exchange platform that allows me to buy and exchange them easily. The result is that the middlemen we’re trying to eliminate with blockchain technology are appearing elsewhere.
Blockchain can be used to improve interactions between businesses, such as in a multi-tiered supply chain or more efficient contractual arrangements. As a result, companies will look to leverage this technology by developing prototypes, forming partnerships and, in some cases, building their own blockchain systems. We observe that their approach is generally based on an incremental thought process, which means that we don’t change suddenly, we don’t evolve all at once. We adapt slowly, and we use technology – and that’s the paradox. Blockchain is not just an addition to current systems; it is a new idea with its own concept of transparency, decentralization and trust.
Don’t think that blockchain technology will be the solution to everything. I am often asked how blockchain technology could benefit a certain industry or profession. However, blockchain was not created to specifically help one set of professions or industries; it is only conceivable if some are willing to radically change their business approach. To illustrate this point, let’s recall the early 90’s/2000’s: When the internet came along, all industries were asking themselves how to take advantage of this new technology. At the time, rather than introducing inventive services like Deezer and Spotify, the music industry opted for DRM (Digital Right Management) to prevent people from sharing their songs.
In retrospect, it is easy to determine what should have been done, but this example shows us that we often rely on technology to preserve what has already been achieved rather than critically analyzing and transforming it in depth. Given blockchain’s potential to revolutionize our organizations and society, we need to ask ourselves how best to use it. Blockchain is likely to be the exchange infrastructure of the future, so we should all contribute to its development in any way we can, whether it’s during work hours or even over dinner. If we understand the fundamental purpose of blockchain, it is to enable the validation of exchanges without depending on a trusted third party. This will have massive impacts on our economy. It is essential to understand that all the jobs that currently just confirm transactions will most likely disappear. To conclude my remarks, I would like to share with you an excerpt from an interview with Christian Poyau. I’m going to get the opinion of a professional, the president of the digital transformation commission of Medef, and then I’ll give you mine. We’ll talk about it again in the third part…. All businesses can potentially have an impact from blockchain technology; things like communication on the web have allowed people all over the world to connect.
Today, we don’t know if the transaction we sent has been received or not. Can the recipient be sure that it has been validated? It may be a small transaction, financial in nature, or even a transaction with a similar purpose to a good. Blockchain is a technology that, based on the idea of the internet, allows transactions to be validated. For example, it can certify a work of art. It can also prove that I paid 100 euros to someone and that no one can dispute it; this used to be done by a third party like a bank.
The blockchain will confirm that Mr. Poyau paid 100 euros to Mr. Soumier without any of us disagreeing. This opens up a wide range of possibilities. By agreeing to store this information in the large database managed by many computers, the crowd guarantees that the transaction has taken place and that it is accepted by all parties involved; it also prevents anyone from trying to change it. It is the complexity of the blocks in the chain that makes blockchain successful. As we explore this technology further, we open up a series of questions about exchanges and the role of the state. In France, the state is present in many transactions, but with blockchain, this authoritarian presence can be weakened and exchanges between different countries can be done more easily. Medef needs to be part of the discussion again because of the abundance of words thrown around about digital transformation, some of which don’t make much sense. We are certain that blockchain is a crucial topic and that France is well positioned to move forward in this area, with recognized researchers and many startups working on it. Let’s not ignore the potential of the train, as it won’t revolutionize our lives immediately tomorrow morning, but we are sure that it will make a difference in the days to come. This idea came to me as I was spending my day getting ready and I am convinced that blockchain technology is as revolutionary today as the Internet was thirty years ago. Absolutely! I’m totally convinced of that! It’s a huge revolution. First we had paper, then paper transmission and now we are verifying that the communication between people is authentic.
It is a way to verify all exchanges on the Internet, the number of which is rapidly increasing. Therefore, for those who want to know more about blockchain technology, such as how it works, its purpose, whether it can be hacked or not, and the industries it will have a major impact on, this is the place to find out more.