Blockchain technology has several potential applications beyond cryptocurrency. It can also facilitate peer-to-peer non-financial transactions and can be centrally, rather than diffusely, managed. “Data malls,” data provenance, keyless payments, and proxy voting represent several uses for blockchain. These applications should be weighed against pragmatic, rather than idealistic, considerations.
How Is This Research Useful to Practitioners?
Blockchain technology has figured prominently in the news recently, particularly when associated with cryptocurrency “mining.” Blockchain is a “distributed ledger” technology that is resistant to attempts to manipulate transaction histories because all subsequent transactions would be altered.
Decentralized blockchain-based cryptocurrencies use “mining,” a high-energy-consuming computer process, to validate and time stamp transactions. Miners are paid in cryptocurrency, a digital asset. Because cryptocurrency has historically been used to facilitate anonymous (and frequently illegal) transactions as well as blind speculation, many asset managers have chosen not to delve into blockchain technology too deeply. The authors seek to educate that audience about its legitimate uses.
Several current and potential uses for blockchain technology extend beyond cryptocurrency. Blockchain can facilitate such coin economies as direct payments for specialized data in the peer-to-peer (P2P) market via a “data mall,” which provides selected data formatted to help meet the end user’s needs. The provider can manage its data and sales centrally, eliminating mining fees and possibly anonymity.
The data corpus itself can be provided via blockchain, although for large data sets (such as stock quotes), doing so becomes impractical. Blockchain may be used to validate data entries by tracking changes to a data set (e.g., online encyclopedia entries).
Other uses include “keyless payments”—a cryptocurrency-based payment method that does not require long, hard-to-remember account numbers and that can be centralized to allow for recovery of lost “wallets.” A digital wallet could hold various cryptocurrencies and bank accounts. Centralized keyless payment systems are susceptible to hacking.
Finally, blockchain technology can enable shareholders to vote without having to rely on proxy ballots.
How Did the Authors Conduct This Research?
The authors do not discuss any methodology. They merely survey how blockchain works, how it is used currently, and some ideas for its expansion such as those listed in the title. They list several products by name—IOTADM (the Internet of Things data marketplace), Golem, MicroRaiden, the Ceptr project, and Everipedia—which readers can investigate independently to get a better understanding of the applications. An exhibit lists 20 uses with references to make this research easier.
Overall, the authors provide many specific examples that the practitioner can investigate further. I appreciate the authors’ insistence on pragmatism. Ironically, although the authors’ stated wish is to look beyond cryptocurrency to other blockchain applications, most of their elaborations involve cryptocurrencies. Unfortunately, cryptocurrencies’ high volatility keeps them from being pragmatic for simple P2P transactions. PayPal and other direct-payment services do not expose users to illiquidity and exchange rate risks, so coin economies can be needlessly complicated for such transactions if there is no need or desire for anonymity.
In my view, interested readers should simply look at the authors’ list of potential uses and refer to the supplementary materials to further their understanding of some non-payment uses for blockchain. For example, perhaps there are government and security applications that would benefit from centralized blockchain management. It might have been useful if the authors had directed the reader to a “how to” guide for creating blockchain technologies within an organization. Nevertheless, this review gives a neophyte reader enough concrete starting points to permit a much deeper dive into blockchain technology.