Written by Conrad Druzeta
The most exciting thing about blockchain is the concept of decentralization. This is a powerful idea—that business transactions can take place worldwide without a central authority governing them. The idea launched a transformative technology that will go far beyond currency and economics.
I was privileged to participate as a panellist at the sold-out University of Toronto Faculty of Engineering BizSkule event on Blockchain, Decrypting the New Economy. The audience was very interested in the technological and sociological impact of blockchain technology, and there will be many.
Key takeaways were:
- The decentralization of blockchain can be a difficult concept to deal with. Blockchain has none of the hierarchies that we become accustomed to in government and business. The technology crosses borders and can be used in many innovative ways. It is a shift in thinking—that instead of a central authority—the code of blockchain itself will set the game rules.
- Cryptocurrency is just the tip of the iceberg. As time goes on, people will find more and more uses for distributed ledger technology. Everything from housing registries, smart (self-executing) contracts, confirming the authenticity of artwork to preserving personal identification data will be affected in one way or another by this new paradigm.
- Security in blockchain technology can be extremely strong. If a blockchain is distributed worldwide, it is almost impossible to wipe out the decentralized information it holds. The security is ultimately on a much higher level than if information is stored by one or a few centralized authorities.
- Mining Bitcoin needs to become more efficient by using far less power. The process is so energy-intensive because the system architecture rewards miners for the amount of work they perform (proof of work). “Green blockchains” are in development that will change the reward model for miners, through proof of ownership rather than proof of work. This will bring in a new wave of coins/tokens and applications that would be much more efficient than Bitcoin for financial transactions.
- Instantaneous transactions will make blockchain even more attractive. In February 2018, the Canadian Securities Exchange announced the introduction of a securities clearing and settlement platform using blockchain technology. Companies could issue conventional equity and debt through tokenized securities. While the platform is subject to regulation by securities commissions and not a full public blockchain, it is expected to provide real-time clearing and settlement.
Bennett Jones’ Blockchain and Fintech group stays on the cutting edge of developing technologies, the intersection of these technologies with the law and the impact these technologies have on the way legal services are delivered. We are the first Canadian law firm to join the legal working group of the Enterprise Ethereum Alliance, the world’s largest open-source blockchain initiative, dedicated to evolving smart contract blockchain technologies for enterprise application across industries.
Bennett Jones