By Don Tapscott for Wired
The Internet of Things will be powered by the blockchain, transforming how we live
In the not-too-distant future, billions of smart things in the physical world will likely be sensing, responding, communicating and sharing data. Generating, buying and selling their own electricity. Doing everything from protecting our environment to charging our homes and managing our health. Cities and regions will be profoundly transformed by this revolution, as everything from public transit systems,healthcare and power generation stands to be disrupted. This “internet of everything” could do with a “ledger of everything”, powered by the blockchain.
The blockchain is the ingeniously simple protocol that allows transactions to be simultaneously anonymous and secure, peer-to-peer, instant and frictionless. How? By distributing trust from powerful intermediaries to a large global network which, through mass collaboration, clever code and cryptography, enables a tamper-proof public ledger of value.
Though it’s the technology that drivesbitcoin and other digital currencies, the underlying framework has the potential to go far beyond these and record virtually everything of value to humankind, from birth and death certificates to insurance claims and even votes.
The first generation of the internet created a new medium for information. The blockchain is the new medium for value and it turns out every business, institution, government and individual can benefit.
How might this affect, say, the energy grid? Most homeowners, businesses and other organisations in urban areas get their power from regulated utilities at regulated prices. We have more variety in locally generated renewable energy from, for example, solar panels. The local utility captures excess power in its supply for redistribution at wholesale rates, often with considerable leakage.
Yet the consumer, who may be located across the street from a local power source, still must go through the utility and pay full retail for renewable energy generated by their neighbour.
Instead, imagine each household that has the ability to generate and store electricity can enter into peer-to-peer transactions with neighbours, or sell at market rate back into the grid. Millions of homes could become autonomous agents, contracting power automatically with the highest bidder. Blockchain technology is critical to all of this.
With potentially millions of distributed power sources, the system needs to continuously track everything, including the ability to authenticate each node in the network, to ensure its reliability. Power generation is one of dozens of ways cities will be transformed by blockchain technology and the internet of things.
Let’s say that in a near future, most people don’t own cars, but rather share autonomous vehicles in a commons. Imagine a driver who, rather than taking traditional public transport or using “so-called” sharing economy services like Uber (which really have nothing to do with sharing at all), instead logs on to SUber (think blockchain Super Uber) to order a car. All the available vehicles in her area start automatically posting offers, which her node in the network automatically ranks and presents to her, based on the selection criteria. She factors in how much she’s willing to pay for faster routes (eg, higher-priced toll lanes) and contracts with a car that meets her needs. That same car might pick up 100 fares a day at rates competitive to most public transportation options.
What is striking about this proposed model is not the driverless vehicles – they will be commonplace probably sooner rather than later. Rather, the cars could be fully autonomous agents that earn their own fares, pay for their own fuel and repair, get their own auto insurance, negotiate liability in collisions and operate (“drive”) without human control, except when they need to take some entity – maybe a human being – to court.
Where the internet reduced the costs of search and co-ordination, the blockchain will enable us to cut the costs of bargaining, contracting, policing and enforcing these contracts. We’ll be able to negotiate the best deal and get the promised delivery from any other entity, including a driverless taxi. Not only will this disrupt the business model of Uber, it will also force us to rethink how we plan for our cities.
Don Tapscott is a business executive, author, consultant and speaker, and the co-author of Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business and the World (Penguin Portfolio) Alex Tapscott is the CEO and founder of Northwest Passage Ventures, and is the co-author of Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business and the World (Penguin Portfolio)