Blockchain: The technology behind bitcoin became a lucrative business

blockchain

Blockchain

In the bowels of a former nuclear research bunker, British singer-songwriter Imogen Heap sits in front of a piano.

When she begins to sing, the small audience of this peculiar acoustic performance applauds her.

And it is that the audience is not simply enjoying the show: they are also benefiting from it.

The recording of one of the songs of the two-time Grammy Award winner at this concert in Stockholm, Sweden, will be released online.

Integrated within your digital code will be a contract that guarantees that 150 members of the public will receive a share of the copyright generated by the sales.

The technology that makes this surprising gift possible is the blockchain or chain of blocks, a kind of digital account book that records transactions and information in a verifiable and permanent way.

Blockchains have been used mainly in cryptocurrencies such as bitcoin and Ethereum, but they can also be used to create so-called “smart contracts” with which to guarantee an agreement between two parties.

Heap offered those who bought the ticket to his concert the possibility to sign up to be part of one of those contracts as part of an experiment he is carrying out on the potential of blockchain in the music industry.

Heap, an artist who has worked with stars like Ariana Grande and Taylor Swift, works on a blockchain-based service for artists to help them keep track of where and when their work is used, and to ensure they receive fair pay.

And according to a new report on the future of work from the World Economic Forum (WEF), you could soon be part of a very large group of people.

A BOOMING PROFESSION
Analysts at the WEF included “blockchain specialists” in a list of the 50 professions that will rise in importance in the next four years. And with this, there will be a growing number of jobs.

“Among our respondents, 45% of companies state that they are likely to expand into blockchain technologies,” says Vesselina Stefanova Ratcheva, WEF Principal Analyst and one of the report’s authors. “That figure looks different depending on the type of industry.”

Bitcoin transactions are registered in the "blockchain" network, but the uses of this technology are many others.Bitcoin transactions are registered in the “blockchain” network, but the uses of this technology are many others.

The report concludes that while the financial services industry might be expected to be one of the first to adopt blockchain technologies, others such as healthcare, automotive, and energy will not be left behind.

It’s the way blockchains work that makes them attractive to many entrepreneurial companies and individuals. They form what is known as “distributed ledgers”, something like digital spreadsheets of transactions and agreements that, once recorded, cannot be modified.

These books can be attached to digital currencies like bitcoin, to digital content like a piece of music, or even to physical objects.

When a transaction occurs, a public record of it is placed in an encrypted “block,” which is connected to all the blocks that came before and after through a kind of fingerprint known as a cryptographic hash.

If a block is tampered with, it will not correspond to those around it, which means that there was an attempt to scam or tamper with a transaction.

Although the financial services sector with cryptocurrencies is one of the first to adopt the technology of "blockchain", others such as health, automotive and energy will not be left behind | Credits: Getty ImagesAlthough the financial services sector with cryptocurrencies is one of the first to adopt the technology of “blockchain”, others such as health, automotive and energy will not be left behind | Credits: Getty Images

A copy of each ledger is also kept on millions of computers around the world, somehow becoming millions of witnesses to a single contract.

USE IN DIGITAL CONTRACTS
Lantmäteriet, the Swedish land registry, has tested the use of blockchains in their property deals.

Its technology produces a digital file containing the mortgage deeds, property agreements, and the transaction process that is shared with all parties involved in the sale.

When the buyer and seller sign a digital sales contract, agreeing on the purchase price and the date of possession, the mortgage provider, the transfer of funds, and the registration of the title documents will automatically initiate the loan issuance.

The Swedish body estimates that it can reduce the time of a transaction from several months to a few hours.

But the ability of blockchains to provide an irrefutable record has been opened to other uses. The diamond industry, for example, is using them to combat counterfeiting and unethically mined “conflict diamonds”.

The blockchains contain high-resolution images at every point in the diamond manufacturing process, along with certificates and details such as carats, cuts, clarity, and serial numbers. Every time a diamond changes hands, this is recorded on the blockchain.

The recording capacity of "blockchains" has been opened to other uses such as the diamond industry.The recording capacity of “blockchains” has been opened to other uses such as the diamond industry.

In the healthcare industry, blockchains could be used to ensure that clinical trial results are not altered or manipulated by medical companies by providing an unalterable record of the findings made.

“The possibilities are endless,” says Min Teo, CEO of ConsenSys, a blockchain software company created by Joseph Lubin, co-founder of the cryptocurrency Ethereum.

According to statistics from job search engine Indeed.com, the demand for workers with experience in blockchain technology doubled in 2017 and is six times higher than in 2015.

Blockchain developers are living in fierce demand in the market and can expect to make up to $ 158,000 in the United States.

But Teo believes that the potential of this job goes far beyond employing coders who can create these digital contracts.

As they begin to be used as legal documents, for example, teams of tech-savvy lawyers will be needed to analyze the complexities of how blockchains fit into traditional contract law.

LEGAL UNCERTAINTY PROBLEMS
But the blockchain also faces problems.

Currently, blockchain transactions require large amounts of computing power and energy, while the networks that support them can only perform a limited number of transactions per day.

Other issues are also pending resolution, such as the way in which governments regulate and tax contracts through the use of blockchains.

Even its legal status is not entirely clear currently, as the blockchain is not regulated by specific regulations.

Blockchains also do not guarantee that the information they hold is accurate from the start, but show whether that information has been tampered with. This is why they could also be susceptible to fraudulent entries when created.

“There are people who work on all these problems,” Teo says. “We are going to see some new roles emerging as this happens. We are likely to see a lot of jobs created by the new types of business opportunities that are going to open up.”

Imogen Heap is a good example of this: she helped form an organization called Mycelia that tries to change the way the music industry operates.

Experts predict that the success of the "blockchain" will create many new jobs adapted to the profile of this technology. Credits: Getty ImagesExperts predict that the success of the “blockchain” will create many new jobs adapted to the profile of this technology. Credits: Getty Images

File sharing and the global nature of the Internet have made it much more difficult for musicians to charge when their work is downloaded or used.

However, by embedding blockchains in a song’s fingerprint, it should be possible to record every time a song is played on a radio station or used in a YouTube video.

“The song itself will have the ability to pay everyone involved every time it is played or purchased,” Heap explains.

"The 'blockchain' is going to be a big part of our lives," says Imoge Heap | Credit: Getty Images“The ‘blockchain’ is going to be a big part of our lives,” says Image Heap | Credit: Getty Images

Of course, this will require the music industry, radio stations, and online platforms like YouTube to sign up for a system that will distribute benefit payments via automated blockchain contracts.

Heap believes that the industry is beginning to accept the idea that there must be change. Today, for example, you already have to deal with payment disputes caused by online streaming companies like Spotify.

“The blockchain is going to be a big part of our lives and we are going to need a lot of people to help make the changes that are coming,” concludes Heap.

* This is an adaptation of an article by Richard Gray published on BBC Capital that you can read here.