When you meet Daniel Peled flying economy on one of his many trips to Asia, it’s hard to imagine he just raised 120 million dollars for his latest company Orbs, or that he is managing 250 million dollars in private investments in blockchain. This is quite different from the image of new crypto millionaires with lamborghinis or burning-man unicorn weddings as seen on the hysterical John Oliver segment on blockchain.
I recently had the chance to sit down with Daniel Peled, one of the new self-made powerhouse entrepreneurs of the blockchain industry. To most people, the blockchain industry may seem like an estranged combination of cyber-punk culture and funny-money. To Daniel, a serial entrepreneur who at 32 rose from his communal-agriculture (‘kibbutz’) upbringing to founding and chairing the Hexa Group-one of the largest blockchain industry groups- blockchain is the foundation for the next wave of business disruption.
Here’s what blockchain novices need to know, in layman’s terms straight from Daniel himself!
Blockchain ≠ Cryptocurrency
Most novices are (understandably) under the impression that blockchain technology is synonymous with cryptocurrency. The reason for this association is because Bitcoin was what made blockchain technology a household name.
According to Peled, “Blockchain technology got its name due to blocks of digital data being chained together through math. Although the concept and structure of it was in existence before Bitcoin, it was Bitcoin that helped make it rise to prominence. In fact, the first blockchain was the database of Bitcoin transactions back in 2009, and even then, the database itself wasn’t referred to as ‘blockchain.’ That just happened over time.”
Ether is another valuable virtual currency, and it runs on the Ethereum blockchain. Peled says, “Not only does the Ethereum blockchain record virtual currency transactions- it can also record and execute simple programs, such as moving Ether between digital wallets after specified events.”
Blockchain is a Distributed Database
Most (non-blockchain) databases are maintained by central institutions in single locations, which are referred to as centralized authorities. They bring about concerns over breaches, identity fraud, and other cybersecurity concerns. In the case of blockchain, records are kept communally, thereby being referred to as decentralized ledgers. There isn’t just one computer or institution that is responsible for the data. So even IF one computer were to be hacked, the others can go on without it.
“Exchanges of currencies or other representations of value are kept secure using cryptography,” says Peled, “and it’s important to bear in mind that before any exchange can be verified and recorded, all the computers in the network are to give it approval. This eliminates ‘middleman’ authorities such as banks, which are at the core of most transactions, and in turn makes processing fees obsolete.”
Peled went onto add, “The rising popularity of blockchain technology brought about a wave of disruption across numerous industries. As governments and companies worldwide became aware of its capabilities, they demonstrated interest in using it to store data that had nothing to do with virtual currency transactions, and in some cases no transactions at all. Some of the innovative blockchain applications of today include messaging apps, voting, ride-sharing, and academia. Many governments and companies have also worked with private blockchains, in which case (unlike public blockchains) only computers that are approved can get in on the action. A fantastic example of the potential, is what the Korean government is doing with the W Foundation to promote their ambitious nature conservation goals. The innovative blockchain-based W Green Pay project is an app that monitors and rewards the effort of individuals and the public to reduce Greenhouse gas emissions. This is one of many – we’re really still at the beginning of exploring the possibilities”
Numerous industries are getting on board with blockchain technology because of the added security element. All data that is stored on the blockchain is cryptographically secure thanks to a combination of three concepts- hash functions, digital signatures, and hash pointers. IBM for example, are betting big of blockchain-based supply chain management solutions for enterprise.
Benefits and Use Cases of Blockchain
“There are numerous benefits to blockchain technology,” says Peled. “It all boils down to four main points: it’s a time-saver; it’s a money-saver; it reduces risk; and it increases trust.”
Blockchain saves time by making transactions nearly instantaneous, instead of taking days to process, and it saves users and companies money by removing the cost of overheads and cost intermediaries. Thanks to the security measures, cybercrimes are barely a concern, and trust is increased through shared processes and transparency in record-keeping. These benefits prove that blockchain technology has the potential to unlock many new opportunities. This is especially the case when interlinked with other new age technologies such as IoT and AI. The end result will be new use cases and ecosystems with enhanced solutions that are better and faster than anything we are familiar with today.
Peled states, “Some real-world use cases for blockchain technology include mortgage verification, contracts, vehicle records, post-trade settlements, cross-currency payments, digital property management, and syndicated loans. We’re getting there!”
While it may be understood that blockchain technology is the key to unlimited potential, greater widespread adoption of it at a global level comes down to three key players: market makers, industry groups, and regulators.
They’re the ones that can put the adoption of blockchain technology on the fast track, according to Peled. “Generally speaking, market makers are the organizations that innovate. They’re the ones that create new goods and services, in addition to new business processes for existing goods and services. Industry groups provide technical advice on industry trends, and are typically funded by members of affiliated networks. Their role is to encourage best practices by making recommendations to their members and audience. Regulators are the organizations that enforce the rules of play, and are keen to support innovations that are blockchain-based. That being said, we are still in the stage of scaling the infrastructure foundations that will facilitate this disruption. Companies like us at Orbs, which is a public blockchain scaling the first-generation protocol base-layers, are racing to accomplish competitiveness with traditional, centralized computing services. We have the brightest minds working on accomplishing this in ambitious timelines, because this is the foundation that will facilitate the new businesses of economy 3.0.”
With all this in mind, it shouldn’t come as a surprise that blockchain technology serves as one of the most disruptive technological innovations of the modern era. It opens new networks by improving efficiencies and increasing accessibility, and addresses a wide range of challenges across countless industries. Now is the time for anyone and everyone to embrace blockchain technology and its potential, because as Larry Summers famously said, “The people who rejected the Internet as a curiosity for scientists were on the wrong side of history, the people who rejected digital photography as really an artificial thing were on the wrong side of history… So it seems to me that the people who confidently reject all the innovation here [blockchain technology] are on the wrong side of history.”Opinions expressed here by Contributors are their own.