Posted on: 20 October 2015
Ph.D - Chief Experience Officer
Getting Ready for Blockchain
If you remember the movie Flight Club, or watched the TV series Mr. Robot, a common theme is the destruction of the financial system by eliminating all the transaction data, physical and electronic. Although extremely difficult, it is theoretically possible for such a scenario to occur.
The problem is that regardless of the level of security or redundancy in the information, anything that is stored in a central location is vulnerable. The solution is to take the opposite approach. Instead of just one person having a copy, everyone gets a copy of the financial data. So if one copy ever gets lost, damaged, tampered with or corrupted, a quick comparison to other copies will identify the problem.
This is the approach taken by blockchain, the next leap in technology to change how the economy works. In the Fintech world, blockchain is well known as discussed, but the larger population is probably more familiar with who uses blockchain: Bitcoin.
Prior to 2013, Bitcoin was something that was only really known to technology and cryptography enthusiasts. But when the wider audience learned about the potential value of the virtual currency, the value skyrocketed, with 1 Bitcoin worth more than $1,000 US dollars. However, there were several issues, primarily resulting from the theft of Bitcoins, which quickly resulted in the crash in the value of the Bitcoin, where it is now worth between $225 – $250 USD/bitcoin.
The rise and fall of Bitcoin is not surprising to anyone familiar with the Gartner Hype Cycle. After the initial innovation trigger, and reaching the peak of inflated expectations, Bitcoin and all cryptocurrencies are in the trough of disillusionment. For the past couple of years venture capital firms have invested close to 800 million US dollars in start-ups working on the underlying technology behind Bitcoin: blockchain.
Imagine blockchain as a log book which records every time money moves from one location or person to another. Although the identities of who is involved in moving the money are anonymous, everyone can see when a transaction is recorded, and how much money is involved.
Everyone that interacts with the blockchain has their own copy of the log book and because any changes recorded in one log book are shown in all logbooks in real time, the information is never lost or incorrect. So, banks and businesses will be able to move money faster without having to wait for the central authority to update their records at the end of the day.
The challenges moving forward are the same challenges any new technology face. First, blockchain is a technology in search of a story. The reasons venture capital firms are spreading out the funds to so many start-ups is because none have developed a concrete use of the blockchain outside of the banking environment. Secondly, banks are very risk averse, more so with the movement of money, so moving from a reliable, but slow and outdated system to a technology that has not been tested on a large scale, is frightening.
With increasing openness by governments and financial regulators, there will likely be some form of blockchain in the next couple of years, but how it will impact the banking user experience is unknown and brimming with potential.
Ph.D - Chief Experience Officer
Dan firmly believes that technology must be created with the user in mind. Never shy to critique a bad design, Dan uses the Akendi blog to shine a spotlight on usability mistakes…and their solutions. Leveraging his background in engineering, computer science, psychology, and anthropology, Dan offers a unique perspective on the latest UX trends and techniques.