“QR codes are a fad,” read the headline of an article published in Fall 2012. A few years later, the overhyped technology was included in a list of “Biggest Tech Fads of the Last Decade.” But then COVID happened, and now QR codes are widely used. The use cases were already there, but the need for social distance and everyone having internet-enabled smartphones combined to create the conditions for widespread use. Today, blockchain technology needs its own “Covid” moment.
PwC projected that in 2020, nearly every business would adopt blockchain 2025, boosting global GDP by US$1.76 trillion by 2030. Many analysts made similar predictions beginning around 2017. Yet today, blockchain products are not nearly as used as predicted. For a technology product to be widely used, it needs:
- people changing their behaviors,
- reasons for businesses to use it, and
- appropriate tools to produce or consume it (aka, infrastructure).
As governments introduce digital identities and currencies, people will inevitably get used to blockchain products like digital wallets. Tackling climate change or automating business processes are reasons businesses use it. This article argues that one of the final pieces for PwC’s trillion-dollar prediction to materialize will be infrastructure products like Gora that connect blockchain smart contracts to real-world data.
What are smart contracts?
Blockchains are immutable, add-only databases where many independent parties maintain an identical copy of the database.
Each record in the database can include data like a digital asset, such as Bitcoin or a digital Euro, a credential like a driver’s license, or lines of code. The records containing code (smart contracts) are executed in response to an event.
For example, if a customer with a flight delay insurance smart contract asks to claim their payout, a smart contract would first check if the flight in question is delayed past the agreed threshold. If so, it would initiate a transaction to transfer the agreed payout amount to the customer. But since smart contracts don’t have access to real-world data, such as flight departure times, it need specialized software to provide this information. This specialized software is known as Oracles.
When someone wants to send a transaction or present their digital credentials, they must sign it with a ‘private key.’ A private key is like a hard-to-remember phrase to create a practically impossible-to-forge signature. This ensures that only the person accessing the private key could have interacted with the record.
Changing People’s Behaviors
For blockchain to be widely adopted, people should be comfortable managing their digital keys. Digital wallets make this easy by abstracting away the private key and providing mechanisms to recover lost keys. Many countries in Europe and worldwide have already begun rolling out digital identity products and digital currencies.
Once people are more knowledgeable about storing their own digital identities, owning their own data, such as their web browsing habits, will begin to make sense. Data ownership has great benefits, such as preserving privacy and increasing consumer bargaining power. Products like Gora will be necessary to get that data onto the blockchain.
Key Use Cases
Blockchains are currently well suited for financial and identity products, like transferring digital assets or issuing and verifying credentials. However, blockchains can help tackle some of the world’s biggest problems, such as climate change.
Around 50,000 businesses in the EU will need to begin reporting verifiable data on their emissions starting in 2024. To comply, businesses can use IoT devices and sensors to collect real-time emission data. They can use software like Gora to create verifiable records of this gathered information on a blockchain.
Blockchains can also give consumers more bargaining power and privacy. Europe and North America are expected to reach 84.5 million telematic insurance policies by year-end 2025. Telematic insurance is where insurance companies price policies based on a driver’s behavior, as measured by the sensors in their cars. The problem here is that it:
- provides an insurer with way too much information, such as where you go and when, and
- the data is kept with one insurer; you might have to build a driving profile again if you switch.
Only 25% of drivers are willing to use the technology if it would save them money. Software like Gora can take sensor data from vehicles, parse the needed information while keeping it private, and store only the insights on a blockchain (i.e., whether the driver is a good driver or not). This gives ownership of a user’s driving history to the driver, which protects their privacy and allows them to use the data with any provider. This could make the number of telematic insurance policies much higher than 84.5 million.
There are several more examples of billion-dollar industries, such as crop monitoring or cold chain verification, that blockchain products could improve. The common theme between all these use cases is the need for sophisticated software like Gora to connect real-world sensors to smart contracts.
Are smart contracts necessary?
Businesses already have software doing much of the above, so, are blockchain and smart contracts necessary? A regular database is enough if the data is for internal use, like how much of something is in stock. Blockchain is also unnecessary if data can only be verified through traditional audits, such as public financial statements. Blockchain products can be a perfect tool when organizations need greater trust in the accuracy of the data they share externally from a verifiable source.
Policymakers struggle to create policies that protect consumers and the planet, without affecting companies’ profitability. 64% of German CEOs did not believe governments’ regulations have “increased consumer trust while maintaining business competitiveness.”
VW has sophisticated reporting hardware and software in their vehicles, yet they still lie about how much nitrous oxide their vehicles emit. If sensors reported the emissions to the blockchain while the vehicles were in use, VW would have likely avoided the deception altogether.
Policies around data protection in the EU have media companies there facing an existential dilemma:
- make users pay for their service or
- show non-targeted ads.
The former makes most users stop using the service, while the latter significantly reduces operating revenues. Many Companies, like Meta (formerly Facebook), are getting around this by offering consumers the option to either pay a monthly fee or accept personalized ads.
Accepting ads means the collection of a lot of personal information. But the European Center for Digital Rights says this is wrong and has lodged complaints against several media companies. But there can be another option – using products like Gora to anonymize a user’s data and give marketers only the topics they want to see ads about.
Infrastructure is falling short
Software that connects smart contracts to real-world data is expensive to build. It needs to be as secure as blockchains but handle much more data and computations than they can. This requires hiring people skilled in cryptography and distributed systems engineering and spending months, if not years, in development. Instead, businesses can purchase existing solutions that are more than ten times cheaper and faster than building their own.
However, businesses find the current products too specialized for their needs. The majority of products either only provide financial data (e.g., currency exchange rates) or need so much customizations that the business may as well develop their product. Gora focuses on enterprise needs by:
- exposing APIs for businesses to integrate their data sources with,
- providing an App Marketplace for businesses to find already-developed products and
- allowing for custom and private networks with controls on who can access data.
Blockchain products should integrate into a business’s current software systems rather than replace them. Gora provides a marketplace for developers with industry-specific knowledge to sell premade products, such as insurance or emissions monitoring apps that integrate with companies’ ERP systems. Finally, Gora allows enterprises to self-host private networks while accessing personalized, on-demand support.
Conclusion
Adopting any technology is like a triangle, with behavior, use cases, and infrastructure as the three connecting lines. In the QR code example, the use cases were there, but it was not until the infrastructure and people’s behavior changed that it became widely used.
With blockchain, the use cases are clear, and digital identity will likely be the use case that brings about behavioral changes (i.e., managing digital keys). Software that connects real-world data to blockchain, such as Gora, is one of the key pieces remaining for blockchain to become widely adopted by organizations.
This news is republished from another source.
