GENEVA — A decade after its invention, the blockchain technology that powers Bitcoin and other cryptocurrencies is inspiring the launch of new international organizations and potential new uses as it heads along a path towards standardization.
Blockchain is often spoken about in superlatives, and it has the potential to transform not only banking, cryptocurrencies and supply chains but also everything from agriculture, health care and humanitarian aid to voting, business and property records. Like every other technology, however, its relative value and merits depend on the people who make use of it.
That was the point made at a United Nations-hosted blockchain summit in June by Rostin Behnam, a lawyer who serves on the presidentially appointed U.S. Commodity Futures Trading Commission. He cited a new blockchain partnership announced in March between the U.N. Development Program, Office of the U.N. High Commissioner for Refugees and World Economic Forum, or WEF.
“We are literally discussing a new world. Just as the founders of the United Nations spoke with optimism in 1948, so we may be hopeful about the future. Anything is possible,” Behnam said.
“If we are not thoughtful, if we do not remain ever diligent to the movements within the transformation, we may unleash corruption, criminality, and division on a greater scale,” he said in a statement. “Blockchain could become a source for repression and totalitarianism. The work before us is daunting and difficult. But, the rewards could be amazing and game changing. Our cooperation could heal the divisions that torment our world as we confront tragedy throughout our torn planet.”
The United Nations is not the only international organization getting on the blockchain bandwagon. The New York-based World Blockchain Organization, a U.S.-registered nonprofit, was created in 2017 “to guide and promote comprehensive adoption of block chain technology across industries.” It also is a U.N.-registered, non-governmental organization, with a New York office set up this year.
The U.S.- and Swiss-based Global Blockchain Business Council, with members from more than 30 countries, was conceived at Necker Island, owned by British billionaire and Virgin Group founder Richard Branson, and launched at WEF’s 2017 meeting in Davos, Switzerland.
The International Blockchain Federation was founded by two business people in the Netherlands. The International Blockchain Real Estate Association was founded by a California-based entrepreneur. The international nonprofit Government Blockchain Association is based in the Washington, D.C. area, while the International Blockchain Association is based in London and California.
Still another organization, the International Decentralized Association of Cryptocurrency and Blockchain, held a world summit at Moscow in May. The first international trade fair at Monaco devoted to blockchain and its applications also was organized in May.
A shared database
Blockchain technology, a database or chain of digital blocks with records of transactions shared across a network of computers called “nodes,” adds safety and security to transactions. The digital platform is what underpins the rise of Bitcoin, Ethereum and other cryptocurrencies.
It was invented in 2008 by a fabled billionaire known publicly as Satoshi Nakamoto, but whose true identity remains unknown. His white paper announced the invention and described Bitcoin as a peer-to-peer electronic cash system. Some also see it helping world peace.
At a dinner in 1957, Behnam recalled, then-U.N. Secretary-General Dag Hammarskjöld said “the work for peace is basically a work for the most elementary of human rights: the right of everyone to security and freedom from fear.” The idea is that a new and rising technology could speed those efforts.
“Blockchain is more than technology: it is an advance that reaches out into every aspect of life,” Behnam said. “We could use Blockchain to address the most basic, the most primal problems on our planet: corruption, income distribution, poverty, food, and health care. And, the fear billions of people experience everyday as they try to survive.”
The @UN conversation on #BlockchainForImpact begins. “Better access to data is enabling better fiscal policies that are more effective in helping us to achieve our sustainable development goals.” pic.twitter.com/6woenSKULM
— Matthew Unger (@ungermatt) June 4, 2018
Once a record is added to a chain, it is difficult to change. The technology makes it hard for hackers to tamper with a record because they would need to change every block linked to it without being detected.
Not everyone is sold on blockchain technology, however, and some technology alternatives are emerging.
In May, the U.N. Office for Project Services, or UNOPS, signed an agreement with Berlin-based IOTA, which is another cryptocurrency but without a blockchain. It more than doubled in value, to over US$10 billion, in a matter of weeks last year. IOTA is a fledgling technology that enables data to be stored in a tamper-proof distributed ledger, then lets customers buy that data without paying a fee.
In contrast, bitcoin and other blockchain systems use a distributed ledger of “miners” to verify transactions. A network constantly checks to ensure all copies of a database are identical. The records the network accepts are added to the block, each bearing a unique code, called a hash, and the hash of a previous block in the chain.
The block is added to the blockchain, and hash codes, a type of encryption, connect the blocks in a specific order. IOTA uses a web of two randomly selected transactions, each referring to two previous transactions, in what it calls a “Tangle architecture.”
The two organizations said in a statement they partnered to explore how IOTA’s technology, still in development and testing, can help UNOPS more efficiently manage and track U.N. documents, supply chains and transactional payments in real-time. IOTA’s “open-source, permission-less innovation approach” facilitates cooperative problem-solving, said David Sønstebø, co-founder of the non-profit IOTA Foundation.
Yoshiyuki Yamamoto, a UNOPS special advisor on blockchain technology, said his organization and the foundation “share a vision where machines, devices, sensors and people connect and communicate to each other — it’s the world of ‘Industry 4.0.’ Harnessing technology that allows for these processes to work simultaneously, without the need for intermediaries, will help expedite our mission as an organization.”
Some experts say more security is needed to prevent hacks to the cryptocurrency exchanges that trade bitcoin and other virtual currencies but do not use the same technology. Some major hacks to Japan’s Coincheck and Mt. Gox crypto exchanges provide recent examples. Japan allows Bitcoin to be used legally for payments.
Along with the speculation over Bitcoin, digital currency hubs are becoming established. Switzerland’s affluent and industry-friendly region of Zug, near Zurich, piloted a project last year for users of government services to pay in bitcoin. As home to the Ethereum Foundation, Breadwallet and other startups, Zug has been bidding to become a Swiss “Crypto Valley” for the development of cryptocurrencies and blockchain.
Potential uses and standards
Apart from business and finance, blockchain has other uses. The shared ledger technology can protect data from fraud and instantly update those who need to know about it. Potential uses range from food safety to medical records to voting. Many banks are exploring its uses, but most have refrained from dealing in hard-to-trace transactions using cryptocurrencies due to money laundering concerns.
The International Organization for Standardization, which is based in Geneva and has members from 161 countries, works to create common ways for measuring and building technology around the world. It launched a process of setting international standards for blockchain technology in 2017.
At an inaugural meeting in Sydney, ISO’s delegates from over 30 nations created five groups on reference architecture; taxonomy and ontology; use cases; security and privacy; and identity and smart contracts.
“Blockchain technologies are a means of achieving trust and security when making exchanges, without the need for oversight by a trusted third party, and can be effective building blocks for other initiatives like anti-corruption and fraud prevention,” said Craig Dunn, head of an ISO technical committee, ISO reported. “Future standardization in this area can take the development of these technologies to the next step.”