During the early days of the Internet some forward looking visionaries foresaw the dominant force the internet would become. In a 1999 interview with a somewhat dismissive Jeremy Paxman, broadcast on UK tv, David Bowie asserted that the internet was “was an alien life form” that was set to “crush our ideas of what mediums are all about” For most people at that time whilst the internet was a convenient service portal when what you wanted was available online it was, by and large, a curiosity sideshow to everyday life.
Nearly a quarter of a century later we see the internet as an essential resource without which modern life is almost un-navigable. In the ‘old days’ we needed a deeper level of knowledge and understanding to even be able to research information/resources/services… We needed to not only know what we were looking for but pretty much have a good idea of where/how to look for it. Today, through the plethora of online search engines and their ever more sophisticated algorithms, we can at times rely on the internet to understand what we are looking for and for it to instantly collect, collate, and deliver numerous options of response to our search device.
To understand how pivotal the internet has grown to become we can look at just one aspect - global online commerce (E-Commerce). According to the UNCTAD (UN Trade and Development Body) the value of E-Commerce in 2018 was an estimated US$25.6 trillion – a colossal figure representing over 30% of total global GDP. To understand just how extraordinary this figure is we have to consider that this is the value of current online commerce based in what is at times an internet reminiscent of the old wild west. Whilst trading partners can establish relationships with trusted partners, for those seeking new business opportunities the dangers are immense. Online scammers use increasingly sophisticated ploys to achieve their aims. Just this week we have witnessed the result of fraudsters selling fake UEFA Champions League cup final tickets, and the chaos and disappointment that resulted. This all seeks to undermine the confidence needed for online commerce to continue to grow.
For the continuing development of E-commerce the world needs an internet where transparency, security, and verification are not only implicit but are all guaranteed. Blockchain technology will deliver all of this and more.
However, that said, for all the positives that Blockchain will bring to online commerce it will mean little if we fail to deal with the problem of transactional latency. For many years in our daily lives we have had the ability to enact real time property/value transfers. With the swish of a card we can buy a ticket, pay for our shopping, or settle a restaurant bill, however, should we wish to settle up today using a blockchain based system of payment we will routinely have to wait for an hour or more as the necessary confirmations are achieved and the transaction is locked in. This latency delay may be a little easier to accept when transacting online but it is a significant drag anchor limiting the potential for online trade to grow to its full potential.
Today most blockchains systems operate on protocols based on Proof of Work (Bitcoin, Ethereum). These blockchains are open, permissionless systems which means that transactional verification is timely and expensive. However, by shifting to a protocol based either on a Proof of Stake for open permissionless systems, or by using an in-house verification pool for closed permissioned systems would eliminate transactional latency. With sufficient IT infrastructure in place this would result in real time transactions. When this is achieved the world of E-commerce will be able to expand at a much faster rate in the safe, secure, and transparent space blockchain will provide.