Blockchain and Bitcoin – A Disruptive Force?
The Internet has brought some of the most fundamental changes in business and society since the industrial revolution. Yet for numerous organizations, security remains an issue, specifically in regard to fraud. In the wake of the 2008 financial crisis and the destabilization of the Euro many looked for a decentralized currency and new banking systems that were not affiliated with the institutions wrapped up in dubious activities. One solution came in form of Bitcoins, a fiat currency that is based on the solving of mathematical puzzles.
More than Crypto Currency
Hyped up a few years go, with massive spikes from around USD 5 / Bitcoin to over USD 900 / Bitcoin and the drops back down to USD 200 / Bitcoin in just over a year, the currency is slowly stabilizing. Today a Bitcoin has a value of between USD 420 and USD 450. Not showing any signs of disappearing though, companies, like Swiss-based Xapo, have been founded to verify users and give them easy to use digital wallets so that they can easily perform transactions as well as purchase these coins, or often fractions of coins, using other legal tenders. Yet, as interesting as Bitcoin is, the underlying blockchain technology has far wider applications than just crypto currencies.
Applications for All Industries
Blockchain creates a distributed, public, and time-stamped record of information that is constantly validated to protect against fraudulent behavior and malicious cyber attacks. This technology can be used for more than just money, but also to issue special documents, store records, and validate other forms of information. At the recent CeBIT in Hannover, DigitalZurich2025 held a session on Blockchain discussing its disruptive potential as well as its role as a driver of efficiency. The discussion with representatives from EY, UBS, Xapo and Ethereum showed that we are just seeing the tip of the iceberg in regard to the potential of blockchain. It can bring greater transparency and less fraud in industries that go far beyond the financial services industry.
Consumer Protection & Corporate Governance
During the CeBit talk Mervyn Maistry from EY pointed out some areas where fraud is high. The food industry, for example, is notorious for fraud, be it scallops that aren’t scallops or his example of Mānuka honey, of which Great Britain consumes four-times more than is even produced. Clearly products are being manipulated. With blockchain certificates of authenticity it would be harder for products to be sold under one name, when they are in fact of a much lesser quality. Major brands have a clear interest as well in adopting blockchain certificates to help their dealers and customers know that they are getting the real deal.
When it comes to corporate governance, blockchain can help companies by creating special ledgers that are only good for certain products and services. When it comes to budgeting then, staff budgets can only be used for staffing costs and not transferred for new office equipment for instance or what is more likely, hoarded for future use. Applying blockchain can therefore help with budgets, their transparency and of course compliance. These are all key factors in corporate governance.
Potential Impact is Huge
Olga Feldmeier of Xapo made an analogy to the telecommunications industry when talking about Bitcoin. That is the majority of mobile phone users today never had a landline. The landline was indeed a precursor to the mobile phone, but owning a mobile phone is not predicated on having had a landline. The same will be true for crypto currencies and bank accounts. Billions of people today do not have a bank account and lack access to one, however, this does not mean that they cannot have a virtual wallet and start completing transactions with Bitcoins. That is the jump that companies like Xapo see people making. Of course the banks are not far behind and see the potential of blockchain for minimizing transaction fees and times, ensuring security of payment and validation of the people and entities partaking in transactions.
Because of its open and distributed nature, blockchain allows corporates like banks to quickly and easily engage with startups and other players in the blockchain ecosystem. UBS for instance was able to develop cryptobonds with Ethereum in just 4 weeks, and thanks to the nature of blockchain and its inherent stability they know that their product is secure.
Ethereum is a good example for thinking further what the use of blockchain can be. They are developing new ways of using it like smart contracts, smart cities and automated processes that are totally secure, fast and independent.
Thinking this way Mervyn Maistry might be right when he says that blockchain has the potential to change society as we know it.