Innovation

Blockchain Today: A Young Technology That Could Change Everything

27 December, 2018
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“Blockchain will profoundly impact the intersection of business and people by unleashing a new era of efficiency.”

The meteoric rise of cryptocurrencies such as Bitcoin thrust blockchain to the forefront of the daily news in late 2017, and its subsequent epic fall cast a new pall over a technology that was just beginning to overcome its early reputation as a perfect vehicle for swindlers, drug dealers and traffickers. While awareness of blockchain has increased markedly over the last few years, most organizations and people are still unable to grasp what this new technology will really mean to their businesses and lives.

Today, blockchain technology is about where the Internet was in the early 1990s. It’s an exciting and important technology, but one that is still in its fledgling stage. The truth is, similar to how people were trying to figure out the Internet in the early 1990s, no one really knows exactly how it will revolutionize economies and cultures. But we do know—much like the Internet in the early 1990s—that blockchain is going to be a game changer.

Blockchain: The Efficiency Revolution

 

Blockchain will profoundly impact the intersection of business and individuals by unleashing a new era of connectivity and efficiency. Because blockchain is secure, streamlined and can be both transparent and anonymous simultaneously, the technology will revolutionize operational processes by eliminating costly intermediaries. Suppose, for example, a VP of engineering in Beijing, China is being relocated—along with his wife and two daughters—to a new long-term position based in Perth, Australia. Historically, just finding and securing housing across borders has involved an overwhelming amount of paperwork, people and processes. Local real estate protocols are fraught with legacy registry systems, sprawling bureaucratic channels and intermediaries including brokers, title agents, title attorneys, notaries, escrow agents, land registry officials and bankers in both countries. These processes are bloated, expensive and susceptible to fraud. The streamlined transparency and security provided by blockchain technology will eradicate many of those wasteful and vulnerable practices.

Blockchain enhances efficiency not by collecting data, but by securely connecting data across a decentralized network of participating computers called nodes. Nodes store the blockchain’s data, follow the rules of the blockchain’s specific protocols and communicate with other nodes, which can be located anywhere. Each follows the same rules and maintains an identical copy of the network’s immutable data set. New information is added only when the nodes agree, and the change is distributed simultaneously to each node. To alter it, would-be hackers would not have to simply hack one node, but all (or most) of the individually protected nodes distributed throughout the world. By ensuring the data is simultaneously tied together and yet independent, anonymous and secure, blockchain ensures the integrity of the data network. This allows all participating parties to know that the shared data is valid, and no intermediaries are needed to confirm that a home buyer has enough money, or if the house has water damage, or if the title deed has been signed, notarized and delivered.

Blockchain In Growth Economies

 

Blockchain is gaining traction and disrupting growth economies at an increasing rate. Not only is it being touted as a possible solution to endemic and institutionalized corruption, but it is also gaining acceptance in important industries, especially financial services, healthcare and government.

Financial Services

Blockchain first gained traction in growth economies as the technology behind Bitcoin, the first digital currency. However, experts soon recognized that blockchain’s transparency and security features could significantly change the financial services industry—much as the Internet changed the media and entertainment industries 20 years ago. Banking institutions across the globe are adopting blockchain and advanced distributed ledger technologies for a wide range of functions, including trade settlements, payment processing and cross-border transactions. In fact, India recently launched India Trade Connect, a trade finance strategy that uses blockchain platforms to empower an unprecedented collaboration between IT juggernaut InfoSys and seven of the nation’s biggest banks.1 Modern blockchain technologies allow these financial entities to streamline trade finance systems and oversee international supply chain transactions at every step of the operation.

Healthcare

The global healthcare industry manages vast amounts of clinical and administrative data, from the pharmaceutical supply chain to patient medical records to claims management. The introduction of smart medical devices including everything from personal fitness trackers to connected surgical suites, is introducing an entirely new ecosystem of information to mine. The pool of data collected from healthcare-related devices is growing exponentially. Accurate, accessible data is critical to improving clinical outcomes and reducing waste, and blockchain’s immutability and ability to connect currently siloed information and serve as the “single source of truth” are key enablers. In South Korea, the healthcare industry has been very proactive in implementing blockchain to centralize patient information and marginalize the prevalence of counterfeit drugs through transparent supply chain management. Blockchain records of patients’ medical histories provide Korean hospitals and caregivers with a single, accurate record of a patient’s treatments, procedures and pharmaceutical needs.2

Government

Governments in growth economies around the world are using blockchains for everything from property records and voting registries to driver’s licenses and financial histories. Its ability to provide a chronological and immutable digital record makes it ideal for transactions that impact populations and economies—from single individuals to entire industries. Blockchain increasingly allows governments in Africa to better organize records and services through improved identity management systems—which legitimizes processes key to successful societies, from collecting taxes to counting votes.3 For many growing nations, blockchain may soon offer the potential to leapfrog from antiquated and bloated operational processes, fraught with malfeasance, to streamlined, incorruptible systems that attract international investment and encourage entrepreneurship. Blockchain is gaining rapid acceptance with businesses and policymakers in part because the continent doesn’t have deeply entrenched incumbents or legacy systems that might resist this new technology in an effort to maintain their influence.

Blockchain: The Unknowns

 

When the Internet gained acceptance in the early 1990s we knew that the ways human beings communicated and interacted with information was about to experience extraordinary changes. We didn’t know, however, that it would lead to the rise of other revolutionary forces such as Google, peer-to-peer file sharing platforms like Napster, ubiquitous smartphone devices such as the iPhone, or the invention of social media channels like Twitter, Instagram and Facebook. All cultural disruptors that continue to shape the world in significant ways, from unhealthy personal digital addictions to the influence of government-sponsored disinformation campaigns.

Blockchain promises similar benefits and risks. The impact it will have on growth economies, international commerce and human culture cannot be fully assessed or appreciated at this point. But its potential is real and pervasive in every region of the world. Businesses, CEOs and governments should adopt strategies that don’t necessarily mandate a call to action, but a call to awareness—an earnest effort to gain a sophisticated understanding of the technology and how it can create positive changes, or negative consequences, in a world that is still figuring out how the Internet of the 1990s has transformed the human condition.

To learn more about blockchain read Mercer Digital’s Blockchain 101 Overview.

1Infosys Finacle Pioneers Blockchain-based Trade Network in India in Consortium with Seven Leading Banks: Infosys Limited - https://www.infosys.com/newsroom/press-releases/Pages/pioneers-blockchain-based-trade-network.aspx
2Will Blockchain Transform Healthcare in South Korea: https://techwireasia.com/2018/06/will-blockchain-transform
3Why Africa’s Emerging Blockchain Movement Is Growing So: https://media.consensys.net/blockchain-month-in-africa-920945771100

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Jackson Kam | 11 Jul 2019

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Ardavan Mobasheri, managing director and chief investment officer at ACIMA Private Wealth, believes the global leadership baton will have been completely passed to the faster-growing economies by 2030. He states, "By the end of the third decade of the century, the transition will likely be complete, with the anchors of global economic growth cast across the Pacific and the Southern Hemisphere." But as the world adjusts to the growing strength of emerging market economies, it must also adapt to those economies' inevitable speed bumps. "Speed Bumps" Are Starting to Form Globally   Emerging market assets are now retreating in the face of increasing headwinds across their geographies, including production slowdown, rising debt, higher inflation rates and slides in currencies.1 "The contagion in emerging markets happens through different channels, and it tends to be greater in periods of monetary tightening in developed markets," Pablo Goldberg, a senior fixed-income strategist with BlackRock, tells CNBC.2 "Liquidity is an issue. Investors will sell what they can sell." Desmond Lachman, a resident fellow at the American Enterprise Institute and former deputy director for the International Monetary Fund's Policy Development and Review Department, writes that U.S. economists and policymakers are ignoring risks posed by emerging economies at their own peril. "They fail to see that years of massive Fed balance sheet expansion and zero interest rates created the easiest of borrowing conditions for the emerging markets," Lachman writes. "By so doing, they removed economic policy discipline from those economies and allowed large economic imbalances in those economies to develop, especially in their public finances." Now that more capital is flowing back into U.S. assets deemed safer than emerging market assets, the acute economic vulnerabilities built up within the emerging market economies during the years of "easy" money are being revealed. These vulnerabilities, if left unchecked, will likely continue to grow and spread globally, extending their implications even further into the years to come. Business Leaders Can Adapt — Here's How   To best prepare for an uncertain financial future and avoid those vast repercussions, you'll want to first take notes on the aftermath of the last financial crisis — it can teach some strong lessons on how the global economy and financial system work. For example, according to the Mercer report, "10 Years After the Global Financial Crisis: 10 Lessons to Learn," one of the most important lessons from 2009 shows that U.S. policymakers' policies, record low policy interest rates, vast liquidity injected into the banking system and quantitative easing produced unexpected outcomes across the globe. While the monetary policies haven't been inflationary in terms of consumer prices, they have been inflationary in terms of asset prices. Now, policy rates are increasing in some economies, but the full consequences of the last crisis' aftermath on all of the world's economies are still unknown, even today. Keeping that in mind, you can take these three steps as a business leader to prepare for the next crisis: 1.  Don't abandon diversification, widely known as "the only free lunch in investment." 2.  Be dynamic, and be prepared to rotate out of assets currently at close-to-record highs if they become unfavorable once investors realize their valuations may not be based on strong fundamentals, such as underlying growth in profits. 3.  Don't abandon active management, as conditions will inevitably change. Taking these three simple steps will allow you to stay nimble and flexible enough to adapt to any situation — even a financial crisis. As markets endure various metamorphoses, remember these lessons and keep these tips in mind to ready your organization for any crises to come. Sources: 1. Teso, Yumi and Oyamada, Aline, "Emerging Markets Retreat Amid Global Growth Concerns: EM Review," Bloomberg, February 15, 2019, https://www.bloomberg.com/news/articles/2019-02-15/emerging-market-rally-abate-as-trade-concern-returns-em-review./ 2. Osterland, Andrew, "Emerging markets, despite strengths, still get no respect," CNBC, October 1, 2018, https://www.cnbc.com/2018/10/01/emerging-markets-despite-strengths-still-get-no-respect.html. 3. Lachman, Desmond, "We ignore risks posed by emerging economies at our own peril," American Enterprise Institute, September 17, 2018, http://www.aei.org/publication/we-ignore-risks-posed-by-emerging-economies-at-our-own-peril/.

Eduardo Marchiori | 27 Jun 2019

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Many countries and governments have recognized the need to provide their citizens with the skills and knowledge needed to compete in the age of automation — and that starts with workers having access to these technologies to edify their value and marketability in a competitive world. However, in countries like Argentina, Brazil and the U.S., people feel strongly that their fates are up to themselves instead of their governments and that they are individually responsible for handling the sweeping changes of digital transformation.3 For some, this means migrating to nations and economies that offer better prospects than their current circumstances. A World of Evolving Needs   As witnessed throughout history, migrant workers are drawn to regions where suitable jobs are available. In a world defined by automation and computer technologies, a new era of needs has emerged. 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However, the most controversial aspect of Abenomics is the intention to open Japan up to migrant workers to alleviate internal workforce deficiencies that require uniquely human capacities — a move which many Japanese citizens consider to be a threat to their cultural identity.5 But without younger workers to stabilize the economy, Japan might not have a choice. The Fourth Industrial Revolution is changing the game, and many countries will need migrant workers to fill the gaps between the evolving roles of man and machine. For centuries, migrants have worked hard to fulfill their personal needs — which, in turn, also serves the needs of the employing countries that require their labor. In this modern economic landscape, automation and tech may force change upon job functions, but the need for human capital endures. Sources: 1. "International Migration Report," United Nations, 2017, https://www.un.org/en/development/desa/population/migration/publications/migrationreport/docs/MigrationReport2017_Highlights.pdf。/ 2."India Digital Transformation Market to Reach $710 Billion by 2024: P&S Intelligence", Prescient & Strategic Intelligence, 5 de março de 2019. https://www.globenewswire.com/news-release/2019/03/05/1747720/0/en/India-Digital-Transformation-Market-to-Reach-710-Billion-by-2024-P-S-Intelligence.html。 3. Wike, Richard and Stokes, Bruce, "In Advanced and Emerging Economies Alike, Worries About Job Automation," Pew Research Center, September 13, 2018, https://www.pewglobal.org/2018/09/13/in-advanced-and-emerging-economies-alike-worries-about-job-automation/。 4. Kotecki, Peter, "10 Countries at Risk of Becoming Demographic Time Bombs," Business Insider, August 8, 2018, https://www.businessinsider.com/10-countries-at-risk-of-becoming-demographic-time-bombs-2018-8。 5. Yoshida, Reiji, "Success of 'Abenomics' hinges on immigration policy," https://www.japantimes.co.jp/news/2014/05/18/national/success-abenomics-hinges-immigration-policy/#.XJr1GK2ZOgR。

Vineet Malhotra | 17 Apr 2019

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With individual rights established as the legal default, consumers will hold the power in this relationship and can monetize their data by renting access to various aspects of their blockchain profiles — from their sleeping habits to exercise routines. As deeper access is granted and more data sources are connected, behaviors can be predicted with greater accuracy, increasing the value of an individual's profile. In effect, individuals will be able to self-identify as willing marketing targets who offer their comprehensive descriptive profiles for sale in an emerging digital marketplace for personal data — a development that will radically alter the business of advertising, data research and analytics. A World of 8.5 Billion "Personhoods"   In 2030, the global population is expected to reach 8.5 billion. By that time, blockchains could consistently, reliably and securely organize data around the individuals who comprise the world's communities and nations. This makes person-centric societies technically possible, where citizens' actions and behaviors are digitally recorded in their "personhood" — an immutable record that serves as a single source of truth to their experiences and sensibilities. People, in essence, will regularly create real-time data that is chronologically added to their collective profile — which includes health records, educational backgrounds, professional credentials, voter registrations, driver's licenses, criminal histories, financial status and any other notable aspect of being a person. "Personhood" could become the universally accepted record to which all identity-related information can be tied. All the processes once needed to validate identity will be replaced by an individual's comprehensive blockchain profile. The commoditization of personal data will profoundly impact how people relate to businesses and each other. Will being held accountable to one's own "personhood" — and knowing that the details of our lives will forever be recorded in our blockchain profile — change how we behave? Will attempting to increase the value of one's "personhood" become an extension of trying to improve their own lives? Or vice versa? The rise of "personhood" could change our collective understanding of ownership in ways the human race hasn't witnessed since the concept of personal property rights first emerged. The Future Challenges to a Blockchain World   There are always casualties to sweeping technological advancements. With the proliferation of blockchain technology and the rising value of individuals' data, societies risk becoming even more polarized along financial and class lines. Individuals with more purchasing power inherently possess data that is more valuable to businesses that sell products and services or governmental institutions that could benefit from their financial support or influence. Those without money or access to modern technologies will face profound disadvantages unless governments — especially those in growth economies — implement regulations that protect vulnerable citizens from being left behind. Growth economies must also find ways to integrate intermediaries who will fight the prospect of obsolescence as blockchain technologies become more popular. Though the future is difficult to predict, and change always creates challenges, history teaches us that where value is created, technology eventually wins. The future of blockchain presents the human race with the opportunity to understand each other, and ourselves, in unprecedented ways. By providing new insights into human behaviors, relationships and business interactions, we can learn from each other and improve conditions for everyone. Perhaps blockchain data will even convincingly demonstrate to humanity how similar we all are. In the future, the most important questions people can ask themselves is not, "Who am I as a person?" but, "Who are we as a society?" The answer to that question may create the type of civilization only dreamed of by musicians, poets and philosophers. Interested in learning more about blockchain? Check out: Mercer Digital's Blockchain 101 Overview. 1Palmer, Danny. "What Is GDPR? Everything You Need to Know About the New General Data Protection Regulations." ZDNet, https://www.zdnet.com/article/gdpr-an-executive-guide-to-what-you-need-to-know/. 2"The HIPAA Privacy Rule." Office for Civil Rights, https://www.hhs.gov/hipaa/for-professionals/privacy/index.html.  

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Is the next global financial crisis just around the corner? If so, will it be markedly different from the last crisis? And is there a possibility the contagion will come from today's emerging markets, such as China, Turkey or Argentina? While the future is uncertain and uncontrollable, you can take calculated steps as a business leader to prepare now for what may come later. Emerging Market Economies Are on the Rise   The strength of emerging market economies was one of several top concerns for leaders in 2018, according to the Mercer Global Talent Trends study, and it continues to be a concern today. While Asia, Latin America and Africa steadily replace the North-Atlantic-centric economies as the world's engines of growth, the global economy is experiencing increasing impacts due to their growing strength. 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Business Leaders Can Adapt — Here's How   To best prepare for an uncertain financial future and avoid those vast repercussions, you'll want to first take notes on the aftermath of the last financial crisis — it can teach some strong lessons on how the global economy and financial system work. For example, according to the Mercer report, "10 Years After the Global Financial Crisis: 10 Lessons to Learn," one of the most important lessons from 2009 shows that U.S. policymakers' policies, record low policy interest rates, vast liquidity injected into the banking system and quantitative easing produced unexpected outcomes across the globe. While the monetary policies haven't been inflationary in terms of consumer prices, they have been inflationary in terms of asset prices. Now, policy rates are increasing in some economies, but the full consequences of the last crisis' aftermath on all of the world's economies are still unknown, even today. 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Teso, Yumi and Oyamada, Aline, "Emerging Markets Retreat Amid Global Growth Concerns: EM Review," Bloomberg, February 15, 2019, https://www.bloomberg.com/news/articles/2019-02-15/emerging-market-rally-abate-as-trade-concern-returns-em-review./ 2. Osterland, Andrew, "Emerging markets, despite strengths, still get no respect," CNBC, October 1, 2018, https://www.cnbc.com/2018/10/01/emerging-markets-despite-strengths-still-get-no-respect.html. 3. Lachman, Desmond, "We ignore risks posed by emerging economies at our own peril," American Enterprise Institute, September 17, 2018, http://www.aei.org/publication/we-ignore-risks-posed-by-emerging-economies-at-our-own-peril/.

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