What’s the value of blockchain to consumers?

value-blockchain-consumerA distributed ledger that relies on no central authority and is tamper-proof. That definition of blockchain, the technology that underlies Bitcoin, will appeal to anyone who has had a taste of the sorry state of centralized models of business and networking.

Wall Street is abuzz about blockchains because blockchains can make financial transactions faster and cheaper. Cybersecurity experts believe blockchain can prevent cyber attacks and maintain the integrity of data and online identities. Blockchains can bring transparency to supply chains and fight voter fraud in elections. I can go on about the applications of blockchain in different industries.

We know very well how to pitch the industrial and business value of blockchain. But when it comes to explaining blockchain to consumers, we’re saying all the wrong things.

Many try to use the same infrastructural jargon to describe the importance of blockchain to the average user.

“Since your data is stored in a distributed ledger of transaction in a network that has no single point of failure, on a block of data that is cryptographically linked to other blocks on the ledger, it’ll be more secure than storing it on your normal cloud-based storage server.”

I won’t give an exact number, but I don’t think that upon hearing that phrase, a large percentage of DropBox users will have a moment of epiphany and give up their membership for a blockchain alternative such as Storj.

Others try to explain the value of blockchain to consumers by equating it to Bitcoin—another failed attempt. While the value of Bitcoin has been steadily soaring in the past months, it is far from being the best general application that has been built on top of blockchain. Bitcoin doesn’t have the versatility, stability and acceptability of fiat currency. It does appeal to a niche audience, but as Jeffrey Dorfman explains, rather than being a true currency, it’s a commodity, an asset that is worth collecting like gold, and making profits over its price fluctuations.

So what is the true value of blockchain to consumers? I’ll get to that in a bit.

TechCrunch’s Jon Evans recently wrote an article in which he described blockchain as the next Linux, not the new Internet, which is mostly true. If you think of blockchain as a disruptive technology which like Uber will revamp industries in a few years, and every user will be talking about it, you’re wrong. If blockchain is, as Evans says, a clunky and unfriendly Linux-like beast that requires a lot of expertise, then yes, it won’t appeal to consumers.

But I think an even more precise definition is the analogy that Marco Iansiti and Karim Lakhani draw between blockchain and TCP/IP.  Rather than a disruption, it’s a foundation that will take one or several decades to establish, and possibly redefine the entire infrastructure that runs Internet.

While everyone is using the TCP/IP infrastructure on a daily basis, a very small percentage understand the general architecture or mechanisms that govern it. That’s because the applications that are built on top of it use it transparently, abstracting the complexities for the convenience of the end user. That is how blockchain should be viewed and implemented.

Transparent, tamper-proof, hack-resilient, auditable—those are all characteristics that current centralized systems lack. But for the most part, end users are oblivious to those weaknesses mostly because of the same abstraction that is sparing them the details of TCP/IP’s inner workings. They trust their DNS servers to remain online forever, and when they go down as a result of a botnet attack, they grumble about it and forget it the next day when it starts working again. They believe their online accounts won’t be tampered with or become the subject of a wholesale hack.

So what is the tangible value of blockchain to consumers? I believe it’s ownership of data.

We are generating a large value of data, and the value of that data is increasing. In many settings, digital assets are becoming just as precious as physical ones.

But we have no ownership of them. We have no control over our digital footprints in social media, the tons of information that we’ve generated, the connections and friends we’ve gathered in our Facebook and Twitter accounts over the years. We buy virtual in-game assets, but those assets are tied to the servers of those games. Our digital certificates are only as good as the authority that stores them.

If a server goes down or if the service shuts down, we will no longer have access to that data. If our account is closed or blocked for any reason, we are forced to start over and recreate all those connections we had previously established.

Meanwhile, service providers are using our data for their own ends, marketing them, monetizing them, often without our consent and sometimes with us even knowing about it. We are more and more under the control of big corporations that control most of the Internet.

This is something that blockchain can change. Users are becoming more aware of the importance of owning their data. Blockchain makes sure that you have full ownership of your data independent of code that runs the application or the companies, servers, service providers or whoever else that owns the code. You can choose which application will have access to your data and how much of it. You can choose to sell your data or to give free access to it. If you choose to abandon one social media service for another one, you’ll carry all your data with you. You’ll be setting the terms, not pressing I agree without having any choice.

This will create an environment where we’ll have more choice to choose applications. And those applications will be able to interoperate because their data runs on independent storage (darn, I’m slipping into the technical nonsense again).

This doesn’t mean users will have to go and start learning blockchains. Rather, it means that they’ll be able to choose to use applications that run on blockchain technology if they want true ownership of their data (which they should, by the way).

We still have a long way to go before we have a fully functional stack of services that run on the blockchain, independently of their data. I’m personally still skeptical about whether such a thing will happen at all because I think the obstacles that blockchain faces are more than technical (think political and economical). But I think that the value of ownership is something that will appeal to users, especially as we move toward a data-driven world. And that will give blockchain a leg up in the race against the norm.

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