By now, you've probably heard that “blockchain will change the world.” Notwithstanding massive recent hype, it almost certainly will. And its impact will be even larger right here in New Jersey, because we're at the heart of many of the industries it's likely to transform.
The web is now packed with introductions to blockchain, but here’s the minimum you need to know. It offers a powerful new way to track value, transfer ownership, and confirm transactions securely, without a centralized authority to supervise, act as a bottleneck, or charge high fees for doing so.
Blockchains are distributed databases where transaction records, called blocks, are replicated almost immediately across computers worldwide, across a decentralized peer-to-peer network. Each block is timestamped and linked in a chain, from earliest to latest. New transactions add to the chain, but strong cryptography and complex mathematical techniques prevent older events from being altered or counterfeited without detection. Every participant can access full data for checking transactions on their own. Transactions take place between blockchain identifiers: users can remain private or use their identifiers to prove who they are. Finally, as Harvard Business Review notes, since it’s all digital from start to finish, transactions can be triggered through algorithms and rules -- for example, “smart contracts” that recognize delivery and release payment.
As you probably know, the blockchain concept was first envisioned as a way to secure bitcoin transactions, theoretically enabling users to be certain about who owns a bitcoin, without involving governments or banks. But, as with other potentially earth-shaking technologies, people have quickly discovered far wider applications.
That starts, of course, with the financial industry -- obviously a colossal presence throughout New Jersey and its surrounding region. Which explains the massive explosion of “FinTech” startups that have emerged to exploit the blockchain opportunity--as well as fast-moving experimentation by global financial institutions aiming to use blockchain to improve their businesses (and protect their market positions).
At the New Jersey Tech Council, we know just how much excitement surrounds blockchain in the FinTech space. On September 27th, the region’s top players will participate in the Council’s 6th Annual FinTech Conference. Our keynoter, Ron Quaranta, leads the Wall Street Blockchain Alliance, and our various panels will discuss the potential effects of blockchain and the latest trends in the space.
Excitement about blockchain is also growing throughout the life sciences industries that are central to New Jersey’s economy. A June 2017 Pistoia Alliance survey of senior pharma and life sciences executives found that 83% expect blockchain to be adopted in under five years, and nearly one-fourth are already experimenting with it.
Their #1 potential application is a matter of life and death: ensuring drug safety throughout the supply chain. The Drug Supply Chain Security Act (DSCSA) will require medicine to be fully traceable, protecting against counterfeits, dangerous, illegal, or stolen drugs, and making recalls faster and more complete. Blockchain may be an important part of the solution.
So, too, 60% of life sciences executives believe blockchain may enable more secure, patient-centered sharing of medical records and genomic information. As personalized medicine and ubiquitous DNA testing arrive, this is a problem that desperately needs solving.
Blockchain’s potential healthcare applications point to even broader applications wherever provenance, safety, and contractual performance must be guaranteed. As Michael Casey and Pindar Wong recently wrote in HBR, companies with complex global supply chains constantly struggle to ensure transparency and accountability. With blockchain, digital tokens could track intermediate goods through production, shipping, and delivery -- ensuring provenance, reducing risk, allowing for more flexible credit terms, and permitting more efficient use of assets.
Here in New Jersey, of course, we’re at the cutting edge of supply chains -- and not just at Port Newark, Newark Airport, and our massive logistics facilities. We’re home to key players and investors in supply chain technology, too. That’s why Council regularly hosts important regional supply chain technology events -- such as our forthcoming December 7th Data Summit in Newark which will feature a keynote by UPS’ Kim Felix.
Blockchain won’t mature overnight. Years of work will be needed to transform its promise into reality. But I’m happy to tell you: much of that work will be done in New Jersey.