Bitcoin is the most widely known and used cryptocurrency in the world. The current market The current market capitalization of just over $10 billion (USD) (Crypto-Currency Market Capitalizations. McKinsey Global Institute. Article (PDFKB) Bitcoin isn’t mainstream yet, and some skepticism of the digital currency remains. But the buzz surrounding the technology underlying it—blockchains—has started to take a different tone. Blockchain, headquartered in Luxembourg, is a company that provides a software platform for digital. The potential of blockchain is being missed according to an earlier report which claims that Bitcoin lost its credibility with banks after its rise and fall in according to a McKinsey report. – View our Media Kit PDF here. Image Courtesy: Pixabay.
Mckinsey bitcoin pdfWhat next for blockchain?
Should I invest? Is it going to go up or down? The most important thing that we focus on in our work, is the much bigger question, this underlying, distributed-database technology that enables us to have a truthful and immutable record of everything. The financial-services industry is up for serious disruption—or transformation, depending on how it approaches this issue.
For the research for Blockchain Revolution , we went through and identified eight different things that the industry does: it moves money, it stores money, it lends money, it trades money, it attests to money, it accounts for money, and so on. You pick any industry, and this technology holds huge potential to disrupt it, creating a more prosperous world where people get to participate in the value that they create.
The music industry, for example, is a disaster, at least from the point of view of the musicians. They used to have most of the value taken by the big labels. Then, along came the technology companies, which took a whole bunch of value, and the songwriters and musicians are left with crumbs at the end.
What if the new music industry was a distributed app on the blockchain, where I, as a songwriter, could post my song onto the blockchain with a smart contract specifying how it is to be used? You want to put it in your movie? You put it in the movie, the smart contract pays me. This is not a pipe dream.
She has already posted her first song onto the Internet. I fully expect that many big recording artists will be seriously investigating a whole new paradigm whereby the musicians get compensated for the value that they create.
What could go wrong? We identified ten showstoppers and we went through them in detail in our research and in the book.
Another showstopper is that this technology is going to be the platform for a lot of smart agents that are going to displace a lot of humans from jobs. Maybe this whole new platform is the ultimate job-killer.
The biggest problems, though, have to do with governance. Any controversy that you read about today is going to revolve around these governance issues.
This new community is in its infancy. Unlike the Internet, which has a sophisticated governance ecosystem, the whole world of blockchain and digital currencies is the Wild West. We have Internet Governance Forum, which creates policies for governments. We have the W3C Consortium, which creates standards for the Web.
We need a bigger block size to be able to handle all of the transactions that will be arising. There are big differences. Is it an irrational exuberance? Rather than just redistributing wealth, maybe we could change the way wealth is distributed in the first place. Imagine a Kickstarter-like campaign to launch a company where you have 50 million investors and everybody puts in a couple of dollars, or very small amounts. Imagine if they could be brought in, 2 billion people, into the global financial system.
What could that do? Seventy percent of all people who own land have a tenuous title to that land. Or blockchain Airbnb? This is all about the value going to the creators of value rather than to powerful forces that capture it. In the process, we can protect our privacy. Imagine each of us having our own identity in a black box on the blockchain.
When you go to do a transaction, it gives away a shred of information required to do that transaction and it collects data. You get to keep your data and monetize it if you want, or not. This could be the foundation of a whole new era whereby our basic right to privacy is protected, because identity is the foundation of freedom and it needs to be managed responsibly.
Never miss an insight. We'll email you when new articles are published on this topic. Accept Use minimal essential cookies. Blockchain technology is a distributed ledger. It allows for the permanent and immutable transparent recording of data, essentially, and transactions specifically.
It could be tea leaves making their way to the final tea maker. Or it could be me sending you a payment person to person without the need for intermediaries. I think of Bitcoin as being the entry point to a digital future where everything of value can and likely will be exchanged in digital format.
Central banks will look to the Bitcoin experience to build central-bank-backed digital assets. From an enterprise perspective, you might move away from Bitcoin specifically and take what you learn from that to apply it to other use cases. You can essentially assign a tag to items across the supply chain and record each movement down the chain on a blockchain.
I think we will have private blockchains that fit into the public blockchains , similar to the way we think about the Internet and intranets. We want to have this internal connectivity.
They allow our businesses to interact with one another internally and then plug into a more public domain. The thing that I find really exciting about this technology is [what it can do] not just for users like me but users across the world. Two and a half billion people across the globe are not served by the current financial system at all.
And 1 in 5 families are underserved by the current financial system. They have access to financial services, but at a tremendous cost. Those people have a radical use case for this technology and for Bitcoin specifically.
You can send it via Bitcoin for a couple of pennies. When I first joined [Blockchain], the conversation was relegated to financial services. How are the big banks going to use this? Even that conversation was about how the big banks will use this to make their systems more efficient. People really want to be a part of this conversation. What can it really do for you? But there will be far more conversations where the answer is really compelling.
One of the issues that we have as an industry is that people are talking in three- to five-year increments. I think this is a decades-long experiment. What I can say is that I do not believe there is a single industry that will not be touched by this technology.
When you created the Internet, there was no way to really predict Facebook. But the basis of the Internet was to connect people directly.