In today’s “look at me”, “I need to be seen” world it’s easy to get trapped in the noise around us. Sometimes we have to stop and listen. There’s a lot that can be learned in 30 minutes or less. It can come from the news, people around you, industry experts, or any number of sources. The key is to be ready to listen when the conversation starts to shift from the every day, look at me noise around us. This 30-minute education came at a leading IT industry conference during breakfast.
This morning I found myself at a table with an employee from the Federal Reserve, a former J.P. Morgan broker and an event sponsor from Leonovus. After the usual banter of how often do you come to this event, what do you get from it, and whether attending every year is worth the value, the topic landed on “blockchain“. Don’t worry if you are not familiar with this term. In fact, it’s one of those ethereal concepts like bitcoin. Highly techie and damn near impossible to understand. But it is a technology conference so I put on my propeller cap and buckled up.
Here’s what I walked away with. In theory it’s a concept of exchanging goods and services through a system of encrypted “blocks” or contracts between the person seeking a product or service and the person providing that product or service. This interaction is “witnessed” by other participants in the “chain”. The Lenovous representative spoke of how they are using this distributed approach to reach new markets in a more secure way than a centralized approach. Huh?
That still didn’t register so the former J.P. Morgan broker gave an example of moving products. Say you’re an auto dealer looking to buy a shipment of BMWs (I guess it would’ve been unrealistic that a J.P. Morgan broker would have used Fords as an example. But I digress). You open a loan with the bank to finance this deal for $1,000,000. Now you find the broker you are going to purchase your BMWs through as well as a third party overseas you want to ship them to.
You now have five blocks. The car dealer, auto broker, shipping company, the bank, and an overseas buyer. The chain is created because each block is reliant on the other party in the group to do it’s part before everyone’s needs are satisfied. Notice there are no middle-men. All contact is direct and transparent to all the members in the chain.
So if the manufacturer doesn’t deliver, everybody knows immediately. Or if the shipper loses his product, it’s instantaneous. So what makes all of this work – electronic currency and cryptography? Although it’s one of those ethereal concepts, it represents a major shift in how goods and services are transacted….and despite the techie hype it’s a long way from day-to-day reality.