Blockchain - Tame or Transformational?
Published on March 29, 2018
Every once a while, a new technology emerges with promises of widespread and far-reaching impact in the way people live and conduct business. Just as the steam engine helped to power the Industrial Revolution in the 18th century, blockchain technology could disrupt industries and revolutionise the world economy.
Blockchain – the technology that underpins cryptocurrencies such as bitcoin – is essentially a massive, distributed ledger that runs on millions of computers worldwide. Think of it as a global digital database that holds permanent records of transactions and information which are visible to everyone on the network. In addition, there is no need for a central authority or a third-party to approve transactions or verify identities; it is truly peer-to-peer.
The use of blockchain technology in business is wide ranging, from finance to real estate and even the music industry. What makes blockchain extremely appealing is data security. The digital assets on the network – once created and added to the chain- are immutable and virtually unhackable. In other words, it is a platform of trust.
A sector that could really benefit from blockchain is insurance, which is at its core a business that is built upon trust. Inzsure, offering commercial insurance, is one such company that is tapping the technology. I spoke with Inzsure chief executive officer Steve Tunstall on the sidelines of the recent CoreNet Global Summit about his views on how blockchain could transform his business.
What is the impact of blockchain on the insurance industry?
Steve: Insurance is a great case in point where essentially the only product they have is trust as an industry. The customer buys trust, it buys the reliance that the customer is going to get paid in the event of a claim, the eventuality is a critical part of the transaction. The issue with the current level of technology and current relational database is that it is quite difficult to maintain the integrity of those databases. It is quite difficult to be sure that people are who they say they are. It is difficult also to make sure that they have the right credential and there is a need to go through KYC (Know-Your-Customer), that takes a long time. It’s a slow process. So, the benefit of blockchain is that you can have that relationship and that KYC done once, it is locked into the system and thereafter, things can be much more secure and done much quicker. That is the objective that we are looking at with Inzsure, the solution we are delivering for SME businesses in Asia, will be much more secure, much safer and give advice in a much cleared and directed way than is currently available through the human interfaces.
Would you say the greater transparency within the blockchain network is particularly useful for the insurance industry?
Steve: Absolutely, if everybody has all the information, then no one can come in and change it, not only in terms of hackers getting in and changing things, but also sometimes big business does bad things too and there is no way to hide those acts on the blockchain, everybody knows about it.
What are some challenges that businesses faced in the adoption of blockchain?
Steve: It is like all emerging technologies, particularly this one because it is quite specialized and it is detailed. Getting a broader understanding of how it is actually going to work and explaining it to people is something of a sweet spot that needs to be tackled carefully. It is important not to overpromise because there are still difficulties in the system. The security issues are generally solved, but speed is still a problem. On top of this is the expense of running a blockchain. At the moment, it can be extremely expensive - the system to do the mining and the processing required. This is a technology that is still in its infancy but we are building it in at the base from our company, and I think it is a fundamental part of our differentiation.
How long do you think it will take for the technology to gain traction?
Steve: Bill Gates always says we overestimate what can be achieved in a year and underestimate what can be achieved in a decade. I suspect that the majority of real estate businesses would be radically transformed in three years, not five years.
Colliers International launched a new research report assessing the impacts of blockchain technology in the context of commercial real estate (CRE) in Asia. Blockchain has become part of the vocabulary of many industries over the past decade. The authentication and security possibilities opened by blockchain are of particular relevance for the property sector, and across Asia examples of the technology being applied in the field are already emerging.