Blockchain, Cryptocurrency-Silvio Micali, the Ford engineering professor at the Massachusetts Institute of Technology, argues that blockchain development on a global scale could lead to the creation of a truly borderless economy.
Talking about Bloomberg Daybreak Asia, January 21, the MIT professor explained that the blockchain requires three simultaneously functioning systems in order to pave the way for a more inclusive global economy. While others have focused on the technological advantage of blockchain and cryptocurrency, particularly in the field of fintech and banking, Micali finds true innovation in the level of security it offers not previously available in decentralized systems.
The three functions mentioned above as a prelude to an inclusive economy involve security, decentralization and scalability. While Micali believes that cryptocurrency and blockchain have the potential to fulfill all three functions simultaneously, the technology has so far been able to incorporate only two at a time. Scalability, in particular, was identified as a feature that needed improvement before the technology could be more viable to challenge current established practices.
While January 2018 saw the end of what will be remembered as an epic race for the crypto markets, the usability for the better coins like Bitcoin and Ethereum came to a sudden halt. Although it continues to operate under its secure and decentralized blockchain, the number one currency by market capitalization BTC has suffered increasingly unsustainable transaction costs and extended confirmation times. Innovations such as the implementation of the lightning network try to improve the previous Bitcoin network problems, but scalability has been increasingly highlighted as an obstacle to exceeding the currency.
Blockchains and decentralized decentralized cryptates to improve security measures compared to their centralized counterparts, criticizing the latter to be more vulnerable to hacks and the increasing occurrence of privacy violations. Instead, blockchain offers users an added level of security in their transactions, claiming
"Only a true decentralized system, where power is so widespread that it will be practically impossible to attack them all and when you do not need to trust this or that particular node, you will actually bring the security you really need and deserve."
While the MIT professor has not given a timetable for when the blockchain will have the potential to achieve a truly global economy, a move towards safer and decentralized systems should have the end result of reducing the pressure on the borders of trade. Instead, with the increase in trust offered through blockchain in addition to the absence of centralized power, blockchain-based economies will be more inclusive for parts of the world, rather than creating finance outlets and banks that have characterized the current landscape.
However, the scale becomes an increasingly important problem with blockchain addiction. Cryptocurrencies, with their basic technology based on decentralized networks, must overcome the most pressing obstacle of scaling down to mass adoption. But with Facebook, IBM and other big companies opening blockchain divisions, it could be a short wait before Micali's "borderless" economy becomes a reality.