Blockchain technology is a distributed ledger, meaning that no central party, individual, or business needs to facilitate the transactions that take place on the blockchain network. The trust needed for transactions to take place on a blockchain network is instead left with the community of nodes, or peers, in the network. This is a shift from our traditional way of thinking whereby we instill our trust in national governments. With this being the case, is blockchain technology a threat to governments worldwide? Furthermore, in the age of Big Data, is blockchain technology a threat to the large companies that profit off of our data and information? This article will look at how blockchain technology could pose a threat to national governments and large companies worldwide.
Simplified Transfer of Digitally Represented Assets
As mentioned, a blockchain network allows for a distributed trust system wherein transactions can take place without a 3rd party intermediary. This enables anyone to transact with any asset that can be digitally represented, interchanging this digitized asset with anyone else on the blockchain network. It can be a digital representation of money, such as cryptocurrency, or information such as title deeds or personal information and data.
The blockchain network can also grant access to any digital asset, such as personal information, if the person who owns the asset wishes to grant someone else access to it. This is achieved using cryptographic keys representing ownership of assets on the blockchain and enabling the interchangeability of these assets between people in the network.
Now that we have taken a look at how blockchains can enhance any asset that can be digitally represented, let’s take a look at the threat it poses to governments and large companies.
Blockchain Threat To Governments
Blockchain networks pose a significant threat to governments because anyone can become part of a blockchain network and transact anonymously. This is an issue for governments for a number of reasons which we will now take a look at.
Anonymous Transactions
As mentioned, anyone can transact on the blockchain anonymously. This is a problem for governments globally because it is extremely difficult to track and stop illegal financial activities such as money laundering. Activities that may be regarded as terrorism are also difficult to monitor since blockchain technology can be used to create anonymous messaging channels that do not flag specific keywords. Furthermore, if a suspicious activity does take place on the blockchain and governments are aware of it, it is relatively difficult to link the blockchain profile with an off-blockchain identity.
Seamless Global Payments
Anyone on the network can seamlessly transact without borders. This is a problem for governments when looking at cryptocurrencies, mainly digital representations of money, since anyone can now send and receive funds globally using the blockchain. This is great for anyone on the network but not so great for governments because they cannot efficiently monitor the inflow and outflow of funds in their respective countries. This creates a huge problem for governments as the amount of money in each country can no longer be monitored and controlled.
No Tie To Any Jurisdiction
Since the blockchain is decentralized, it falls under no governmental jurisdiction. This means that people transacting on the blockchain do so outside of the country they reside in. At the time of writing, all activity or profit made on the blockchain is not taxable until the money is exchanged for a fiat currency belonging to a particular country. When cryptocurrency is exchanged for a fiat currency that belongs to a specific country, then the value traded is susceptible to tax regulations in that country. However, most people feel that their funds are better off on the blockchain than in a bank account. This is a problem for governments because they can’t collect as much tax as before the invention of blockchain technology. People can also hide how much money they have in a blockchain ecosystem due to blockchain’s anonymity and privacy.
These are just some of the main issues that blockchain technology creates for governments across the globe. Many more haven’t been thought of or aren’t considered major threats yet, which will inevitably become bigger problems as the current adoption of the technology grows to mainstream adoption. Let’s now take a look at how blockchain technology poses a threat to large companies. This mainly applies to companies that have monopolized the Big Data industry.
The Big Data Era
Data and personal information are more valuable than gold and oil in the current era. Big technology companies have realized this and have found a way to monetize our user data, with many arguing that they violate our privacy by selling our personal information to other companies. Blockchain poses a threat to these big technology companies. Let’s take a look at how.
The Threat To Big Companies
As you may remember, blockchains allow anyone to control access to their digital assets. These assets can include money, like cryptocurrency, or information such as personal information, title deeds, etc. This enables people to do what they never could before: control access to their personal information. This is a problem for big technology companies that previously could collect our data in the background without asking for our permission and then monetize it by selling it to other companies. Thanks to blockchain technology, users can control how much access these big tech companies have to their personal data and what personal information they have access to. This will drastically decrease the potential earning capacity of this lucrative revenue stream for these big technology companies. Blockchain technology can also remove any monopolies in the marketplace, creating a more fair marketplace with a lowered barrier to entry for new market players. With all of this said, it is easy to see why some of the biggest technology companies, especially companies playing in the Big Data space, are investing in research to identify ways to play in the blockchain space while also mitigating the risk that blockchain technology poses on their position in the industry.
To Recap
Blockchain technology poses a serious threat to governments and large companies around the world because of its ability to give users control over their data back while also protecting user privacy and providing a seamless, global transaction ecosystem that anyone can transact in. Furthermore, companies operating in the Big Data industry are most at risk because blockchain technology will restrict their access to their clients’ information if their clients start using blockchain technology in their daily lives. This will significantly impact these companies’ revenue streams built around collecting and selling their clients’ information.
CORE MultiChain Puts User Privacy First
CORE MultiChain is a super-performant blockchain ecosystem that aims to eradicate the market dominance of Big Data technology companies and envisions a borderless world where users can transact seamlessly across the globe. Their ecosystem is able to achieve this by cleverly utilizing some of the best blockchain technologies and protocols that strengthen privacy within the ecosystem. Technologies such as ZK-Snarks and transaction mixers are just some of the protocols used in the CORE MultiChain ecosystem, which controls access to users’ personal information and ensures their privacy.
