Ester Oliveras, coordinator of the Accounting, Control, Management and Education Research Group and professor in the Department of Economics and Business of UPF

Maria Antonieta Fernández, professor in the area of Administrative Law in the Department of Law of UPF

Blockchain is the sexy word of the day. A blockchain is a decentralised and inalterable record of data. We can talk about it in terms of these two characteristics. Today, most databases are centralised: Facebook, Google or any bank, to give a few examples, are entities that have our data and decide how to use them or who to sell them to. A blockchain, however, is a ledger distributed across many computers and in different geographic locations. But, since no one works for nothing, there must be incentives to finance the maintenance of this data. One of the payment mechanisms today is that the computers that close a block - which is a set of transactions - are the ones that receive payment. While Google receives advertising revenues by using our data, in a blockchain system it is the formation of the blocks that is financially rewarded.

The second characteristic is that the data is inalterable. The same data is copied on all computers, which are distributed geographically. If someone tries to manipulate one of the computers, and their intervention is not consistent with the other computers in the chain then it will not be accepted. To alter data, you would have to manipulate more than half of the computers. It is because of these characteristics that the blockchain is known as the “Internet of values”.

The first blockchain application was the cryptocurrency bitcoin, which is basically used as an investment instrument and, to a lesser extent, due to the high volatility of its value, as a medium of exchange. Later, the evolution of technology enabled the addition of so-called “smart contracts”. These are coins with broader capacities, called “tokens” to distinguish them from bitcoins. Today, the biggest network that allows smart contracts is Ethereum and its unit is the Ether.

In the European Union, various institutions, including the European Parliament itself, have begun to analyse the scope of the transformations linked with blockchain. They are also warning of the need to be prepared to deal with the difficulties and opportunities that they pose. Let’s look at some of the possible applications.

Tokens can be used to grant a right which promotes participation and involvement in a project. For example, it could grant the right to vote, to property or the use of a given asset. In this regard, the blockchain could resolve music and video piracy. It is worth noting the electronic voting possibilities available through this technology, which has enormous potential in organisational contexts. In fact, it has already been used for internal elections in political parties in Denmark and for shareholder voting in Estonia. In the longer term, some ambitious suggestions have contemplated the possibility of using this technology to implement a “liquid democracy”, combining direct democracy, in which citizens vote periodically on specific political decisions, with a delegate voting system in which citizens can vote on these specific issues themselves or assign their vote to another citizen - for example a politician, journalist or scientist they trust - being able to withdraw or reassign this delegation at any moment.

Blockchains can also improve the quality of supply chains, as the technology enables the verification of the authenticity, origin and ethical standards of goods and services, thereby improving purchasing, logistical and payment processes.

In conclusion, we could agree with the European Parliament’s declarations indicating that “blockchain will not make people better”, but it could make many of the mechanisms needed to develop trust and legal security “cheaper, faster, more transparent and more secure”, which are key factors in the development of any society.