Is Blockchain Living Up to the Hype? - Article Analysis Essay

Introduction

In his article on whether blockchain is living up to the hype surrounding it, Espiner (2018) starts by defining blockchain as a ledger of information blocks such as contracts and transactions, which are kept in an entire network of computers. Various users can access this information, which is under the control of decentralized management. There has been much publicity revolving around this blockchain concept, especially since it created the first blockchain-based cryptocurrency known as Bitcoin. Since the inception of bitcoin, a large number of people subscribed to the idea that they could become rich quickly or without having to invest a significant amount of capital. However, most of these people do not fully understand this blockchain technology works. Some of its components such as smart contracts are powerful in the sense they allow sellers and their clients to have their deals stored in a blockchain. Despite its potential to redefine how people do business, it is quite difficult to scale up blockchain since it is an energy-hungry and slow technology. Besides, the uneditable, unknown and scattered nature of blockchain seemingly creates a lot of challenges in its operation (Espiner, 2018). With that in mind, this essay explores the argument brought forward in the above article while drawing reference from theories of globalization, technology and networks, and conflict and co-operation.

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Globalization

George (2011) delineates globalization as a universal process characterized by an increase in liquidity and growth in the multi-directional flow of information, goods and people in addition to the structures that they interact with. Liquidity, in this perspective, is the ease of movement of places, information, objects and people within the current global era.

Back to the article in question, Espiner (2018) purports that one way through which the blockchain technology can transform how people do business is the smart contracts. These contracts are based on the notion of a decentralized digital identity. The decentralized blockchain is a force capable of empowering communities and people, connecting users from all over the world and creating numerous opportunities for financial growth. If blockchain is viewed from the dimension of intellectual property, Archibugi and Filippetti (2014) argue that provided the inceptor's ownership rights of this technology are secure, they may consider decentralizing the technology or knowledge in upcoming and developed nations. The decentralized smart contracts feature, arguably, draws inspiration from intellectual property rights.

Theories of Space, Place and Globalization

One hypothesis that backs the idea of decentralization of blockchain as purported by Espiner (2018) is the theory of space, place and globalization. Under this theory, Robinson (2007) points out that the restructuring of time and social spaces is crucial to globalization. This restructuring is a function of the correlation between social configurations and space, the idea that space dictates social practices as well as the varying connection between social constructions, organizations and countries under globalization.

Robinson (2007) continues expounding on this concept by mentioning The Condition of Postmodernity, an idea which maintains that globalization is a manifestation of time-space compression created by dynamics of capitalism. Furthermore, globalization has led to the emergence of a new spatial order grounded on a network of global cities that are locations of specific services for multinational mobile capital. This capital is a vital aspect of the global economy, which entails the decentralization of manufacturing processes and a concurrent centralization of control of the manufacturing structures within the global cities.

Espiner (2018) states that investors in the blockchain technology view it as a means of making money. Regardless of grandiose claims that blockchain is revolutionizing the commercial space, Espiner (2018) argues that it just provides an alternative mechanism of vending new services that draw interest from a high number of sellers. In light of the position taken by Espiner (2018), the theories of space, place and globalization evidently back his claim that blockchain is not actually transforming the business world. The emerging spatial order brought about by globalization and a global economy relies upon a decentralized production and centralized control of production. However, in the blockchain technology, agreements and businesses conducted can be accessed by any user since this information is controlled by decentralized management. Therefore, based on the above theory of space and place, it would support the argument by Espiner (2018) that blockchain is just another approach of selling services as opposed to the popular claim that it is transforming businesses through the globalization of services.

The Theory of Modernity, Postmodernity and Globalization

As opposed to the theory of space and place that backs the claim that blockchain is not revolutionizing industries, when viewed from the concept of modernity and postmodernity, this claim is, perhaps, erroneous. Before delving into this concept, it would be prudent to understand where globalization originated from. Lewis and Moore (2009) maintain that the roots of globalization date back to the onset of investment and trade as well as the antiquity era. Modern economists often overlook the impact of commercial networks during ancient times on the current business scene. Yucel, Elibol and Dagdelen (2009) consider globalization to be an on-going historical process whose climax was attained right before the beginning of the 21st century when modern transport and communication technologies proliferated. Since then, the introduction of novel technologies continues to create global markets for typical services and products.

The theory of modernity and postmodernity holds that globalization has completed the modernity project (Robinson, 2007). In other words, the course of globalization signifies the universalization of modernity that specifically involves the universalization of a capitalist production approach and the nation-state, and the centralization of management or control. Rather than the perspective of globalization as a time-space compression as in the other theory, here, globalization is conceptualized as a product of modernization. In this regard, the world has reached a new global era that takes over from the modernity era.

With the above perception in mind, blockchain technology can be deemed to be a new way of doing business. Bitcoin, the first decentralized cryptocurrency was invented only about a decade ago. Globalization, as indicated in this theory, represents the transition from modernity to postmodernity. The current global age is, with no doubt, in the postmodernity period, which began in the late 20th century. Therefore, the stance taken by Espiner (2018) that blockchain has not transformed the business scene is incorrect when pictured from this angle. The impression of a decentralized digital identity associated with bitcoin almost certainly points toward a change in the business domain that creates opportunities and empowers individuals. This opposing position to that of Espiner (2018) is because bitcoin enables users to record and keep their encoded information in a network of computers instead of a single location as in earlier times.

Technology and Networks

The Sharing Economy Business Model

One of the theories that support the idea of blockchain technology is the Sharing Economy Business Model (SEBM). Espiner (2018) stipulates that the control of information accessible to users under the blockchain technology is decentralized. Tumasjan and Beutel (2018) purport that over 1500 startup companies across the world are designing their business models, services and products with the concept of blockchain in mind. In this line, decentralization is a key initiative where these startups strive to eliminate middlemen and building peer-to-peer networks that allow a direct conducting of business deals between two individuals. The ultimate objective of this initiative is to create a real sharing economy business model where customers can conduct peer-to-peer dealings as opposed to a centralized organ that may charge comparatively high transaction levies.

Gouvea, Kapelianis and Kassicieh (2018) state that, currently, information and communication technology infiltrates the environmental, social and economic aspects worldwide. The sharing economy business model associated with the blockchain technology provides a different approach of doing business other than the conventional centralized way. As Espiner (2018) posits, the peer-to-peer transaction mechanisms that are enabled by this technology are, virtually, revolutionary in nature. Drawing reference from the concept of sharing economy, in most cases, blockchain imposes no restrictions on the information that consumers can access. Such blockchains, which are regarded as being public, can significantly transform the implementation of a sharing economy and, thus, unleash their potential for a decentralized control (Tumasjan & Beutel, 2018). Besides, Espiner (2018) maintains that the ability of two users to transact via the blockchain technology without an intermediary is an enthralling prospect.

The Theory of Platform Cooperativism

The concept of platform cooperativism counters the idea that transacting businesses without a middleman, as seen in the blockchain case, is an attractive prospect for investors. Espiner (2018) mentions that the hype revolving around this blockchain technology is due to the bitcoin haste, which has resulted in the flow of billions of money into the hundreds of digital monies circulating in the market. This rush stems from the "assurance" that potential investors can become wealthy for free.

However, the above understanding of blockchain or bitcoin is faulty when viewed in line with the concept of platform cooperativism. Scholz (2016) asserts that the theory of platform cooperativism highlights the premise that users can only resolve the innumerable challenges brought about by the sharing economy by instituting autonomous governance structures, bolstering solidarity and changing proprietorship. The sharing economy that is created by blockchain was supposed to allow users to make money during their free time and ease the ownership. However, this favorable condition is yet to be realized since blockchain houses numerous contract workers that are not protected by any trade union like normal employees.

The Bitcoin technology does not involve any sharing but is, instead, a highly-demanded service economy that propagates business dealings into people's lives. Blockchain allows access to information about business transactions to any user across the world (Espiner, 2018). Nonetheless, despite this decentralized control, no user can claim exclusive ownership rights of the blockchain platforms (Scholz, 2016). The concept of platform cooperativism is all about independently owning the business models available on the internet, which is the only remedy to problems caused by the anonymous nature of blockchain technologies.

Conflict and Cooperation

The Ethical Model

Wilcke (2004) argues that for a business to become competitive in a free and open market, basing its prosperity on the customers' voluntary choices is an ethical high road. Espiner (2018) states that blockchain allows users to access information from any location owing to the decentralized control employed by this technology. Despite this free will and the directness that blockchain offers in carrying out business transactions, i...