Blockchain is an obscure term to most Americans, even if due to its growing popularity they know it’s linked to the burgeoning world of cryptocurrency and cyberspace transactions.
In its simplest form, blockchain is simply a shared, public database of transactions in a network that stores all transactions in pieces of data (blocks) that are then chained together to form a cryptographically verified digital record of transactions or data.
This technology is so new that the world is just tapping into its potential. Its nascency is mirrored by the developing private space industry, leading some people to wonder how blockchain may impact and improve this area.
The professional services network PricewaterhouseCoopers (PWC) analyzed several potential uses of blockchain for the space industry that included financing, tokenization, procurement and satellite communications.
For example, initial coin offerings have the potential to utilize the blockchain to finance missions in the space investment “gold rush,” an industry that is predicted by several firms to become a trillion-dollar economy by 2040.
Access to financing is one of the biggest impediments for entrepreneurs, but blockchain technology that facilitates alternative capital sources such as initial coin offerings (ICOs) might help alleviate some of these capital constraints. These missions must also find a way to monetize the data they gather in space, and there are applications with blockchain here as well.
Blockchain’s Data Mobilizes Growth in Space
Blockchain was first used in space by Blockstream, which is an organization that distributes cryptocurrency. The following year, SpaceChain linked up with PricewaterhouseCoopers in France to study its applications in space.
While these prove blockchains’ viability in space, many applications remain untapped. Missions to the moon and Mars offer companies a treasure trove of data, and private space companies are already exploring the viability of offering utility tokens that might distribute data gathered on the missions, enabling them to fund future missions by monetizing the data they gathered on their previous ones.
The data one company mines are undoubtedly helpful for other private companies and space agencies aiming to plan future missions. According to PWC’s report on the applications for blockchain in space, “They could be involved in creating an ICO-based funding ecosystem to enable interested entities to contribute to funding mechanisms for start-ups.”
Life has a way of teaching us that patience pays off. The key for space start-ups is staying viable while they await their breakthrough. Regulatory challenges necessitate patience and uncertainty when a company begins its quest to go to space.
Most countries now have a regulatory structure that governs ICOs, and when it comes to tokenization, discerning legal rights represents a significant challenge for sellers and buyers. Nonetheless, private companies and space agencies need to conduct their own feasibility and engineering studies to spot areas where adopting blockchain solutions pays off.
The PWC report shows that adoption rates remain low as some companies have opted for a wait-and-see approach, not wanting to be the guinea pig that sinks time and resources into something that may or may not pay off.
What if using blockchain in space is not a solution that moves heaven and Earth, but rather a tool to increase transparency and efficiency in our processes? Consider this: Manufacturing and supply chain management could enhance traceability and accountability of productions throughout the chain. It would improve transparency for customers. Using satellites as nodes for data processing or storage could also lead to the creation of space-based blockchain applications.
Stacking Up Blockchain’s Future in Space
Aravind Ravichandran, who studies blockchain and space applications for PricewaterhouseCoopers, asserts that only a few companies have taken the lead on blockchain innovations in space.
He points to the company ConsenSys Space that created a blockchain-based database to pinpoint positions of satellites — an increasing necessity as companies like SpaceX launch fleets of satellites and we have to avoid collisions with debris. The only other database is owned by the U.S. Air Force.
Satellite communication is an easy and understandable application for blockchain, and a lot of the infrastructure to support greater space exploration is still in development. It may prove to be a very practical application for blockchains too. Consider that broadband companies (already a massive industry) rely on launching satellites to secure their viability. The ongoing race to build extensive satellite constellations, including thousands of small satellites to provide high-speed internet, would be easily supported by blockchain’s transparency and help mobilize the economy being built around these satellites.
Additionally, the continued success of space flights like Elon Musk’s SpaceX or Jeff Bezos’ passing the Karman Line has inspired others to join the fray, an area limited to NASA and the ESA for the first 50 years of space exploration.
Test flights can cost companies millions of dollars and funding such an endeavor can feel herculean and therefore make failure truly game over for an organization. However, with tokenization, what seemed astronomical might soon be attainable for many dreamers who were previously sidelined.
If those funding concerns are addressed with alternative capital structures and sources, think of the access to space that more companies might potentially have. Dreams of exploring and understanding space could become a reality that benefits us all.
Blockchain may seem like a new-age, abstract term, but its ability to open space up for so many of us might make it one of the most impactful tools in the space gold rush.
Transforming supply chains and how we make money off of and pay for space exploration can make previously unattainable goals practical. Most likely, blockchain’s use in space may currently lie beyond our understanding as we are just scratching the surface of its power.
How many of us might one day venture into space? The answer is still unknown, but nonetheless, the idea is exciting. Even if we do not go to space, how many of us might one day participate in the space economy? As we continue to create a new horizon for humanity, I posit it is a larger number than most people think.
Originally published in Forbes Business Council.