Blockchain technology was invented in 2008, but only came into the public conversation when Bitcoin launched and used blockchain as a system for recording transactions made in Bitcoin, or other cryptocurrencies. This was maintained across several computers linked in a peer-to-peer network which allowed digital information regarding the transactions to be distributed, but most importantly, not copied. This meant each individual piece of data (transaction in this case) could only have one owner.
With blockchain, the information is constantly reconciled into the database sometimes referred to as a digital ledger, (stored in millions of locations) and updated almost instantly. That means the records are public and verifiable. Since there’s no central location, it harder to hack; it exists as a network database simultaneously in millions of places. This decentralised technology, used globally across a vast network, has no one central authority managing it but is universally sanctioned by those utilising the system, with transactions being authorised and then ratified by all involved. There are clear lines of verification and a true record of any transaction that cannot be overwritten or deleted.
Put into the simplest of terms, if you wished to send money to a friend you would currently have to set up an electronic transaction via the bank (or visit your bank), it would take authorisation from the bank to confirm that you had the money, then to agree the transfer. That money then would be transferred into your friend’s bank and their bank would move the money into their account when that authorisation had cleared. With blockchain transactions, the transaction is ‘promised’ and is at that time called a ‘block’. This block is a unique digital transaction which is simultaneously distributed across the blockchain network. The network, verifies the transaction as valid, or not. Once validated, the ‘block’ transaction is added to the ‘chain’ and reconciled across the network updating every database held on the network at the same time to create that permanent record. The payment is now moved to your friend. The transaction is completely transparent, there is a record of it and it has all happened without a centralised authority’s sanction.
And blockchain is not only used for digital currency. A quick sweep of the internet showed many more uses including:
- Payment processing and money transfers
- Monitoring supply chains
- Retail loyalty rewards programs
- Digital IDs
- Data sharing
- Copyright and royalty protection
- Digital voting (as every block is completely unique there can be no duplication!)
- Real estate, land, and auto title transfers
- Food safety – tracking food to the plate
- Immutable data backup
- Tax regulation and compliance
- Workers’ rights (Coca-Cola, is working on a blockchain registry complete with smart protocols that verify, facilitate, or enforce a contract and improve labour policies to encourage employers to honour digital contracts with their workers.)
- Medical recordkeeping
- Weapons tracking
- Wills or inheritances
- Equity trading
- Managing Internet of Things networks
- Expediting energy futures trading and compliance
- Securing access to belongings
- Tracking prescription drugs
In employment terms you can see the potential when you hear that in 2016 IBM had 1,000 employees working on blockchain-powered projects, and were setting up an office in Munich to spearhead those initiatives 1 (within which its blockchain work on connected devices is based). They set aside $200 million for development.
It is estimated that Financial and technical firms invested $1.4 billion dollars 2 in blockchain in 2016 with a reported increase to $9.7 billion dollars in 20213 .
It is clear that blockchain technology is going to continue to be a real game changer as the use of this technology expands and it is rolled out in ways that are yet to be considered.
- https://www.idc.com – (New IDC Spending Guide Sees Worldwide Blockchain Spending Growing to $9.7 Billion in 2021)
EXTRA reading: https://www.ibm.com/blogs/blockchain/