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As a peer-to-peer network, combined with a distributed time-stamping server, Blockchain ledgers can be managed autonomously to exchange information between disparate parties. There’s no need for an administrator. In effect, the Blockchain users are the administrator.
Additionally, blockchain networks can be used for “smart contracts,” or scripts that automatically execute when certain conditions are met. For example, Ethereum Ether exchange users must meet pre-determined conditions that prove someone owns the cryptocurrency and have authority to send the money they claim to own. In addition, multiple blockchain users can create contracts that require more than one set of inputs to trigger a transaction.
One example: real estate transactions require sign offs between buyers, sellers and their financial institutions.
While no system is “unhackable,” Blockchain’s simple topology is the most secure today, according to Alex Tapscott, the CEO and founder of Northwest Passage Ventures, a venture capital firm that invests in Blockchain technology companies.
“In order to move anything of value over any kind of Blockchain, the network [of nodes] must first agree that that transaction is valid, which means no single entity can go in and say one way or the other whether or not a transaction happened,” Tapscott said. “To hack it, you wouldn’t just have to hack one system like in a bank…, you’d have to hack every single computer on that network, which is fighting against you doing that.”
The computing resources of most Blockchains are tremendous, Tapscott said, because it’s not just one computer but many. For example, the Bitcoin Blockchain harnesses anywhere between 10 and 100 times as much computing power compared to all of Google’s serving farms put together.
Shipping. Fintech. Healthcare, Energy. Blockchains are being put to a wide variety of uses in several industries. (Most recently it’s been touted as a way to exchange carbon credits.)
In shipping, for example, a bill of lading for cargo shipments has traditionally been paper based, which requires multiple sign-offs by inspectors and receivers before goods can be delivered. Even when the system is electronic, it still requires multiple parties to sign off on cargo shipments, creating a lengthy administrative process. To try and streamline that cumbersome process, the world’s largest container shipment operator, Maersk, in March 2017 announced it is using a Blockchain-based ledger to manage and track the paper trail of tens of millions of shipping containers by digitizing the supply chain. And Maersk has now teamed up with IBM on a new Blockchain-based electronic shipping platform. It’s expected to be up and running later in 2018.
[ Further reading: Blockchain breaks out in the enterprise ]
Each participant in the shipping supply chain can view the progress of goods through the Blockchain ledger, understanding where a container is in transit. They can also see the status of customs documents, or view bills of lading and other data in real time. And, because it creates an immutable record, no one party can modify, delete or even append any one of the blocks without the consensus from others on the network.
“Blockchain and distributed ledgers may eventually be the method for integrating the entire commercial world’s record keeping,” Gupta said.
Genpact, for example, announced a service for finance and accountingthat leverages Blockchain-based smart contracts to capture all terms and conditions between a customer and an organization for an order.
Compared with traditional database technologies and centralised systems, Blockchain implementations can be cheaper and require considerably less IT investment to maintain. In addition, because of its application in creating resilient, hacker-proof records, lots of initiatives have been proposed for registries using Blockchain. For example, within the Public sector it can affect government-maintained registries e.g. Blockchain-based tracing of donations from donor to recipient to ensure the money goes where it is needed. “Almost every major financial institution in the world is doing Blockchain research at the moment, and 15% of banks are expected to be using Blockchain in 2017.”
The first distributed Blockchain was then conceptualised by Satoshi Nakamoto in 2008 as the core component of the digital currency Bitcoin, where it serves as the public ledger for all transactions. The words block and chain were used separately in Satoshi Nakamoto’s original paper in October 2008, and when the term moved into wider use it was originally block chain, before becoming a single word, Blockchain, by 2016. Although associated with and used by Bitcoin, Blockchain technology will be applied to multiple sectors and industries.
The first major Blockchain innovation was Bitcoin, a digital currency experiment. The market cap of Bitcoin now hovers between $10–$20 billion dollars, and is used by millions of people for payments, including a large and growing remittances market. Blockchain for Bitcoin meant that it was the first digital currency to solve the double spending problem, without the use of a trusted authority or central server. Bitcoin, (the digital asset) is used like other assets in exchange for goods and services. Unlike traditional currencies and assets, Bitcoin is easily portable, divisible, and irreversible. The benefit is that Bitcoin increases system efficiency and enables the provision of financial services at a drastically lower cost, giving users more power and freedom. There is no central intermediary as there is no regulation around Cryptocurrency.
So how will Blockchain affect the day to day digital world? There are so many applications that are attracting significant investment across multiple sectors and that Blockchain could disrupt. Companies are keen to invest so that they become the disruptor, not the disrupted.
Some Examples include:
Financial Services : This is attracting the biggest investments due to the size and scale of opportunity in financial transactions
Property: Reducing time and admin costs and also fraud, by keeping records on the Blockchain – which provides an audit trail.
Music Streaming: There are several start-ups leveraging Blockchain to change how music will be distributed and shared and how royalties will be paid
Voting: Using the Blockchain individual votes can be audited with greater transparency
Healthcare: – Patient records could be stored on the Blockchain without the worry about records being changed.
Recruitment: Technojobs have partnered with APPII to introduce Verified Career profiles – your CV can be verified by your Educational Institutions and Employers. Find out more here.
These are just a few of the examples as there are so many sectors where a secure audit trail and records without intermediaries means the Blockchain will be coming!
A Smart Contract is code that is deployed to the Blockchain. Each smart contract contains code that can have a predefined set of inputs. Smart contracts can also store data. Following the distributed model of the Blockchain, smart contracts run on every node in this technology, and each contract’s data is stored in every node. This data can be queried at any time. Smart Contracts can also call other smart contracts, enforce permissions, run workflow logic, perform calculations etc. Smart contract code is executed within a transaction – so the data stored as a result of running the smart contract (i.e. the state) is part of the Blockchain’s immutable ledger.
Ethereum is a group of incredibly smart individuals who have developed the next generation of cryptocurrency. The Ethereum project involves a large single network (much like Bitcoin), and runs on a cryptocurrency that can be mined (Ether). We are looking at deploying private networks of the Ethereum (or similar) within organisations, or across small predetermined groups of organisations.