What is blockchain and what does it mean for business?
Along with ‘5G’ and ‘Internet of Things’ you may have heard the term ‘blockchain’ being bandied about rather a lot in recent months, and wondered what all the fuss is about. It is widely believed that blockchain, along with 5G and IOT, is a disruptive technological innovation that will transform a wide range of industries.
In simple terms, a blockchain is a distributed database or ledger. The database or ledger is stored on devices that are not all connected to a common, central processor. The ledger manages a growing list of ordered records, called blocks, with each block having a unique number and timestamp. Critically the technology keeps the database in sync.
Blockchain technology utilises public-key cryptography as a means of protecting the identities of users, ensuring transactions are done safely and securing all information and storage of value. Therefore, anyone using blockchain can have complete confidence that once something is recorded on a blockchain, it is done so legitimately and securely. It also means that users are only able to edit the parts of the blockchain they ‘own’.
The first commercial examples of blockchain in action came in 2009 with the release of the cryptocurrency Bitcoin. The blockchain serves as the public ledger for all bitcoin transactions. Bitcoin was the first digital currency to solve issues associated with ‘double-spending (unlike physical currency, digital tokens could be copied and used more than once).
Outside of financial transactions and cryptocurrencies, what impacts will blockchain have on business? The advent of the internet and on-line communication means that consumers and businesses are already communicating and exchanging information across distributed networks, so the psychological ‘barriers to adoption’ are already largely broken down. The blockchain overcomes the costs, time and resource consuming issues associated with parties to a process or transaction handling the information, and transitions between steps, on different systems and in different ways.
Here are some examples of blockchain implementations:
Spotify – blockchain technologies used to improve management of artist copyright, attributions and royalty payments. https://www.musicbusinessworldwide.com/spotify-acquires-blockchain-firm-to-build-a-more-transparent-music-industry/
Wal-Mart – IBM Blockchain platform used to track and manage food supply chain and food safety. https://www.youtube.com/watch?v=SV0KXBxSoio
Estonia – the Baltic state has built its own blockchain platform called Ksi a privacy-centric security solution to safeguard networks, systems and data. https://e-estonia.com/solutions/security-and-safety/ksi-blockchain/
Toyota – The Toyota Research Institute (TRI) is exploring blockchain technology for use in the development of driverless cars. TRI is collaborating with the MIT Media Lab on ways that both businesses and consumers may share driving and autonomous vehicle testing data, manage ride-share and car-share transactions and store vehicle usage information that could be used in the setting of insurance rates. https://www.insurancejournal.com/news/national/2017/05/23/451913.htm
Blockchain is undoubtedly going to be a transformative factor affecting your business, whether as a technology that you deploy to increase your own efficiency and opportunities, or perhaps simply because your suppliers (and your competitors) will likely implement their own systems. Blockchain should definitely be on your radar.
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