Whether you are a neophyte or expert, there is one thing you’ve probably been reading a lot about recently… and that’s blockchain. The hype that blockchain is, or can potentially be, the panacea for all things digital is universal. We hear it can be a contract manager, process improver, execution and delivery accelerator…whatever its end use, blockchain is changing the way we transact and interact over technology.
What is blockchain?
So, what is blockchain in plain English? Simply, blockchain is an incorruptible digital ledger of economic/contractual transactions that can be programed to record not just financial transactions, but virtually everything of value.
Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed so the spreadsheet can be regularly updated and you have a basic understanding of the blockchain. Information held on a blockchain exists as a shared, and continually reconciled, database. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.
There have been great strides in identifying actual value in using blockchain within financial services, healthcare, Internet of Things, insurance and many other industries. But what does it truly mean in the end?
Perhaps the most significant value being created by blockchain is the quick, secure sharing of information between parties. This information can be in the form of a legal contract, personal information or asset via a financial transaction, asset transfer, medical records, or even electronic devices talking to each other. Think printers with low toner talking to ink makers to order refills.
The word ‘transaction’ in this case can actually be used in a much broader sense when talking about blockchain. It can be a transfer of goods and agreed services, it can be someone creating a record (voting in politics or company proxys), and it can also be an agreed result to purchase or sell something of value.
Clearly there are, and will be many more, possible uses for blockchain – many of which haven’t even been thought of. The concept of blockchain itself only became public in a 2008 whitepaper written by an unknown person (or people!) using the pseudonym Satoshi Nakamoto. It was first applied in the transacting of Bitcoin. In less than 10 years the actual use and concepts of blockchain have gone much further than managing a cryptocurrency.
Real life solutions
Today there are companies who are working on real-life solutions using blockchain. MasterCard is deploying distributed ledger technology to develop a method and system for instantaneous payments. It uses recorded guarantees that could provide an irrefutable record of transactions, payment networks and produce a response code to verify payment. Danish shipping giant Maersk uses blockchain technology to manage and track its tens of millions of shipping containers that traverse the oceans every year.
With all the great strides in exploring and applying multiple uses of blockchain, there has also been a significant amount of effort to determine how to best ensure it is safe to use. Who manages all the security requirements necessary to ensure our transactions cannot be changed without our permission? How do we ensure our transaction is not hacked and our valued assets are not stolen? How do we ensure our personal medical information is not compromised? If we are going to rely on blockchain to be the panacea of all things, then should we not be in a position to create an environment than ensures the safety of our things in it?
So, what next?
As most people know, there are many bad actors in the world with the knowledge to break into your digital life and cause havoc – from identity and financial theft to extortion via the use of personal information and assets, to name but a few. As we rush forward with this young technology, would it not be prudent to introduce some regulation? If our intention is to use it to manage things of value and legal merit, I know I’d like to sleep soundly at night with confidence in the digital security of my things.
Or do we leave it up to the blockchain builders to manage it themselves? Financial institutions today have very clear rules that have been established by regulators regarding security of financial assets and personal information.
Should an existing regulator or the creation of a new regulatory body be appointed to provide oversight to this technology? My view is absolutely yes, and I welcome your thoughts…