N’Gunu Tiny, Founder, Chairman and CEO of the Emerald group with a guide to blockchain and its future.
Whilst cryptography has been in use for decades, Blockchain, in its current form, has been around for just over a decade. Terms like ‘blockchain technology’ and ‘cryptocurrency’ are heavily used throughout specialist and, increasingly, mainstream media. But how much do people really understand this technology? And will it really be as revolutionary as people say?
Bitcoin (BTC) brought blockchain into the conversation in 2009, and while I was aware of cryptocurrency, I didn’t focus on it from an investment standpoint till much later. It took me until around 2017 to see the true potential of blockchain technology, and since then I have become immersed in the world of this ground-breaking tech. I believe its potential is enormous, and we are beginning to see this, as various business sectors start integrating it into their service models. Before we look at some of these, let’s go back to blockchain basics.
What is blockchain and how does it work?
Blockchain tech can be said to have created the bones of a new kind of Internet. In its modern form, it is was developed by either one person, or possibly a group of people, known as ‘Satoshi Nakamoto’, and became active in 2009. In the 11 years since it launched, blockchain has grown into something even greater, and with more potential.
It allows digital information to be distributed on a ledger. Crucially the data isn’t copied and can’t be tampered with. Originally devised as the tech behind the first cryptocurrency, BTC, it’s now being developed for use in other spheres. The blockchain is a simple way of getting information regarding ‘assets’ from one place to another in a secure and automated way. A person initiating a transaction creates a block, which is verified by thousands of others around the network. Suitably verified, the block is added to a chain, which is also stored along with the network. The block is, therefore, a unique record, with a unique history. If someone tries to falsify the block, then the entire network chain would need to be falsified, which is almost impossible.
Every block in the chain effectively confirms the validity of the one before, going right back to the first block. As every computer using the software has a copy of the blockchain in real-time, it’s constantly updated with no centralised server holding all of the data. This is called a decentralised ledger.
Why has blockchain become so popular?
There are four major reasons why blockchain has generated so much interest, particularly from banking and financial services:
1. It is decentralised, which means data is not stored in one central place which can be manipulated.
2. Data is stored cryptographically.
3. No-one can change the data on the blockchain without consensus.
4. The blockchain is transparent so data can be tracked.
Decentralisation is a key factor of blockchain’s appeal. Before BTC and applications such as BitTorrent, the normal standard for services was to have one centralised entity storing all the data. So, in order to access it and use information, every user would have to interact only with this entity. A bank is the easiest example to picture of a centralised system – they hold all of your assets, and the only way you can access them is through an intermediary. It’s the traditional client/service model.
Blockchain technology offers an alternative to this traditional model and has gained interest in various financial and technology sectors outside of cryptocurrency. The basic idea of a decentralised ledger distributed around many different users could be a better alternative to traditional centralised databases.
Real-world examples of blockchain in action
While Bitcoin and other cryptocurrencies such as Ethereum remain the best-known applications of blockchain technology, it has real potential to revolutionise any number of industries. Companies like GoChain have been set up to deliver ended to end solutions. Whilst Ethereum can be seen as the developers’ Blockchain, GoChain will be the Corporates and Governments solution to the puzzle.
An example of a major company already using blockchain technology can be seen withMaersk’s TradeLens system. Built using blockchain tech, the system tracks custom documentation on internationally shipped goods. It gives any stakeholder during the process the ability to quickly access up-to-date information regarding a specific shipment. In theory, this means everyone from port authority to a customs officer.
According to the BBC, Maersk is already registering around ten million separate shipping events every week in the system. However, TradeLens does differ from the blockchain used for cryptocurrency, in that it’s specifically permissioned. This means it’s not a public ledger and access is controlled.
Another project utilising blockchain tech is a brand-new real estate system that was trialled by the land registry in Sweden (Lantmateriet). The company designed a blockchain system that can be used to track documentation produced throughout a property sale. All parties can, therefore, keep track of the sale digitally, including the buyer, the seller, banks and brokers. And while the trial was successful, the system can’t yet be implemented into the country’s land registry until new legislation is introduced.
Blockchain technology for voting systems
Over in Thailand, a cryptocurrency business called Zcoin adapted a blockchain system so that votes could be cast during the 2018 Thai Democratic Party leadership election. The blockchain offered an alternative way to count votes, rather than using a traditional central body. To increase security, votes were cast via an app or a polling station only if the voter submitted a photo of themselves along with their choice. The online votes were also audited by a committee, and another system is underway, this time for millions of voters.
GoChain also has developed a system for voting using biometric. This data can then be fed into other central systems such as Immigration and taxation. Imagine not having to complete endless rems of paperwork to renew your passport, when the update information can be passed seamlessly between departments.
Companies all over the world are working out ways they can use blockchain technology into their service models. I absolutely believe that it will completely change not only the way we carry out routine transactions and use cash but become part of many other business applications.
From smart contracts to crowdfunding, banking to real estate, auditing and compliance, file storage, the protection of intellectual property, the potential of blockchain technology is vast. We will see it become entrenched in all kinds of service models over the next ten years, as regulatory bodies catch up with its potential.
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