So let’s start with the basics, Bitcoin is a form of digital currency that no one person controls often used in peer-to-peer payment systems. Blockchain is a tool that can help companies redesign business processes, share data securely, or prove the integrity of their data is making it ideal to support Bitcoin transactions.
It’s important to understand that the Blockchain database is not stored in a single location, and is stored across a decentralised network, resulting in records being truly public and easily verifiable. With no centralised database or single version of the information, as the data is hosted by millions of computers simultaneously, the common security concerns associated with centralised databases are removed. This is achieved through the use of encryption technology in the form of so-called public and private ‘keys’. A ‘public key’ is a randomly generated string, whereas the ‘private key’ is like a password that gives the owner access to digital assets.
Bitcoin pioneered the open source technology, concepts and successful application of the Blockchain approach to securing and sharing data and money and has become synonymous with Blockchain. There is no doubt this is a contributing factor as to why the majority of the Blockchain use cases relate to the Financial Services (FS) sector;
- Reduction in Fraud
- Know Your Customer
- Trading Platforms
So you’re an FS organisation and about to make a significant investment to secure financial transactions, should you consider Blockchain? Well, it depends, let’s say the transactions run on a database and it’s likely to require millions of investment to secure, then there is a chance blockchains are the solution. However, if high performance, millisecond transactions are necessary, then a more traditional approach is recommended as Blockchains are slow, due to their decentralised nature.
Irrespective of industry, Blockchain can be used to store securely, and automate the integration of online transactions while taking into considerations factors such as transaction or payment history. This is beneficial as a means of making it easier to establish trust between all parties, stream operations and delivering a better customer service.
But if you are not an FS organisation what are the benefits, well simply put it a record keeping tool. Any process that requires a lot of record-keeping and security between parties could be suitable for Blockchain. If you think about Supply Chain, Blockchains could be used to orchestrate and share data between a network of customers, buyers, logistics companies, authorities or 3rd parties, each with their own requirements for some of the data. The ability to create a single secure blockchain at the beginning of the process provides transparency through the entire process.
Looking at the wider application of Blockchain, there is a case for disrupting the disruptors. During the last ten years, the so-called ‘sharing economy’ has given rise to hugely successful companies such as Uber, Airbnb and Zipcar, based on the simple premise of brokering services between a supplier and consumer. For the convenience of providing an ‘app’, connecting the dots, and offering a cashless transaction they charge a fee.
But what if Blockchain allowed you ‘the consumer’ to connect directly with the supplier cutting out the middle man, what if you could have all the convenience without the additional cost, would you still use Uber, Airbnb or Zipcar? The use of Blockchain in the sharing economy would use self-executing smart contracts to perform the services currently fulfilled by the middlemen but at a lower cost.
Ten years ago you would not have thought you would be renting someone's home or car for your annual vacation, but it’s has become today’s norm, largely due to the secure convenience factor.
The extent of Blockchain adoption in modern systems has not yet been fully realised. As we have seen with the more recent acceptance of Cloud technologies, it will take time for Blockchain to be fully understood and accepted as a means for managing and securing digital relationships as part of a system of record. Blockchain will, like Cloud, become increasingly part of a corporate strategy but when and how are still being explored.
The Blockchain Revolution Promises to Touch Every Industry. The blockchain revolution began with bitcoin, which used distributed ledger technology to foster trust in a currency and transaction mechanism not backed by any government or traditional institution. Visionary entrepreneurs and CIOs building and expanding digital businesses are keeping the flow of transformation going. Their goal is to reinvent the very nature of commercial activity by removing intermediaries and enabling more-fluid business processes to be conducted in diverse ecosystems.