Blockchain — The next big revolution
It is now evident that the Satoshi Nakamoto did more than just inventing a currency, i.e Bitcoin. He also solved a longstanding problem in computing, to do with date and networks. His solution comprised of “blocks” of confirmed transactions that form a chronologically linked “chain”.
To comprehend the scale of this innovation, it is necessary to understand the extent to which data has until now been available only to one authority for authorization. The blockchain allows any individual to verify that a transaction existed in a particular form at a certain time.
A blockchain is a shared and distributed digital ledger or database that maintains a continuously growing list of “blocks”. A block could contain records of transactions regarding digital assets, but could also include facts and information. Once the record is verified and validated, a block is added to the chain with previous records in a linear and chronological order.
What makes the blockchain such a revolutionary technology is that the ledger or database is distributed to a countless number of participants (nodes) around the world in public peer-to-peer networks (similar to the Internet) or private (or permissioned) peer-to-peer networks (similar to an intranet). These participants can be individuals or organizations (and even things). The only condition is that they have a smartphone or Internet connection. Everybody with a smartphone can create a real digital ID and interact with other people in the blockchain network. Blockchain technology thus enables and facilitates access to finance, insurance services, stock markets, etc.
The “peer-to-peer” transactions are possible because the technology uses a “distributed consensus model” where the network “nodes” verify, validate and audit transactions before and after they are executed. This is often faster and safer than a traditional model in which transactions can only be executed through third-party intermediaries, such as a bank, judiciary or notary. Network connectivity is also important, because it allows for multiple copies of the blockchain to be available across a distributed network. This makes it practically impossible to alter or erase information in the blockchain. The use of cryptographic hashes makes tampering with blockchain records even more difficult, if not impossible. Cryptographic hashes comprise complex algorithms. Even a minute change to the blockchain will result in a different hash value, making manipulation instantly and readily detectable. Digital signatures help establish the identity and authenticity of the parties involved in the transaction. These security measures make blockchain validation technologies more transparent and less prone to error and corruption than existing methods of verifying and validating transactions via third party intermediaries.
In short, blockchain technology creates an independent and transparent platform for establishing truth and building trust. The technology increases openness and speed, while at the same time significantly reducing costs.
But perhaps the most significant feature of blockchain is that it is so adaptable. There are multiple possible applications relevant in a business context. Most obviously, blockchain can be used to provide new methods of processing digital transactions. But blockchain can also be used for crypto-currencies, records management, e-voting and identity management.
It is for this reason that blockchain technology has been mentioned as one of the most significant disruptive technological innovations since the Internet. Every time a transaction occurs, it propagates across the global network so all parties host records, and each computer continuously monitors for anomalies. Transactions are encrypted, verified by all parties, and immutable.
Since the entire chain is continually self-updating, thieves and hackers would have to breach all computers that contain the ledger at one swoop to steal money or alter data.
Advocates say blockchain’s radical charm is that it cuts out the middleman and reduces costs. There is no need for a trusted third party to broker deals. All transactions can be audited. In the bitcoin world, it means buyer and seller transact directly, with no intermediary, such as a bank or agency, coming in between. But start-up companies and technologists are finding vast new uses for it. Some musicians and artists see services based on blockchain technology as a godsend. New companies are working to simplify licensing and liberate musicians from intermediaries — talent agents, record labels and streaming services — all eager to take a cut of revenue.
In other areas, blockchain is seen as a way to streamline logistical processes, cut out third parties and give a parade of entities transparent access to information. Global ports are studying distributed ledger technology as a way to kick-start a revolution in the way goods move globally.
The technology’s ability to give owners consent over release of information is a key part of an unfolding battle over identity in both developing and developed worlds.
Scientists say they foresee blockchain technology used to protect and hold encrypted personal information — a Social Security number, birth certificate, driver’s license and the like — to be under the control of individuals and not any central agency. Individuals could summon verifiable data for identification purposes at banks or elsewhere, perhaps through a bar code that would appear on a smartphone screen and be read by a scanner.
Wall Street is convinced that blockchain is set to radically transform the world of finance. But exactly how and when that transformation will transpire is uncertain.
Blockchain Revolution aims to provide a broad overview of changes the technology could bring about. It could transform remittances, the largest flow of funds into the developing world; transfers could take place in an hour rather than a week, and with greatly reduced commission. Secondly, the technology could provide immutable land title registration for the estimated 5 billion people in the world who have only a tenuous right to their land. Thirdly, it could overhaul online identity, allowing us greater privacy but also the ability to gain value from those aspects of our data we are prepared to share. Finally, blockchain technology could help artists and musicians claim ownership of their work and receive a fair share of its value.
