Blockchain — Can it help against our fight with COVID-19?
If you have been following up on topics related to banking, investments, cryptocurrency/ Bitcoin you must have come across a term called as “Blockchain” — the record keeping technology behind Bitcoin network. If you haven’t come across any of the said topics and don’t know what a blockchain is, fear not, because here we are going to talk about Blockchain, how it works and most importantly, explore how it can be used to tackle COVID-19.
What is Blockchain?
If you look up the term “blockchain” on Google, you may have encountered a definition like, “blockchain is a distributed, decentralized, public ledger”. This definition though correct, might seem a bit vague to a complete beginner to the topic. Blockchain has a reputation of being complex, but the truth is blockchain is actually very easy to understand. Blockchain is literally just a chain of blocks, but not in the traditional sense of those words. When we say the words “block” and “chain” in this context, we are actually talking about digital information (the “block”) stored in a public database (the “chain”).
“The whole point of using a blockchain is to let people — in particular, people who don’t trust one another — share valuable data in a secure, tamper-proof way.”
— MIT Technology Review
How does it work?
Blockchain consists of three important concepts: blocks, nodes and miners.
1. Blocks
Every chain consists of multiple blocks and each block has three basic elements:
· The data in the block.
· A 32-bit whole number called a nonce. The nonce is randomly generated when a block is created, which then generates a block header hash.
· The hash is a 256-bit number wedded to the nonce. It must start with a huge number of zeroes (i.e., be extremely small).
2. Miners
Miners create new blocks on the chain through a process called mining.
In a blockchain every block has its own unique nonce and hash, but also references the hash of the previous block in the chain, so mining a block isn’t easy, especially on large chains.
Miners use special software to solve the incredibly complex math problem of finding a nonce that generates an accepted hash. Because the nonce is only 32 bits and the hash is 256 bits, there are roughly four billion possible nonce-hash combinations that must be mined before the right one is found. When that happens, miners are said to have found the “golden nonce” and their block is added to the chain.
3. Nodes
One of the most important concepts in blockchain technology is decentralization. No one computer or organization can own the chain. Instead, it is a distributed ledger via the nodes connected to the chain. Nodes can be any kind of electronic device that maintains copies of the blockchain and keeps the network functioning. Every node has its own copy of the blockchain and the network must algorithmically approve any newly mined block for the chain to be updated, trusted and verified.
Check out the following video by Investopedia to get more clarity on the concept:
Applications of Blockchain
Blockchain Technology has been used for a variety of applications. These include:
>> Cryptocurrencies
Most cryptocurrencies use blockchain technology to record transactions. For example, the bitcoin network and Ethereum network are both based on blockchain.
>> Smart Contracts
Blockchain-based smart contracts are proposed contracts that can be partially or fully executed or enforced without human interaction. One of the main objectives of a smart contract is automated escrow. (An escrow is a financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction. It helps make transactions more secure by keeping the payment in a secure escrow account which is only released when all of the terms of an agreement are met as overseen by the escrow company.) An IMF staff discussion reported that smart contracts based on blockchain technology might reduce moral hazards and optimize the use of contracts in general. Though not widely used yet, it’s introduction can be a game-changer.
>> Financial Services
Major portions of the financial industry are implementing distributed ledgers for use in banking, and according to a September 2016 IBM study, this is occurring faster than expected.
Banks are interested in this technology because it has potential to speed up back office settlement systems.
Banks such as UBS are opening new research labs dedicated to blockchain technology in order to explore how blockchain can be used in financial services to increase efficiency and reduce costs.
>> Video Games
A blockchain game CryptoKitties, launched in November 2017. The game made headlines in December 2017 when a cryptokitty character — an in-game virtual pet — was sold for more than US$100,000.
CryptoKitties also demonstrated how blockchains can be used to catalog game assets (digital assets).
>> Domain Names
Blockchain domain names are another use of blockchain on the rise. Unlike regular domain names, blockchain domain names are entirely an asset of the domain owner and can only be controlled by the owner through a private key. Blockchain domains, pave way to having sites that are more resistant to censorship and thus enabling freedom of speech as there are no authorities or individuals that can intervene on controlling a domain except the private key holder. Also, they are a better option to replace the traditional wallet addresses as one can easily memorize the domain and use it for receiving payments.
Organizations providing blockchain domain name services include Unstoppable Domains, Namecoin and Ethereum Name Services.
How can Blockchain help us to tackle COVID-19?
Blockchain is supporting efforts around the globe to battle the virus. Here are some of the sectors in which blockchain is being implemented to tackle COVID-19:
- Supply chain management
The COVID-19 crisis has caused major disruptions across global supply chains. Two factors in tandem play a harmful role:
- Many factories have shut down due to safety concerns and there is unprecedented demand for certain goods, especially medical supplies. This high demand forces many users to source supplies without knowing their origin or quality.
- Long supply chains cause needless opacity and this makes it difficult to forecast and plan supply accordingly.
Blockchain is particularly suited to supply chains because it can connect all stakeholders in a supply chain and provide a single source of truth. It provides transparency and breaks down data silos while guaranteeing security. The World Economic Forum (WEF) has released a ‘blockchain deployment toolkit’ to help organisations improve future pandemic preparedness and accelerate an economic rebound post COVID-19.
Check out the following link to know more:
https://widgets.weforum.org/blockchain-toolkit/
2. Contact tracing
Blockchain can be used to both gather and collate patient data more efficiently, monitor patients’ movements to guarantee social distance, and protect their identity at the same time. In blockchain there is no central authority and users are given control of their personal data. They can selectively share information that is important for coronavirus mitigation efforts, while protecting their identity and other sensitive information.
3. Disaster relief and insurance
Blockchain is used in the loan and insurance industry to simplify and shorten the complicated application and approval process by removing third-party intermediaries and inherent delays in processing. The benefits include faster processing time, lower costs, reduced operational risks, and rapid settlement for all parties involved.
4. Healthcare sector
Blockchain has a wide range of applications and uses in healthcare. The ledger technology facilitates the secure transfer of patient medical records, manages the medicine supply chain and helps healthcare researchers unlock genetic code.
Blockchain has a lot of applications and offer great potential especially in many COVID-impacted scenarios, especially in the supply chain. Given its benefit in terms of reliability of the supply chain, transparency across multiple use cases, and the tracking of goods, it is a promising technology that can be used as a weapon to win this war against COVID-19.
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