What Is Blockchain and Why Should I Care?

While most people have only heard the term “blockchain” associated with Bitcoin, blockchain or blockchain technology is something with far more potential than just its current usage in cryptocurrency.

From land titles to reclaiming the remittance market, blockchain technology offers both an opportunity to set scalable infrastructures from the ground up and a way to navigate and govern industries that have either been previously inefficient or unclear.

What is blockchain?

Blockchain is essentially a shared digital record book — a new way of recordkeeping that guarantees accuracy in every transaction because any and all changes must be approved by everyone who has access to it. Imagine a ledger, but with next-level, impenetrable security.

Anyone can access this ledger, and all those with access are given their own individual copy of the records. Any changes or additions to the ledger must be agreed to by everyone. This safeguards against not only attempts to manipulate information without group agreement, but also removes the need for a single person or persons to act as the sole recordkeeper.

If we think about blockchain like a Google document that has been shared to a group of people, that means that changes on the document will be automatically highlighted for all to see and therefore, everyone in the group will be able to manage and review the latest activity.

This way of recordkeeping not only encourages open and honest transactions, but will also disrupt how current public records are kept and make them widely accessible to the people. Generally speaking, in any industry where information and value must be documented securely, blockchain can be applied.

How Is It Better Than Your Average Excel Sheet?

In the past, transactions were tracked using paper receipts or deeds that could easily be lost or damaged over time. When computers became a common fixture in the home and workplace, accounting or note-taking software like Microsoft Excel or Word enabled electronic storage and management of information without the real-life clutter.

The problem, however, is that even with electronic storage, the information usually lived within a program or file kept on one computer or hard drive or a central server. If the the file was lost or stolen, the original data would be compromised or lost altogether.

How blockchain improves upon this and minimizes the risk of loss is by decentralization — or not keeping the master record data just in one place. As mentioned before, because everyone on the blockchain has a copy of the records, the original copies live on every computer in the blockchain network. Any attempts to add a transaction to the blockchain requires validation from the entire network, or are otherwise rejected. That way, the data itself is not vulnerable to loss or security breach.

What does this mean for us in the Philippines?

This means that blockchain can supply solutions on many fronts that benefit the nation. Use cases — in other words, scenarios where blockchain can be applied — include anything from establishing legitimate proof of identity and ownership to preventing voter fraud and reducing remittance costs.

At the moment, one of the most relevant ways blockchain can contribute to the nation is in building its national ID system. Blockchain can help create a unified database to make everyday transactions with all branches of the government faster and more organized, as well as deter crimes like identity theft. Since access to benefits and services provided by the government and big institutions require proof of identity, having a reliable way to document a citizen’s identity will make it easier for more Filipinos to apply for jobs and open bank accounts.

Another way blockchain can contribute is in laying the groundwork for a concrete land title registry. There is currently an unclear method of tracking property here in the Philippines. And sometimes, due to slow processing of claim paperwork or lost and damaged property deeds, land owners do not end up having an official claim to the property they have purchased. In the worst cases, owners can fall victim to land theft by deed forgery without a way to defend their property. By having an irrefutable database validated by your peers and officialized by the government, citizens will be have legitimate proof of ownership and the business of purchasing land on a local level can be confidently executed directly between the buyer and seller.

Yet another way blockchain will benefit us? By serving as a new platform that will replace the currently problematic voting system. Using a technology like blockchain, which has built-in properties of fact-checking, votes may be tracked more effectively to avoid electoral rigging by misuse of deceased identities to place fraudulent votes.

These, of course, are only a few applicable cases. We have yet to even scratch the possibility of blockchain in other areas of society it can help improve.

What is most apparent at the end of the day, however, is that blockchain is the future — here and abroad. From smaller rural communities in the Philippines to some of the world’s largest banks, blockchain application is proving to be an attractive and practical way to revolutionize both current institutions and infrastructures that have yet to be established.

When examining how blockchain has already begun to take shape in the Philippines, look no further than the remittance market. What the technology has brought and is continuing to deliver is a way for the people to reclaim the money they work hard for.

In 2017, approximately P1.45 trillion was sent home by Filipino family members working abroad — P100 billion of which were taken by traditional financial institutions in the form of fees. Because blockchain removes this role of the “middleman”, you can now send money home to your loved ones at a significantly lower cost.

The question now moving forward is which problem here will we tackle next with this innovative technology?

Disclaimer: We are not an investment advisor, and this post is for educational purposes only. Any information contained in this blog is not meant to be taken as financial advice.