Following on from my blog post outlining an A-Z of Digital, here is “B is for Blockchain”
What is a Blockchain. Well there are lots of articles on Blockchains that explain them, so rather than repeat, I will reference a some colleagues blog posts.
A blockchain– originally block chain – is a distributed database that is used to maintain a continuously growing list of records, called blocks. Each block contains a timestamp and a link to a previous block. A blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. By design, blockchains are inherently resistant to modification of the data. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks and the collusion of the network. Functionally, a blockchain can serve as “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. The ledger itself can also be programmed to trigger transactions automatically.”
One common train of thought that can occur when talking about Blockchains is to also think about Bitcoins. Often associated due to Bitcoins using Blockchains for their transactions, there are other uses for Blockchains. A colleague Neil Fagan covers this point in his blog on Bitcoins and Blockchains
Blockchains are secure by design (another colleague Faisal Siddiqi discusses this in his blog post Blockchains and Birthdays). The ledger method makes their use ideal in many industry sectors including, Healthcare, Banking, Insurance and Legal where transactions can be time stamped, verified automatically, encrypted and trusted. This helps reduce the amount of fraud with transactions being proved. Some of these verticals are covered in a number of posts by colleagues listed below with some excerpts from their blogs:
Blockchain or, more precisely, Distributed Ledger Technology (DLT) is currently one of the hot topics in the banking industry.
Its main focus is on clearing and settlement, where DLT can reduce reconcile efforts, address liquidity needs and accelerate processing. Several reports and studies suggest benefits and substantial savings – in particular, when DLT is applied in financial market infrastructures spanning multiple jurisdictions. But there are also a number of open points, not least in the legal and regulatory realms.
A compelling scenario could be an insurance policy blockchain smart contract with multiple transactions throughout its lifecycle. An initial purchase transaction would trigger an automatic deposit of monetary assets into the contract. A second transaction might add documentation proving ownership and value of real world property being insured. Subsequently, a loss notice event from an external claims system might trigger a Claim transaction which would execute autonomous Verification and Payout smart contracts. The policyholder would not need to file a claim, and the insurer would not have to administer it. This would reduce the potential for fraud, decrease administration costs and simplify the claims process.
In addition to the elegant technology behind distributed blockchain applications, there is a solid business proposition to be made. With Bitcoin having successfully demonstrated the decentralization of money, it becomes feasible to consider that all kinds of other transactions can also be decentralized on blockchains with similar benefits. Decentralized applications are being developed on blockchains for tracking the provenance of diamonds, simplifying interoperability of electronic health records, adding IoT smarts to the power grid and disrupting a range of industries with these other fascinating use cases.
In some cultures, a handshake is as good as a contract. In some situations, emotional intelligence plays a role in shaping how a person responds to another person, and the trust level you build. In the blockchain world, this interaction will be unnecessary; a person will simply trust another through the use of a software program.