Although Blockchain, as a term, hasn’t yet entered the wider public consciousness, there are many in business, especially finance, who are excited about the potential that this technology represents.
Blockchain was first created by Satoshi Nakamoto (a pseudonym used by an anonymous developer) as the technology behind the Bitcoin cryptocurrency. It’s a specialized data structure that can replace a traditional centralized ledger, by sharing a public ledger over a network of computers. The technology is secure by design and the lack of any central resource makes it attractive in similar ways to cloud computing and peer to peer file networks.
Understanding the potential use-cases for Blockchain will be essential for business leaders who want to disrupt and innovate in their markets.
Validation is the Biggest Strength of Blockchain
All data sent through a Blockchain is timestamped and validated. By design, any data that enters the ledger database is automatically valid through confirmation of existence. It is extremely difficult to spoof data through Blockchain because there is no centralized database or system that can be manipulated. Erroneous data simply cannot exist because it would not align with the records that exist on every system that makes up the network.
This is important for a number of reasons. One example is that it removes the need for a middleman or third party in verification of data for financial transactions. This could be significant for financial trading, and could eliminate the need for stock exchanges in the future. Companies could publicly offer shares in the form of virtual currency, which could then be traded and validated within a Blockchain network.
Personal identification could also be performed through Blockchain, with some companies already developing identity services. OneName is a prime example. The company has developed a decentralized naming and storage system where users can create accounts and usernames which are stored indefinitely within Blockchain. As the technology matures, OneName hopes to be able to provide a service where users can use an existing Blockchain ID to log into secure websites and other online services. Banks could use this type of identification system to verify customers. Governments could utilize similar technology to build a national identification network that wouldn’t require manual processing. In the best case scenario, identity theft would become a thing of the past.
Blockchain technology has the potential to be used as a validation tool for any transaction imaginable, even when not related to finance. Immigration data could be stored in Blockchain databases. Civil and criminal records could be recorded securely. The potential is only limited by the creativity and vision of those that innovate using Blockchain derived technology, and it’s quite clear at this stage that tamper-proof data storage and validation is the biggest high-level advantage.
Do Large Organizations Recognize the Benefits and Future Potential of Blockchain?
Bitcoin has provided the best proof of concept possible, forcing large private, public, and government organizations to take note.
- Consultancy company Deloitte announced in 2016 that they are in the early stages of developing a digital banking system based on Blockchain technology.
- Tech giant IBM already uses Blockchain to offer a system that is used for creating smart contracts that can be self-executed and self-enforced. Once agreed upon and recorded, these contracts are extremely difficult to misinterpret or misrepresent, because they can always be verified through the distributed ledger.
- In Russia, Sberbank (a state run enterprise) has partnered with federal agencies to develop a document transfer and storage system using Blockchain technology based on Bitcoin’s original concept.
It’s clear that Blockchain is a technology that can change the way we think about money, transactions, personal data, and even contractual agreements. The businesses that recognize the potential of this technology will be those that can capitalize on its benefits in the coming years.