The press loves to tell business leaders that they’re lagging behind: that if they don’t jump on the next bandwagon, our hard-built operations will be cast on the scrapheap of history.
Video calling. Social media. Remote working. All promised to revolutionise the way businesses operate. But while each is slowly shifting behaviours and expectations, none have created the seismic change promised to us by journalists and tech ‘gurus’.
Blockchain, then, is the latest in a long line of lofty technologies promising to change the way we work, trade and grow.
Except this time, it just might – whatever your business, whatever your sector. Here’s what you need to know.
What is Blockchain?
At its most basic level, Blockchain technology is a record of a change made to a piece of data, which is visible to all users with access to the Blockchain. This record cannot be corrupted or changed after being added to the chain, or it becomes a new entry in the chain.
Confused? Consider the last time you bought a car. If the previous owner was a scrupulous one, they would have supplied the ownership history of the vehicle, with notes on previous owners, repairs made and taxes paid on it. The Blockchain is the owner’s logbook for any database, document, or set of digital information. A Blockchain is a purchase ledger for any type of information, accessible to either everyone or only those with privileged access to the chain.
The Blockchain is information technology built on top of the Internet. Described by Forbes as the ‘third layer’ of the Internet, it exists outside the World Wide Web we use every day, being a different way to store and distribute data online.
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When a user views or downloads any information from the Internet, they view or download a version of that information stored in a single location. If the server holding the information is accessed, then the information itself can be changed.
Conversely, every time information is changed by any user connected to the Blockchain, a record of this change is stored on every other device in the chain. A single user therefore cannot change this information in secret without access to every device, which would take near-impossible levels of computing power.
What can Blockchain be used for?
In this way, Blockchain is a near-perfect way of keeping and sharing accurate digital records and managing data online. The implications of this for businesses and organisations are profound.
Most readers will have heard the term ‘Blockchain’ in relation to cryptocurrency, including Bitcoin – one of the first major applications of the technology, following its creation in 2008. Cryptocurrencies allow users to trade value between each other anonymously, but with a complete record of who received what, and who paid who, stored in a Blockchain. Every transfer is direct. The Blockchain requires no middle man, because the Blockchain is its own record of transactions made.
‘Smart Contracts’ are the second instance where Blockchain has gained widespread interest. These are technologies which act ‘on’ Blockchains themselves. If a condition is met in the Blockchain, a Smart Contract is issued. For example, if a user withdraws an excessive amount from a bank account, a Smart Contract sends a warning to the user that they are overdrawn. This makes online record systems more useful and efficient.
Why is this important?
In both instances above, Blockchain technology removes the needed for brokers and record keepers for the transactions involved. This is why the technology has such promise for businesses and other organisations – and why many may feel threatened by the prospect of decentralised, incorruptible, fully transparent digital record-keeping.
To date, the technology has garnered most interest in the world of finance, built as banks are to move, manage and store records of transactional data. But Blockchain has applications that are near universal. Indeed, organisations are only beginning to understand how useful the technology is for day-to-day online operations of all types. These applications fall into several categories:
- Where data provenance has a value. Founded in 2015, Everledger offers a platform that tracks the origin and movements of thousands of diamonds. Every time a diamond changes hands, the transaction is recorded in a Blockchain so that the new owner knows where their stock originated. Tracking systems like these have value for businesses heavily reliant on the quality of their supply chain.
- Where data can be shared. The Estonian Government uses Blockchain technology to share all of their citizens’ data securely across state service providers, so these services can be better coordinated ‘on the ground’. Elsewhere, Blockchains have been used to store land registry data, and make it universally available.
- Where transactions can be made more efficient. Seven major banks have joined a Blockchain hosted by IBM to connect customers, their suppliers and the banks themselves, to make financial transactions between each party directly, and therefore more quickly and securely. Goldman Sachs has estimated that time-saving technology of this type has potential to save customers more than $6bn annually, globally.
- Where costs can be cut. Similarly, money transfer app Circle enables users to send currency across borders using Blockchain technology – charging no commission fees because users transact directly with one another.
- Where accountability is key. Blockchain records every interaction made with an item of data, for all to see. In this way, every change to a contract between parties, or to a business’ financial records, could be visible to all parties in the chain. That means “no more missed transactions, human or machine errors, or even an exchange that was not done with the consent of the parties involved”, says TedX speaker Ian Khan. Businesses will be able to monitor contracts; donors will be able to track where charities use their money.
- Where data can be disaggregated, and shared between trusted parties. Blockchain will enable users to store their private data online, then allow organisations to access only permitted parts of that data. Sensitive medical data could be shared selectively among hospital departments, with patients having a full record of which department accessed which data, and when.
- Where institutions and organisations are not trusted. By making the movement of data fully visible, Blockchain empowers users to own their data – a growing concern in developed and undeveloped societies where electoral fraud and similar issues exist.
What does Blockchain technology mean for my business?
2017 has seen Blockchain technology come into popular consciousness. Yet for owners of growing businesses, the real-life applications for the technology are some way off – with the likes of the Bank of England dubious about the maturity of Blockchain payment systems.
What is clear is that Blockchain is not going anywhere, and that accessible, incorruptible ledger systems will be adopted in time. Behind the scenes, banks are already using the technology to manage their own internal systems, which means your business’ finances have already been touched by the new technology.
Businesses able to understand the concept and develop ideas for making their processes more efficient, transport and secure when the technology reaches maturity will have a head start on their competitors.
Moreover, Bitcoin will make the automation of data processes easier than ever. For this reason, the technology represents a rearguard challenge for many businesses. The middle man should watch his back. Will you?