Blockchain, the technology behind bitcoin, is quickly gaining traction as a secure way to record all kinds of transactions. What is it and why should you care?
What is blockchain?
Blockchain is a distributed ledger of transactions—like financial invoices, work orders, and delivery records—maintained by interested parties in a network. When a new transaction occurs, a “block” is created to permanently record the structured, well-defined data of the transaction. As part of that structured data, the block will have reference to adjacent blocks, which creates a “chain.” When you have one or more linked transactions, you have a blockchain.
Each member of the network maintains a copy of the ledger, which ensures that no one can disrupt the chain by tampering with or deleting data. New transactions must be approved by the distributed operators of the network—using one of many consensus protocols—before they can be created and distributed to the system. The result: a distributed, immutable ledger of transactions that removes the need for intermediaries—saving companies a lot of time and money. It also increases trust, accountability, and transparency.
Blockchain across industries
Let’s look at a simple example with food safety. Walmart recently tested its ability to identify contaminated food in its stores. Currently, it can take the company days to determine which supplier and batch are contaminated and making people sick. Using the blockchain technology, Walmart can create a digital audit trail for a product from its origin, shipping company, inspection points, and warehouse. That way, every store can identify suspect food and remove it from its shelves quickly.
Here’s how it will affect other industries:
- Healthcare: Doctors, clinicians, and facilities will have better access to health records without location being a barrier.
- Transportation: The immutable nature of a platform that tracks time, date, and condition removes delivery charges for things like delays and damaged products.
- Retail and manufacturing: Companies can track provenance of products, responding to consumer demand for greater transparency.
- Oil and gas: The clear proof of origin eliminates concerns related to black market and other dubious sources.
- Finance: Consensus across members enables them to create an identity management system to support Know Your Customer (KYC) and compliance procedures.
- Government: Cities and municipalities can streamline and improve the permitting process for any number of activities.
Some of the largest tech giants are already seizing opportunities that blockchain provides:
- IBM and SecureKey have partnered to develop a digital identity and attribute sharing network based on IBM Blockchain.
- The Sovrin Foundation is developing self-sovereign identity (SSI), a scalable, privacy-protected, auditable, and open identity system.
- Microsoft, Accenture, and others launched the Decentralized Identity Foundation to develop a system for reliable identity on the internet.
- Microsoft and 13 other partners are working to improve visibility and traceability across industry supply chains.
- Backed by several credit unions, CULedger is working to solve the issue of identity management, information exchange, and transaction speed.
- Amazon, IBM, Microsoft, and SAP have announced Blockchain-as-a-Service (BaaS) on their respective cloud platforms.
The opportunities for industry advancements are endless. However, given the transformational nature of blockchain technology, it’ll take time before organizations fully understand how to take advantage of it. Blockchain implementation will require cross-industry partnerships and trust in correct business and economic climates. To participate in this new frontier, companies should take this time to review and identify blockchain opportunities in their industry and consider partnering with an organization that will help them realize new product and services.