Blockchain, once associated solely with the cryptocurrency bitcoin, has since been found to have many uses, with the potential for many more.
One of the foremost examples of digital ledger technology (DLT), blockchain can solidify supply chains and secure elections. It can make real estate transactions easier, and medical records more accessible. It can facilitate data transfers and ensure the smooth operation of the Internet of Things.
But why? What makes it so good, and why is there the expectation that it could do so much more?
In a word, security. The folks at MIT spelled it out in layman’s terms, while using bitcoin, widely considered the first digital currency, as an example. All of bitcoin’s transactions are stored in the ledger, with multiple copies shared to a network of computers, or nodes. These nodes, which are operated by so-called miners, determine the validity of every new transaction. In the case of bitcoin, for instance, they check to see that each miner seeking to complete a transaction using that particular crypto does in fact have one to spend. Valid transactions are then added to the chain as blocks.
Every block has its own cryptographic fingerprint (called a hash), and every completed transaction does so courtesy of a unique process known as a consensus protocol — i.e., the agreement between all the other nodes. Both those elements should at least theoretically make such transactions tamperproof.
The MIT crew does raise questions about how secure the network really is, and provides examples of instances when hot wallets or smart contracts, two DLT staples, have been hacked. But generally blockchain, and DLT in general, has been well-received.
Consider the following examples:
- Supply chain management: Using an online ledger removes documents, and thus inefficiency, from the equation. Consider the example of the shipment of flowers from Kenya to Rotterdam that required no fewer than 200 documents to complete. That’s a thing of the past with blockchain.
- Secure elections: It could potentially reduce fraud or, for that matter, the need to so much as travel to a polling place. In 2016 West Virginia became the first state to use DLT-based technology in a primary, a possible sign of things to come.
- Real estate transactions: With supply chains, there’s no need for hard copies anymore. All of that now exists in the blockchain network, and all parties have secure access. This is true for real estate transactions, and all manner of other transactions.
- Medical records: Electronic medical records (EMRs) are already widely used, but those stored in a blockchain would ensure the patient easier access and greater privacy, the latter of which is essential under HIPAA requirements.
- Data transfers: The cryptocurrency IOTA, believing most corporate data goes unused, has developed a DLT-based data marketplace that would allow companies to sell or share data, the idea being that it would spark innovation.
- IoT management: The world of interconnected devices — smart thermostats, lights, refrigerators, security systems, et al. — is ever-evolving, and in 2017 Cisco Systems moved to trademark a blockchain that would monitor the various devices for trustworthiness.
Clearly there is more to come. Blockchain will disrupt a great many sectors in the years to come, and we have its reliability and security to thank.