It has become traditional as each year ends to proclaim the new one “The Year Of Blockchain” and as each year ends technology commentators rush to speculate why Blockchain doesn’t yet seem to have lived up to its potential. Outside the confines of the tech community, Blockchain is readily confused with Bitcoin, the cryptocurrency (now 9 years old) whose fortunes wax and wane as people variously argue it’s wildly overvalued or grievously undervalued.
It’s perhaps worthwhile setting out what Blockchain is (and isn’t). Blockchain certainly isn’t a currency, crypto or otherwise. It’s a layer of “infrastructure” sometimes called Distributed Ledger Technology. It is distributed in the sense that there is no central repository of information, no database on a file server which can be hacked, or bank vault that can be robbed. It is ledger technology in the sense that it is able to hold and transmit information, a system which can store transaction details – in the words of Harvard Business Review – “efficiently…in a permanent and verifiable way.”
It’s called Blockchain (originally two words “block chain”) because there is a chain of blocks – something like a winding snake – and each block contains the latest information in the ledger (database). There are several aspects which make Blockchain flexible and potentially very useful:
- Blocks are distributed using peer-to-peer technology in a decentralised way on many many computers worldwide. This makes blocks permanent ie they can’t be inadvertently destroyed or lost if a file server is breaks down or a building is destroyed in a hurricane.
- Blocks store data in a verifiable way because each new block contains traces of the previous block in the chain meaning that a given block of information cannot be altered without changing every subsequent block (which would require someone to control the whole network system).
- Blocks are stored using public key / private key cryptography meaning they are secure.
If Blockchain is potentially so useful, what is it actually being used for? Its most common use currently is for cryptocurrencies such as Bitcoin. It is however being trialled and tested in many much less tech-centric activities:
- The governments of Sweden, Georgia and India are, independently, looking at how Blockchain can help ensure the integrity of their land registers and speed up land transfers.
- Performing rights holders are working to use Blockchain to speed up royalty payments by authenticating copyright more quickly.
- One large logistics company is trialling Blockchain to ensure greater data integrity ie so that it loses fewer parcels.
- A credit and debit card provider has started using Blockchain to expedite settlement of transactions.
- A fiduciary business is examining how Blockchain can enable it to incorporate companies more quickly with less human error.
It’s clearly early days and we’re reminded that certain technologies, be it the internet or the mobile phone, were available for a substantial period before they were understood to be revolutionary.
If Blockchain does turn out to be quietly revolutionary, it will be in these everyday activities set out above. So whilst 2018 may not be “The Year of Blockchain”, it may very well be the year that Blockchain became mainstream.