Largely synonymous with cryptocurrencies such as BitCoin and its many variations, blockchain is the underlying technology that is making it possible for the world to imagine fundamentally new and better ways of doing things.
As if threatening to disrupt the financial universe of stock markets, trades, dividends and currency exchanges isn’t enough, blockchain holds the potential to affect a sea change of disruption across many of the longstanding institutions, industries and societal structures we’ve become accustomed to.
As a foundation technology, blockchain has the potential to produce a plethora of spin-off phenomena that could potentially result in major disruptions across industries and disciplines far and wide. Bitcoin has already proven this theory as seasoned and budding investors rush to claim their piece of the new digital currency.
What is Blockchain?
Blockchain was created by an anonymous person, or group of people going by the nomenclature of Satoshi Nakamoto in 2008. It was then implemented as a core component of the now famous or infamous (depending on who you ask) cryptocurrency known as Bitcoin. Its primary function was to act as a public ledger for all transactions using the new cryptocurrency.
What made blockchain a perfect fit for potential new cryptocurrencies was the solution it provided to the problem of double-spending, which is a way to alter, delete or otherwise manipulate financial transactions or digital currency values for fraudulent purposes.
Blockchain does this by eliminating the need for a trusted third-party authority to validate transactions, which is the traditional way checks and balances are maintained during financial transactions, audits, stock trades etc. Instead, its internet-based, peer-to-peer architecture allows it to distribute and update manifold copies of digital records and transactions in milliseconds across its architecture.
This results in a distributed and verifiable ledger that is virtually incorruptible as transactions are validated by consensus of the entire distributed chain, and not a nominated external authority. From this architecture arises a democratised way of substantiating crucial information within a matter of seconds. And therein lies blockchain’s beauty: its incorruptibility; a characteristic not absent in humans.
A Picture of Potent Potential
Its decentralized consensus architecture makes blockchain potentially suitable for the recording of any event imaginable in digital format. Medical, insurance, financial, audit, identity management, transaction processing, document digitisation, gambling or even voting systems could all be fundamentally transformed by its the technology’s vast applicability.
The near-incorruptibility of data in an age where information has become a currency in its own right is what makes blockchain such a paradigm shifting piece of technology. And industries can’t deny its merits. Just last week, the De Beers Group announced its venture into blockchain as a way to guarantee and verify the authenticity of diamonds from the moment they are mined to the point that it reaches the consumer.
The world’s largest diamond producer thinks the technology is compatible with its approach to reducing the proliferation of conflict diamonds. De Beers CEO, Bruce Cleaver, told Reuters that blockchain is “…as immutable as anything invented. It’s a much more unhackable system than anything on a single server.”
The De Beers blockchain is earmarked to span the entire value chain and would be open to everyone in the industry. This gives it the potential to monitor virtually every stone, reassure financial backers and make the mining supply chain more efficient, transparent and accountable.
“With blockchain, we can imagine a world in which contracts are embedded in digital code and stored in transparent, shared databases, where they are protected from deletion, tampering, and revision. In this world every agreement, every process, every task, and every payment would have a digital record and signature that could be identified, validated, stored, and shared.”
– Harvard Business Review
Russia: A Need for Transparency
Russia’s reputation for political corruption (depending on your preference of news channel) doesn’t exactly make it synonymous with governmental transparency. Yet, the Kremlin’s ventures into blockchain has resulted in ways to include its citizens in decision-making at a council level.
Moscow’s Active Citizen App was developed in 2014 to include citizens in non-political matters such as new housing developments, transport upgrades, bike lanes, free Wi-Fi, park activities, tree planting etc. Since its launch, the app has come under scrutiny from critics who say it is designed to skew “voting” in favour of the government agendas.
As a result, lawmakers decided to use blockchain technology to ensure transparency and incorruptibility of voter data and, interestingly, of over 2000 polls submitted through the app, none of the votes tallied came up against the consensus of voting citizens.
While political opponents liken the move to putting lipstick on a pig, the Russian government’s exploration into distributed ledger systems reveals a picture of potential of what the technology could mean for more effective democracy.
More Robust Checks and Balances
Blockchain’s ability to effectively eliminate middlemen in the auditing and financial world could just be the perfect counterweight to the global plague corruption has become. Traditionally, auditing took a retrospective view of an entity’s financial conduct, with reports following, sometimes years, after actual deals, contracts and arrangements have been signed and completed.
This does little in the way of taking a preemptive stance against corrupt practices in government or corporate environments. Distributed Ledger Technology threatens to disrupt entire auditing frameworks by applying real-time, nonpartisan, incorruptible and democratised ways of auditing with little to no room for error.
“Key to the technology is its record of transactions, which enables something akin to real-time auditing by default. Blockchain might also be able to replace random sampling by auditors, by making it easier and more effective to check every single transaction using code. This would also make it easier to investigate fraud, since real-time systems could highlight and investigate anomalies.”
– Ernst & Young
Is the World Ready for Blockchain?
Harvard Business Review’s likening of blockchain to TCP/IP offers a good parallel in many ways. While the average Instagrammer or blogger may be blissfully unaware of TCP/IP’s role in their digital stardom, without it, we wouldn’t live in the hyper-connected globe of tweets, likes, swipes and profile updates. In the same vein, blockchain won’t be a celebrated and much revered end-user novelty, but instead, will provide the foundations upon which new and incumbent technologies, processes and institutions will be re-imagined.
Yet, unlike the case of the unsung protocol that gave us the World Wide Web, blockchain’s adoption won’t be nearly as sluggish as that of TCP/IP. Software giants, Microsoft, SAP, IBM, Hewlett Packard and other non-tech big names such as J.P Morgan make up the 200-member Enterprise Ethereum Alliance (EEA). The alliance is a blockchain initiative with a vision to drive the evolution of the technology and expand use-cases for it across enterprises and other areas.
Blockchain’s potential for transformative change will inevitably challenge entrenched norms, legislations, traditions and hierarchies. Its ability to shine a light in areas some would prefer to remain cloaked in darkness will inevitably see it come up against some resistance. However, its proven potential to facilitate disruption, as in the case of cryptocurrency, means a working proof of concept of its viability is impossible to ignore – and that’s a good thing, depending on who you ask.
From server rooms housing Windows NT4 systems of yesteryear, to hybrid cloud environments we find today, Yaseen has worked with leading technology brands for over a decade, which gives him an acute understanding of where technology has come from and the new and interesting places it is taking the business world. As a Digital Copywriter, he uses this unique vantage point to share his insights on the evolving digital realm.