Not Just for
David Daffner, Vice President
If you’ve heard the term blockchain before, it was most likely in the same sentence as bitcoin. Blockchain, which allows digital information to be distributed but not copied, was originally devised for digital currency but its unique characteristics have potential applications beyond cryptocurrency. For background, check out this visual explanation of blockchain.
Understanding the technology
In a blog article written by Bertrand Maltaverne, he describes blockchain as “a form of digital trust” which is very insightful. He says it’s more than a ledger or database logging transactions because, at its heart, blockchain represents trust between partners. This trust speeds up transactions by removing unnecessary intermediaries. That benefit can provide enormous value to large, complex supply chains, as well as other industries such as healthcare and real estate, as well as voting elections.
Maltaverne goes on to list three ways blockchain is so valuable in how records are added to the database:
- “A network of computers stores and verifies any new record, making the blockchain more robust than a single instance (like in most traditional databases).
- Every transaction is linked to the previous one, creating a complete traceability and preventing any data alteration.
- It’s decentralized (peer-to-peer), so there is no authority deciding rules or with an interest to manipulate data in one way or another.”
Understanding the implications
Bernard Marr, a Forbes contributor, points out that we’re all used to sharing information on the internet, but we wouldn’t share anything of real value, like money, ownership rights or intellectual property in such an unsecured environment. We rely on traditional institutions like banks and government agencies for that. While PayPal offers an alternative payment method, it’s still secured with a credit card or bank account offline.
According to Marr, “Blockchain technology offers the intriguing possibility of eliminating this ‘middleman.’ It does this by filling three important roles: recording transactions, establishing identity and establishing contracts … roles traditionally carried out by the financial services sector.”
While millions of people around the world are already using blockchain, this disruptive application of technology is still developing. And major companies, like Fidelity, IBM and JP Morgan, are investing billions of dollars. New applications will continue to be uncovered. Blockchain revolutionized digital financial transactions and is poised to impact other industries as well.