SUISSE news Winter 2018 / December 2018
What is a Blockchain: A Small Insight
Yet, the vast majority of people are still scratching their heads at what this new concept actually means and what its real purpose is.
The truth is, blockchain technology has massive potential to change nearly every industry in the world — from banking to healthcare to even entertainment. Yet, blockchain technology is still in its very early stages and has a long way to go before it reaches maturity and mass adoption.
Before it has the potential to change the world, first the world has to have a grasp on what blockchain actually is and what it can do.
A brief history
In 2008, the world’s first cryptocurrency, Bitcoin, was invented and released to the public by an anonymous creator. Bitcoin was made to be an alternative to the traditional centralized banking systems of the world. This new form of digital currency would allow peer-to-peer transactions to take place autonomously and without a central authority. This was all made possible because Bitcoin is built upon something called a blockchain. Thus, the first blockchain was born, thanks to Bitcoin.
Since then, literally thousands of cryptocurrencies built on blockchains have been created. Moreover, people slowly began to realize that blockchain technology has far more potential uses than just digital currencies. As a result, countless businesses have popped up that offer blockchain solutions to problems in every industry you can think of.
Many existing companies have also taken interest in blockchain technology as well. Big names such as JPMorgan Chase, Wells Fargo, Apple, Toyota, Samsung, and many others, have announced they are exploring applications of blockchain for their respective businesses.
What exactly is a blockchain?
At its most basic form, a blockchain is a digital ledger in which transactions are recorded chronologically and publicly. In other words, a blockchain keeps a record, known as a ledger, of all data exchanges, known as transactions. These transactions are all verified and added to the ledger as a “block.”
The blockchain database is not stored in any single location. It is a shared database that has been duplicated and exists across a distributed network of millions of computers around the world that are constantly being updated simultaneously. As a result, blockchains cannot be controlled by any single entity and they have no single point of failure.
This means a blockchain is truly decentralized and cannot be altered or hacked, unless that hacker could somehow go into millions of computers and alter every single one. This makes blockchains incredibly secure as well as transparent, since anyone can access the data publicly.
What can blockchain technology be used for?Blockchain has a whole lot more uses than just creating cryptocurrencies. Blockchain’s secure, decentralized, and transparent nature can bring a wide range of benefits to many different sectors.
The most obvious use case is for financial services. Blockchain technology allows nearly instant transactions to take place from anywhere in the world, all at a very low cost since no intermediaries are required. For example, Swiss financial services UBS Group are prioritizing the application of blockchain technology in order to reduce costs and allow their services to become more efficient. Blockchain is expected to cut up to $20 billion in middleman costs for financial institutions over the coming years.
Blockchain is also incredibly useful for protecting intellectual property, which is a huge benefit for content creators such as artists, writers, photographers, inventors, and designers. Kodak has already created a blockchain-based platform called KodakOne that uses an encrypted, digital ledger of image rights that allows photographers to license their work and instantly get paid any time anyone uses their photos online.
Blockchain has the potential to make supply chains far more efficient and transparent, too. From food to pharmaceuticals to diamonds, blockchains allow industries to keep track of data on a public database to securely and efficiently verify when and where goods were manufactured, shipped, and sold.
This new technology can even be used for casting, tracking, and counting votes. Blockchain technology could literally be the end to voting fraud and corruption within elections around the world.
These examples merely scratch the surface of what blockchain technology is capable of. Plus, since the technology is so new, there’s many more use cases yet to be discovered. It still may be a while before blockchain gains mass adoption and becomes widely used by many different industries, but we can expect to see many more businesses continue to explore and implement blockchain in the years to come.