What is Blockchain Technology?
According to Don and Alex Tapscott “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
Created in 2008, blockchain is an encrypted programme that acts as an online ledger of transactions. Each block of transactions is linked in a chain, giving participants an overall picture of what is taking place in the system.
The programme is designed to be decentralised, allowing transactions to take place between users without the need for third parties such as banks, or a central clearing system like SWIFT. In essence, each user acts as their own independent bank – free from the administration, and associated costs, found in a traditional financial center.
Blockchain is a technology of storage and transmission of information, a digital data management protocol:
- Transparent : Everyone can consult all exchanges, present and past.
- Without a control body or trusted third party : It is based on peer-to-peer (P2P) exchanges.
- Infallible and secure : Unlike more conventional databases, it is “distributed”. It means that different copies exist simultaneously on different computers of the network. Preventing the Blockchain from being hacked.
If Blockchain and Bitcoin are regularly associated, Blockchain Technology is “the virtual infrastructure on which the Bitcoin is based”, “the protocol describing the operation of the network on which this currency circulates”. The first transaction with this currency, in May 2010, was the purchase of two pizzas.
How Blockchain Technology can be used in Businesses
The blockchain gives internet users the ability to create value and authenticates digital information. What will new business applications result?
Businesses are becoming more interested by Blockchain Technology recently, and we’ve seen companies in insurance, banks, and payment companies sprinting to begin adopting Blockchain. For these companies that use Blockchain Technology, security offered by the system is one of the most crucial aspects. Here’s how Blockchain has and will be used across multiple business sectors.
Smart contract — is a piece of code which is stored in the blockchain network (on each participant database). It defines the conditions to which all parties using contract agrees. So if required conditions are met certain actions are executed.
As the smart contract is stored on every computer in the network, they all must execute it and get to the same result. This way users can be sure, that outcome is correct.
One of the reasons blockchain technology is so great for supply chain management has to do with the fact that smart contracts are a major part of the system.
There are several potential business applications for blockchain technology. One of those applications is the use of smart contracts.
With smart contacts, all the interested parties can see the terms of the agreement. On top of that, the agreements enforce themselves. In order to move forward, certain expectations have to be met. When the signatories meet those expectations, the contracts can be fulfilled.
This is a great way to enhance your supply chain management. With the use of smart contracts, you can make sure different suppliers are meeting their obligations. You can see deliveries at multiple locations, and track shipments based on the fulfillment of smart contract terms.
And, because it’s all managed with a public distributed ledger, it’s easy to see what’s going on. In many cases, current supply chains still operate using reams of paper.
According to Cisco, 50 billion devices are due to come online by 2020. With so many connected devices all sending, receiving and processing instructions to turn on, dial down and move up, the sheer amount of data due to come on-stream could come with unprecedented costs. Other issues include how exactly we can track and manage billions of connected devices, storing the metadata that these devices produce, and do it all reliably and securely. Before mainstream Internet-of-Things consumer adoption can really take hold, these issues will need to be resolved.
Blockchain technologies could perhaps be the silver bullet needed by the IoT industry. Blockchain technology can be used in tracking billions of connected devices, enable the processing of transactions and coordination between devices, allow for significant savings to IoT industry manufacturers. This decentralized approach would eliminate single points of failure, creating a more resilient ecosystem for devices to run on. The cryptographic algorithms used by blockchains, would make consumer data more private.
Blockchain Internet of Things (IoT) Use Cases:
- Connected Vehicles
- Smart Appliances
- Supply Chain Sensors
Blockchain technology enables the buying and selling of the renewable energy generated by neighborhood microgrids. When solar panels make excess energy, Ethereum-based smart contracts automatically redistribute it. Similar types of smart contract automation will have many other applications as the IoT becomes a reality.
Developing digital identity standards is proving to be a highly complex process. Technical challenges aside, a universal online identity solution requires cooperation between private entities and government. Add to that the need to navigate legal systems in different countries and the problem becomes exponentially difficult. E-Commerce on the internet currently relies on the SSL certificate (the little green lock) for secure transactions on the web. Netki is a startup that aspires to create an SSL standard for the blockchain. Having recently announced a $3.5 million seed round, Netki expects a product launch in early 2017.
Finally According to Vitalik Buterin ,Inventor of Ethereum “Blockchain solves the problem of manipulation. When I speak about it in the West, people say they trust Google, Facebook, or their banks. But the rest of the world doesn’t trust organizations and corporations that much — I mean Africa, India, the Eastern Europe, or Russia. It’s not about the places where people are really rich. Blockchain’s opportunities are the highest in the countries that haven’t reached that level yet.”