Feeding The Monster: The Huge Impact And Real-World Uses Of Blockchain

Blockchain is an immensely hyped and important digital record-keeping technology that reached early prominence due to its origin and use in cryptocurrencies like Bitcoin, Ethereum and Ripple. But, its impact is destined to be much larger than just cryptocurrency as it provides an innovative, secure and immutable way for transactional systems to record and store data and records with multiple parties.

We are really still at the beginning of the blockchain discussion as the current hype cycle makes way for a new and powerful generation of secure transactional systems that enable businesses to support larger and faster growth.

What Is BlockChain

Blockchain is a distributed ledger technology (“DLT”). that enables a party to transfer and record an asset without an intermediary. This transfer of an asset is recorded as a transaction. A blockchain system consists of two types of stored records:

1. Transactions -The actions of record that are committed in a particular timeframe
2. Block - Is a group of verified transactions.

Transactions are stored together in a block. Each block contains the cryptographic hash of the previous one, thus forming a chain. The blockchain is duplicated by all computers on the network.

The hash takes the data from the previous block and transforms it into a string. Since theoretically the strings are impossible to predict it means that any tampering with the data found in the blocks that make up the chain should be detected. Each block is used to confirm the validity of the previous block back to the block that started the chain.

There is no centralized server or authority required or use to hold/escrow the transactions. Blockchain is in theory more secure than other applications, platforms and potentially even traditional banking.

Given blockchain is decentralized and does not allow previous transactions or blocks to be altered means it ideal for use in recording tamper-proof transactions and transactional data. Another important benefit of blockchain is that it does not require the identity of the person committing the transaction to be revealed, thereby ensuring the privacy of the user.

Because each computer on a blockchain network has a copy of the blockchain, the only way to potentially hack a blockchain system would require that all the computers on the network would have to be hacked before another block was added to the chain. So far this has proved to be extremely difficult, if not impossible.

Blockchain is indeed an important technology that can enable a whole new generation of secure transactional applications and platforms.

Blockchain Hype

The spectacular rise of cryptocurrencies like Bitcoin, Ethereum and Ripple has been barely able to overshadow the strong commercial potential for Blockchain in the global marketplace.

The potential of blockchain is starting to catch up with the hype, which is a good thing. Especially, given many prominent companies, vendors, financiers and entrepreneurs have placed their reputations and investments on blockchain. The future success of blockchain as a technology is directly related to its use-cases and ability to provide real commercial value to many different types of businesses.

Potential Uses of BlockChain

Many companies and vendors around the globe are planning, developing or deploying new blockchain applications or uses for the technology. Here are some other potential uses for blockchain technology:

• Music Royalties - Managing copyrights and collecting royalties from digital streaming and downloads.
• Money Transfers - Utilize a secure log of sensitive transactions that allows for tamper-proof verification of monies being transferred between parties.
• Property Records - Ability to securely store property and land records without concern over unauthorized changes or loss.
• Loyalty Rewards - Secure way for multiple parties to share track and record loyalty rewards without identity and security concerns.
• Social Messaging - Ability to send messages without the service provider being able to view or have access to the messages.  
• Insurance Claims – Utilize smart contracts based on blockchain to reduce bad claims by managing insurance claims more securely and transparently.
• Healthcare - Ensure privacy concerns are met while sharing private information with the multiple parties providing care.
• Trading Systems - Perfect use-case for utilizing blockchain’s secure transaction capability to ensure safe transactions without having to utilize third-party middlemen or governments for clearing and recording.
• Regulatory Compliance – Make sure positive actions regarding compliance and regulatory concerns are transparent and continually verified by the network.
• Supply Chain Management - Utilize an immutable ledger to track goods and services throughout the supply chain.

As more advanced use cases for blockchain are developed and deployed the focus will likely be on latency (transaction speed) and transaction costs. We are already seeing it manifest itself in the cryptocurrency world, as Bitcoin is slower and typically more expensive than some of its more prominent peers like Ethereum, Ripple, Doge, etc…

Is BlockChain Right For You

When trying to determine if blockchain is the right choice for use in your application, system or solution, it is best to review the reasons you believe blockchain is the right choice. First, If the problem you are trying to solve can be reasonably done with a relational database, then it is best to use it versus blockchain as they have been around longer and the talent to get it done is more readily available at a lower cost. Obviously, it is very important to make the right choice up front, so do your research and math.

Blockchain can be a very effective way to transact business, but it is highly advisable to review the reasons you believe blockchain is appropriate for your application or solution. If you can reasonably determine that you have three or four of the needs described below, then blockchain may be your best choice.

• Need a shared database with multiple writers accessing and storing immutable data.
• Requirement for a distributed ledger that holds transactions created by multiple writers.
• You have a need to verify that transactions or records are valid and unchanged as part of an important business or financial workflows.
• Multiple parties need to electronically view, verify and/or record actions of a given party
• Need to share data between multiple parties via a transaction or series of transactions and have automatic reconciliation.
• While managing contractual relationships you need to validate multiple unknown parties involved in a transaction.
• Want a distributed system that remove intermediaries and would lower costs, simply process and potentially speed up complicated transactions.
• Need a trusted transaction scenario, since no suitable intermediary currently exists for complex transactions.
• A transaction needs to be created and worked on collaboratively by multiple parties, without additional risk or incurring more latency.

As shown above, it is easy to see how the value of blockchain can be multiplied when solving complex business problems with transactions involving multiple parties. But it also has strong utility in ensuring data or transactional data is unchanged in simpler transactions as well.

Blockchain is here to stay and you can move down the blockchain path internally (be sure and get a qualified blockchain team though) or many of the top software vendors out there are making very large strategic investments to utilize blockchain and gain more customers and/or market share. So, there are several paths that a business can take to gain true value from blockchain and realize there is more to it than just hype.

Once again though, do the research and the math. Good luck!

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Blockchain example image courtesy of Yevgeniy (Jim) Brikman
https://www.ybrikman.com/