Here's Why You Should be Familiar with Blockchain
While blockchain gave birth to bitcoin ten years ago, the now-viral cryptocurrency has outshone its parent; especially this year when bitcoin saw its meteoric rise in price and intrigue. Blockchain has been in the limelight for a few years now but there can be possibly three categories where people can be divided - one is the niche community that understands, breathes and is in love with blockchain. They are the ones who are probably already in the tech community or are already working with it in some way or the other. Second, is the group of people who are confused about what exactly it does and how it operates. Third, is the group that is armoured with articles, news items and videos on the basics of the blockchain, but are potentially as clueless as the second group.
This article aims to be an eye-opener to the latter two groups about this technology that the media just won't shut up about. Why this big fuss about blockchain and its possibilities? Why is it receiving the media mileage that it has in the past one year and what can businesses gain out of it? These are a few questions that this article will attempt to address.
What is Blockchain exactly?
Blockchain, in its simplicity is a distributed ledger that chronologically records transactions in real time. It is a protocol for exchanging value over the internet without an intermediary. It is a decentralized, secure and an immutable system that allows transactions to happen in a near real time which provides players with unparalleled flexibility, speed and security in conducting their specific operations through blockchain. The immutability (read irreversible nature) makes it nearly impossible for changes to be made once established, which increases the confidence in data integrity and reduces opportunities for fraud or corruption.
There are types to it too
There are classically three categories of blockchain - public, private and permissioned.
Public blockchain is one where one can read or write on the platform, provided they can show proof of work. Bitcoin is the arguably the most popular use case of the blockchain. It is a digital currency which is created and traded in a decentralized manner where no one verifies or monitors its transactions amongst participants. The software behind Bitcoin is an open source; meaning anybody can join the blockchain network and use to transact electronically.
A private blockchain is where only chosen players have the rights to join the network which then creates a closed loop environment. For instance, the collaboration between a blockchain firm and a stock exchange where the former provides the latter's customers' trade private company shares using blockchain technology. That way, only shareholders have permission to access, change and read the data. Limited permissions provide a great level of security.
A permissioned blockchain, on the other hand, offers selective transparency where selected nodes have rights to access or provide their consensus on the transaction. For instance, if there is a consortium of ten banks on a blockchain led platform, all banks can interact with each other freely, trade or share invoices without the need to give permission to other banks to access the shared data.
The Rise of Hybrid Blockchain
Interestingly, blockchain's flexibility has also given rise to another type of blockchain that is bound to create an enormous buzz in business operations. Hybrid blockchain is a combination of public and private ledger wherein the governing body or network members can identify and decide which transactions remain public and which transactions must be accessed by a smaller group of members. This characteristic makes Hybrid Blockchain a fitting technology for enterprise use cases. It is through Hybrid Blockchain, institutions can keep their financial transactions private and still be verifiable by an immutable record on the public state of blockchain. Using Hybrid blockchain solution, enterprises and governments can build various applications across different trades without compromising sensitive financial information.
What are the benefits of blockchain?
Blockchain has numerous benefits and ways to reduce operational burden and increase business efficiencies across industries. Not only is it decentralized and immutable which leads to more transparency but it is also likely to simplify all current models across businesses. Different industries such as finance or health are rather unorganized wherein multiple units/employees/departments maintain their own database and data sharing and analysis becomes a hindrance due to the disparate nature of systems, while also being time-consuming. In blockchain, however, it can serve as a platform (or ledger) that is shared by multiple interested parties. This results in simplifying the complexity of managing multiple systems by each entity.
These industries are most likely to use it in 2018
While the financial services industry has been mostly at the forefront of using and testing blockchain in different use cases, 2018 will see an unequaled attention from governments who can use it in practically all their departments, apart from industries like aviation, transportation, supply chain management, human resources, among others as its possibilities and use cases in it are endless yet equally personalized and efficient.
Challenges in Blockchain
One of the biggest challenges of implementing blockchain has been the lack of awareness among people and different bodies where PoCs are being proposed. However, 2018 is expected to see a lot of regulators and industries investing resources to train their staff on the machinations of blockchain. Investment in conferences and seminars on the what's and how's of blockchain will help this problem. Similarly, integration of blockchain with the current systems was seen as a hurdle till now, which thankfully has been addressed by a lot of companies by adopting blockchain in a small use case and slowly expanding its usage and abilities to other avenues of their businesses.
Blockchain may be compared to the 90s' wave of the internet. Today with the sheer amount of security concerns that global players have along with the constant drive to reduce operational costs, blockchain is set out as a solution for all industries, be it healthcare, education, banks, aviation or government bodies. It is set to revolutionize business operations and bring forward a radically different way of working - decentralized, transparent and independent - one that is at the other end of the spectrum to today's global economics of corruption, (slow) pace and inefficiency from current hierarchies.