Blockchain is one of those hot tech words that we’re coming across more and more often. However, not many people actually know how this technology actually works and the range of applications it may have now and in the future.
From cybersecurity to healthcare, government and financial services through to manufacturing and supply chain management, organisations across the globe are discovering the usability and efficiency that blockchain represents.
Last week we had the pleasure to have Andy Higgs, General Manager of Strategic Partnerships at blockchain venture studio, Centrality, in our Lightning Lab GovTech space, and of course, we jumped at the chance to chat about all things Blockchain.
Andy predicts that the impact of this emerging technology will pervade the marketplace. “From a business perspective, distributed ledger technology and open source blockchain protocols have the potential to dramatically reduce the friction of doing business, whether its customer onboarding, changing suppliers or tendering for new work.”
He sees blockchain enabling opportunities for a new business and industry model in terms of how value is captured and shared, which will challenge the status quo. It will also bring a myriad of other advantages, such as the ability to share data while having a single source of truth and cutting down on repetitive processes. “If you’re in an industry where you’re taking out more value than you are putting back, your organization is in danger of being superseded by another organization that may offer a more streamlined, customer-centric service.”
Blockchain in a nutshell
The technology allows digital information to be distributed in a public network, while protecting it from malicious changes. This ‘distributed’ network means that the information shared across is stored in a multitude of locations and is constantly updated which in turn creates public records that are easily verifiable and far safer from the risk of hacking.
How can blockchain change business?
The underlying blockchain (or public ledger) cannot be changed easily. This makes blockchain incredibly useful as a verification tool because the history of creation does not change and is entirely viewable by all of the community. This also means that developers are unable to It also removes the sense of power and potential control that developers can have over such technology as they are unable to change and control the blockchain single-handedly without peer permission.
This word mentioned above is one of the real keywords when it comes to discovering how blockchain can change the game. Most businesses have a centralized model in which data is processed and stored within a single system. If this system were to fail or were subject to hacking, all of this information would be at risk of being lost or manipulated. Blockchain provides the solution by stepping away from the traditional centralized database system ensuring that if one peer completely crashes, all others can continue operating as normal. This system is a game-changer for organisations that currently experience difficult issues with their single server-based operations.
The protection of sensitive data is critical especially within services which are used regularly by the public. Government data collection, healthcare databases and even financial services are still discovering how blockchain has the ability to dramatically reshape how information can be shared and stored online in a safer and more dynamic method. Some of the largest banks around the globe tasked with handling trillions of dollars are investing into the development of blockchain systems to improve verification and streamline services.
No technology is perfect
While the future uses of blockchain are numerous and represent the ability to introduce hugely effective changes to many industries, it’s good to remember that the technology is still in the development stage.
There are some concerns about potential challenges to performance in regards to the technology itself and the required size of databases for some of the desired applications. Performance speed and time to access are essential requirements for operations within financial organisations, in order to successfully meet customer demands.
The Bank for International Settlements argues that bitcoin’s lack of scalability and volatility and the fragility of its decentralised consensus are fundamental flaws that will prevent it from fulfilling its original intent.
Furthermore, other researchers argue that it is unlikely the public would trust the technology without institutional backing and regulation.
One potential path is centrally banked cryptocurrencies where a central bank controls the money supply, but blockchain technology is used to ensure transparency and programmability through smart contracts. The Bank for International Settlements views this as a mid-term policy question that would come with significant financial vulnerabilities and unclear benefits.
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