Many industries are buzzing about using blockchain technology – so what is this buzz all about and what is it exactly?
In a nutshell, blockchain is a way of recording data and also the foundation for cryptocurrencies such as Bitcoin. This innovative form of technology is made up of blocks of transactions (think of it like strands of DNA being joined together), and are added in chronological order.
The blockchain stores a wealth of information such as addresses and account balances from the genesis block (the first transaction), this is then added to the most recently completed block.
The blockchain acts as a public ledger which means that is simple to query any block explorer (details information about Bitcoin blocks, addresses, and transactions e.g. Blockchain Info) . The beauty of this is that you can view your own wallet address and view your bitcoin transactions.
Besides cryptocurrency, blockchain can also be used as a registry based system and can record, monitor, track, and transact an array of assets.
A good of way of thinking of how the blockchain functions is to see it as a giant Excel spreadsheet that can be used as an accounting system for transactions on a global scale. This can include a variety of areas such as finance, physical property, votes, health data, the possibilities are literally endless!
In addition, what is even more exciting about the “Internet of Value” as it has been dubbed, blockchain tech will further the value of the Internet of Things (IoT). Connected devices in the home and across various industries could automatically pay for the energy they use by writing to the relevant blockchain, creating a transfer of value based on the precise usage of the device (as mentioned by Forbes’ Bernard Marr)
So how does trust come into play with blockchain? Users can trust the blockchain from the public ledger which is stored on decentralized nodes and maintained by miner-accountants, meaning there is no need to have a third party such as a bank. In essence, the blockchain allows the decentralization of all transactions on a global level.
Companies such as Lloyd’s have been open to adapt to new technologies such as blockchain. Their director of operations, Shirine Khoury-Haq, (who mentioned in a recent CoinDesk article) that : “blockchain has the potential to improve the way insurers record risk, increasing the speed, accuracy and transparency of our processes.”
Lloyds have recently has taken on the responsibility of underwriting blockchain insurance startup SafeShare – “The insurance solution for the sharing economy” as quoted from their homepage.
So how was trust made? Trust was made directly from the blockchain and not directly with SafeShare itself to enter the business relationship. All Lloyds had to do was to approve SafeShare’s ledger, there was no need to study in detail their daily operations. The reason behind this is is that blockchain technology adds transparency by having a distributed ledger in place, therefore, it’s really hard for business to hide any dubious activities.
Trust and transparency are made in an instant, and this innovative form of technology has only just scratched the surface. It isn’t surprising that banks such as Lloyds are getting so excited about blockchain technology, even if the benefits for now seem quite distant. If we look at Cryptocurrencies for example, such as Bitcoin, which might be seen as innovative (depending on your point of view on the cryptocurrency), however, the innovation doesn’t come from the digital coin itself, it’s the trust machine that mints them.
Here I have just given a very basic overview on blockchain if you would like to know more about the technology I recommend visiting the Reddit community r/BlockChain for the latest news as well as reading Blockchain Revolution : How the technology behind bitcoin is changing, money, business, and the world by Alex and Don Tapscott.