Blockchain: What is it and where will it take us?

For many, blockchain is synonymous with Bitcoin and other cryptocurrencies. However, although blockchain technology is the basis for cryptocurrencies, it has many more applications than digital currency. Some have stated that blockchain has created the’ internet of value’ while others tout it as the one thing that will change the way we transact with each other forever. While these statements may be true, many people today don’t fully grasp what it is or how it works. Below we shed some light on blockchain technology.

Blockchain Explained

Blockchain - Bitcoin
Bitcoin

Blockchain was invented by a person, or group of people, known as Satoshi Nakamoto, who released Bitcoin, the first cryptocurrency, in 2008 and described it as the first purely peer-to-peer version of electronic cash. Bitcoin is reliant upon blockchain technology which, when broken down to its component parts – distributed files, cryptography, and openness – is nothing new. What is new is the use of these parts in unison.

Essentially, blockchain is a computer file used for storing data, similar to any other file. What makes blockchain different, however, is that the files or blocks are stored simultaneously on multiple computers across a decentralized network and regularly reconciled by automatically checking itself around every ten minutes. This ensures that no individual or organization has control over the content of the file. Editing the information in a file requires agreement between every single computer storing it; which brings into play the second element of blockchain tech – cryptography.

Cryptography ensures that each piece, or block, of content within the blockchain is encrypted. To change or sometimes read the information contained in the chain of data you need the code that relates to a specific block, or the whole chain. Without the right code, any attempt to edit or read the information contained in the blocks will be rejected. If the right key is provided and verified throughout the network, access to read or to make an edit is given and a timestamp allocated to the file. This then creates a new block of data for the chain. This new link is added and then distributed across the network, so each computer holding blockchain secured data will update to hold exactly the same information.

The final element, openness, means that anyone with the right permissions is able to view or edit the data within the chain. This openness also ensures that each computer in the network storing the blockchain information is able to monitor the validity of the requests to read, change or update data and as such make sure that the necessary protocols are being met and algorithms answered correctly.

Different Types of Blockchain

Three different types of blockchains have emerged. Public or permission-less blockchains (like Bitcoin or Ethereum) mean that anyone can create a block of data by buying, selling, or giving their currency to someone else and anyone within the network can read and validate these changes but no single person has control.

Public-permission blockchains are arranged within a group or string of organizations. Editing keys are available only to those in the group while the public has permission to read the information contained in the chain. These are being implemented to help prove the provenance of products and authenticate various claims such as organically grown or sustainable fishing claims.

Finally, private permission blockchains are starting to emerge. The data contained within them is not for public viewing and is only accessible by those within the private group; however, each change to the blockchain is recorded permanently. Private permission blockchains are being used in situations such as a group of small businesses that regularly interact and need to maintain an accurate and permanent record of all these exchanges.

Emerging uses of blockchain technology

Financial Blockchain Application
Financial Blockchain Application

While cryptocurrency is most definitely the star of blockchain technology, it is by no means the only actor in the play. As blockchain essentially records each transaction of data, finance is certainly the most obvious application, and also the oldest application for the technology. However, ten years on from its launch, several other areas of industry, governmental process and business transactions are showing promise in terms of making use and streamlining how we work. Below we’ll take a look at three of the most prominent areas adopting blockchain technology.

Healthcare

Electronic Hospital Records
Electronic Hospital Records

Recent changes in America’s legislation for both public and private the health care systems have required all healthcare professionals to demonstrate meaningful use of electronic health records. Furthermore, the Affordable Care Act gave $28 million of federal money to implement electronic health records. Whilst this has pushed forward the move towards digitizing patients’ records no conventions have been agreed for sharing the data between health providers.

Blockchain provides an opportunity to correct this oversight while also ensuring the integrity of patients’ medical histories across institutions. MedRec has designed one such system for creating family history medical records based on Ethereum’s blockchain technology which allows records to be passed from generation to generation. The metadata is encrypted while still enabling secure access to patients across healthcare providers.

The Department of Health and Human Services have taken note of the innovation and in 2016 launched their own Blockchain Challenge with the goal of investigating the relationship between Blockchain technology, its use in Health IT and/or health-related research and how it may be used to advance industry interoperability. Entries covered a range of health-related areas from redesigning health record systems to renovating payment systems and addressing the claims process.

Land Registrations

Land Registration
Land Registration

When disaster strikes or people are forced to evacuate homes it can become difficult to prove who owns a particular piece of land once things begin to return to normal. Even in times of relative peace and calm, to purchase property buyers must locate the title and have the lawful owner sign it over. In some cases, flawed paperwork, forgeries, and defects in documentation can make this seemingly simple process almost impossible.

As many countries are already moving towards digitizing land records if they have not already done so, blockchain technology is being considered by many as the answer to creating accurate, incorruptible records for land ownership. Vermont, United States issued the first property deed using blockchain technology in April of this year. Various departments of the US government are recognizing that blockchain technology could provide solutions to their own issues around streamlining processes, audit burden and data security and integrity.

Smart Contracts

Another area ripe for the adoption of blockchain technology is smart contracts that negate the need for a third party to hold funds in escrow or administer the agreement.

The idea is for the contract between two parties to be written as code, including all the clauses. The ‘if this, then that’ programming allows for all eventualities that have been covered in the agreement. The parties involved in the contract can remain anonymous but the contract is placed in a public permission-less blockchain which in effect increases its security. The contract is programmed with specific trigger actions, such as the delivery of a product, the completion of a project or reaching a specified date, upon which the agreed funds are released or the contract completes itself in some other way according to the coded terms. Regulators would be able to view the blockchain information to understand the activity of the contract whilst upholding the privacy of each participant in the agreement.

Smart contacts can be used by insurance companies to interact directly with customers and without the need to engage a financial service provider, health systems giving more control of data to patients and allowing them to interact directly with researchers, governments to make voting more secure and even businesses for paying their staff each month or fortnight.

Taking Control of Personal Privacy

Recent news about how personal data has been used to manipulate peoples’ political or other views, or simply nudge them towards purchasing a particular product has been prominent in the news over recent months. Blockchain is one way in which individuals may be able to take back control of the swathes of data they create each day by browsing the internet and using social media.

Personal information that is regularly used, including credit card details, first and last names, birthdates, and our unique identifying answers to personal questions, could conceivably be stored within a blockchain. Rather than giving away our sensitive information on each platform and providing the basis for an accumulation of other telling data about our lives, needs, aspirations and wants, this information could be stored in a blockchain and combined with biometric security features similar to that already used by smartphones and tablets. It would then be feasible to enjoy considerably more control over what information we share with whom and do away with passwords too.

The problem of having this information about ourselves being duplicated multiple times and stored in a public space is being worked upon by MIT’s Enigma project who are using the latest privacy technologies to ensure private information is accessible only to those who have the keys to access it and also reduce the power and time taken to process and store vast amounts of information. The aim is to create ‘secret contracts’ that keep information private from the computers storing it whilst still enabling them to process it.

The multiple applications for blockchain technology, the continued growth of cryptocurrencies and strong proof of work that Bitcoin has provided, heralds a new future for tracking and recording peer-to-peer transactions, be they public or private, across the world.

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