What is blockchain and how will it affect my business?

September 20, 2018

 

Blockchain is a new model for the way data is stored and shared. Bitcoin was the first blockchain technology of its kind, which made its appearance back in 2009. Bitcoin was created by Satoshi Nakamoto, a pseudonym for the person or people behind the creation. They also authored and deployed a nine-page white paper titled, "Bitcoin: A Peer-Peer Electronic Cash System". Part of the abstract states:
 

"A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work."

 

Bitcoin grew in popularity in 2011 after Gawker published a piece on Silk Road, which was an online black market for selling illegal drugs. Transactions on the site could only be made using bitcoin.

 

How it Works

 

Blockchain exists as a shared public database. The blockchain database is decentralized, meaning it's not located in any one location, is not controlled by any one central authority, and no single entity can take control of information on the blockchain. Traditional currencies come from central banks, while blockchain is maintained by a network of miners. Mining is how transactions are verified and added to the public ledger. Miners or "nodes" are people running high-powered computers that compete to solve complex mathematical problems so that a transaction could go through. The winner receives a bitcoin as an award.  The verified block is added to the previous blocks creating a chain, hence "blockchain." 

 

How Will it Affect My Business?

 

The banking industry has taken great interest in blockchain technology, as it could help reduce costs and make processes more efficient. Major banks have even begun experimenting with blockchain. 

 

Blockchain tech can be used in supply chains, such as tracking products along a route, and even earlier this year West Virginia rolled out a mobile blockchain voting option for deployed military service members overseas. Healthcare has taken interest in the technology as blockchain can be used as a verification tool for authorized users (generally physicians, insurance providers, business associates, and patients).  According to Computer World, "Blockchain-enabled data allows for real-time movement of clinical and behavioral data between existing physician and patient data siloes; and machine learning on a growing patient database can help identify predictors of diseases and poor health."

 

It's no doubt blockchain has become some of the most disruptive tech as of late; however it's unlikely it would take over more traditional models at this time. Just like with any new technology, it has its limitations. Anyone looking to adopt new technology should do their due diligence and research to see if it makes sense for their business.  Many technologies take decades to develop. People need to be educated and trained on how it works, and industries and institutions need to figure out how to adapt and then implement it into their operations.

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