Ever since Satoshi Nakamoto published an invention he called bitcoin in 2009, cryptocurrency has had its ups and downs. More recently, however, people have looked beyond bitcoin as being a controversial currency used for nefarious black market activity and into the endless possibilities that it presents. At the forefront is the public ledger that records every bitcoin transaction known as a blockchain.
The blockchain is now an exciting new alternative to traditional currency, centralized banking, and transaction methods that is not only changing the way we handle financial transactions, but also alternative uses that will change the world. In short, blockchain is a distributed ledger that maintains a continuously-growing list of every transaction across every network distributed over tens of thousands of computers. This makes it almost impossible to hack, changing the way banking is done.
The benefits of blockchain technology are clear: publicly verifiable information, freedom from centralized database locations and a virtually incorruptible information-hosting network composed of millions of individual computers. It’s not difficult to see why so many businesses are weighing whether blockchain can benefit them, especially considering how diverse the technology is.
There are many possible uses for the technology, but where blockchain really shines is in security and efficiency. The ledger identifies, records, validates and time-stamps every interaction, and it process transactions 24/7.
Right now, blockchain is helping reshape industries in domains as varied as finance, healthcare, government and manufacturing. The technology will continue to evolve and be used in more innovative ways.
The term ‘smart contract’ was first coined in 1993, but it’s recently become a buzzworthy term thanks to the 2013 release of the Ethereum Project. The Project “is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference.”
Chris DeRose further explains on American Banker that ‘smart contracts’ are “self-automated computer programs that can carry out the terms of any contract.” In essence, “it is a financial security held in escrow by a network that is routed to recipients based on future events, and computer code.” Businesses will be able to use ‘smart contracts’ to bypass regulations and “lower the costs for a subset of our most common financial transactions.” Best of all? These contracts will be unbreakable.
Supply-Chain Communications & Proof-of-Provenance
Phil Gomes says on Edelman Digital “Most of the things we buy aren’t made by a single entity, but by a chain of suppliers who sell their components (e.g., graphite for pencils) to a company that assembles and markets the final product. The problem with this system is that if one of these components fails ‘the brand takes the brunt of the backlash.’” Using blockchain technology would “proactively provide digitally permanent, audit-able records that show stakeholders the state of the product at each value-added step.”