Is Blockchain Right for Your Business?
In this article, we explore how businesses are already using Blockchain and what are the benefits of using this technology.
Why Blockchain?
One of Blockchain’s most attractive aspect is its security. One reason for this is universal verification from all users, so if one hacker attempted to change data in a block, it would not be ratified by the others.
It is secured using state-of-the-art cryptography, and, since every block contains a history of the ones before it, it is impossible to retroactively edit a block’s information. Everything is stored online, and verification is provided peer-to-peer, eliminating the need for a middleman to oversee transactions.
As the underpinning technology of Bitcoin, blockchain is mainly recognized as a record of trading cryptocurrency, but it isn’t restricted to that. Primarily a super secure database or ledger of transactions, it can be used for updating any records in a secure and traceable fashion. It’s estimated that to successfully hack Bitcoin’s blockchain, it would require 525 times Google’s entire computing power.
Additional Uses of Blockchain
Despite their reputation for complete transparency, blockchains can be restrictive, including limiting who can write new blocks and who can read them. Private blockchains are typically kept within the company’s network and may have nominated one or more users that are responsible for verifying the new blocks. This means that there is still an element of privacy for records to be kept confidential.
With both security and ease of access covered, blockchains have a range of applications beyond cryptocurrency that could benefit a wide breadth of businesses.
Finance
Interest in blockchain technology has been growing over the past few years, with extra interest after Bitcoin’s leap in popularity in 2017 (its price rose dramatically from $572 in August 2016 to $19,343 in December 2017). At the time of writing, one bitcoin is worth just under $11,000, and its fellow lesser-known currencies aren’t doing so badly either: primary competitor Ether is worth $895.87, and Litecoin is trading at $224.20.
Although traditional banking initially scoffed at virtual currency, some of the biggest financial institutions in the world, including Goldman Sachs, Barclays, Santander and dozens of others, individually and in consortiums, are looking into how blockchain technology might be used in the future of banking.
In the first half of 2017, blockchain firms raised more than $240m with much of that coming from banks. A sizeable percentage (45%) was contributed by R3, which led a consortium of over 70 of the world’s largest financial institutions in developing Corda, a blockchain-inspired distributed ledger.
Medical Records
This makes them ideal for records that need to be updated securely.
Medical facilities across the world utilize a number of electronic records systems – 26 in Boston alone – which makes accessibility difficult: information from one system might not be available to another, which is a particular issue in the healthcare industry when the timing is life or death.
The Premier Healthcare Alliance has estimated that this lack of interconnectivity costs $18.6 billion a year and a loss of 150,000 lives, which is simply unacceptable in our digital age.
Employing blockchain creates a decentralized system with a peer-to-peer distribution of information rather than an exchange through various programs, which, apart from delays with user responsiveness, also prevents issues with incompatibility. MedRec is one prototype of a medical records blockchain from the MIT Media Lab, which aims to streamline all medical information, including patient details, professional visits, and payments for a “comprehensive, immutable log of authentication permission for ease of data access and auditing.”
Digital Products
With an ease of sharing anything digital, it’s no wonder the internet has consistently suffered from illegal downloads. MP3s of music and audiobooks can be duplicated and shared as easily as forwarding an email.
Blockchain represents a viable solution to copyright infringement. Instead of duplicating a file – whether that’s a digital copy of a film, photograph, or idea – there is one original source that passes on the file, which can be traced back through its blockchain. There are two proponents of blockchain use in digital media: one advocates blockchains as supporting the traditional record labels by tracking the file’s ownership, whereas the other sees the music exchange as artist-to-consumer, eliminating the need for a record label.
However, blockchain currently works best in a binary one-to-one situation, e.g. if one person owns exclusive rights to the song (they have written, sung, and produced the track themselves) and they sell a track on, they receive the cost from the customer. This makes it perfect for artists such as photographers that work completely independently. For songs and films, however, this is much more complex when it comes to payment. Mycelia is one blockchain-based program that records all the artists involved in the creation of a music track that will not prevent illegal duplication but also ensure that singers, producers, musicians, and everyone had input is paid for each download.
Contracts
The nature of blockchain lends itself particularly well to contracts. They would not require a third-party authenticator, but instead could be enacted by the two groups involved. Once the block has been agreed and verified, it is set into the chain for any user to access. Any amendments are created in a new block, which would carry the history of the original agreement.
Blockchain Drawbacks
Blockchains may be the ledgers of the twenty-first century, but there are still some aspects to consider before they should be implemented.
Energy & Space Required
Public blockchains require an inordinate amount of energy that increases with the number of people using it: Every user must verify the cryptographical result in order to add the newly minted block to the chain, which means a lot of computers (preferably) constantly connected to the network and solving puzzles. Private blockchains greatly minimize the energy needed. Also, the data stored on the blockchains isn’t shared to a participant who requests it: all of the users have their own access, which requires a great deal of memory.
Thankfully, new innovations are reducing the amount of energy and memory required to mine, store and transfer blockchains. Known as a Proof of Stake (PoS), it is an algorithm that allows a network to achieve distributed consensus, which is gaining in popularity and means the energy requirements of blockchain technology will reduce.
Privacy
By their nature, blockchains are available to the entire system, which in a public system could compromise private data. Bitcoin uses pseudonymous wallets for transactions, although sensitive information like medical records could still use information other than the user’s name to identify someone. Private blockchains, of course, would restrict who could access the blocks, but this would also reduce who has access to information that they potentially need.
Implementing Blockchains
“Blockchain” may be popular right now, but implementing one without appreciating the full scale of its application will only limit its effectiveness. However, if you’re confident in its uses as a permanent, secure ledger, it is likely a worthy investment.
