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In 2008, Satoshi Nakamoto devised Blockchain as a way to underpin and secure Bitcoin, the digital currency. But with the early Bitcoin connection, Blockchain had connotations of the deep web, black markets and online’s darkest corners. So polite types dismissed the mainstream potential.
The tide turned in early 2015. World citizens began investigating Blockchain and companies started considering its deployment. Today, Blockchain’s rep continues to grow.
So, should you find yourself caught up in a conversation about Blockchain, here’s how you can blag your way through.
Blockchain is a type of Distributed Ledger Technology (DLT). “Distributed” because it’s shared across multiple websites, geographies or institutions, a “Ledger” because it records transactions, and the “Technology” bit you can probably guess.
Blockchain differs from other ledgers because all users have local access. At present, most ledgers or databases are stored in one central, vulnerable location.
New transactions hit the Blockchain within minutes. So industries that rely on frequent data reconciliation – transfers between banks for example – could be at the cusp of a super efficient future.
Sure, bank transfers are much quicker than they once were, but huge swathes of time, effort and expense went into that. Delays are still common, mistakes are still made.
Blockchain is already providing banks with local copies of the same data; updated in near real time. There’s no need for reconciliation so it’s much faster, and virtually bulletproof.
Because every transaction is fed to every user’s ledger, Blockchain is inherently secure. Hundreds and thousands and millions of copies of the same data all across the world means there’s no one weak point.
Also, records cannot be deleted from the ledger so hackers will need to be super creative if they’re to ever break the Blockchain.
Clever, snazzy technology is one thing, but adapt Blockchain for the real world and the fun really starts. Let’s talk smart contracts.
Imagine agency/ client contracts are managed by Blockchain.
Contracted work can be automatically monitored; securely in real-time. Because records are permanent, it’s tamperproof, self-verifying and transactions can self-execute: releasing funds on completion of a project.
Currently, contract processes are manual, vulnerable and open to disputes, delay and other myriad problems. With Blockchain, agreements between individuals or organisations can be held, locked, executed and settled in rapid time.
Take politics. Would we need hundreds of elected officials to represent our views if we could tell the PM instantly and directly what we think? Blockchain could be the basis for a new, secure online voting system; enabling the will of the people at short notice.
No more standing in damp church halls to put cards in a box.
Now finance. We’ve established that Blockchain means decentralising records of ownership and handling transactions.
If secure, real-time, verified and fraudproof transactions can take place with no possibility of fraud, what will we need clearing houses, brokers and banks for?
For the short term, these examples seem far-fetched. But the more we embrace Blockchain, the more cultural, financial, political transactions are made possible.
In the long-term it’s not inconceivable that Blockchain will take over huge swathes of our processing. And with Blockchain, the likes of banking could go the way of Blockbuster.