You have heard about blockchain, haven’t you? The technology appeared with Bitcoin in 2008 and has since spread almost like a wild fire. You will find a lot written about blockchain, all major software companies have embraced the concept proposing blockchain services and blockchain has attracted millions of dollars of funding. But why does it matter, and why should you get interested in it?
Why blockchain matters?
In a nutshell, a blockchain is a distributed digital ledger. Three very important words that defines a blockchain:
- Distributed. A blockchain is not stored on a single server but replicated on multiple computers spread on the internet. Therefore, even if a copy was to be deleted or altered, the other nodes would detect it and correct the inaccuracies.
- Digital. It’s kind of obvious, a blockchain is stored and managed by computers.
- Ledger. Like an accountant ledger, once a data is written it cannot be changed. If it were changed, the chain of blocks will become invalid and would discard the invalid block.
Each block is formed by set of data and a computed key (also called a hash value) which is the link to the previous block. If the data of a block was altered, the link between the altered block and the rest of the chain would be inconsistent showing that something has happened, making the data stale. Therefore, ensuring each set of data a transaction with its four ACID criteria: Atomic, Consistent, Isolated, and Durable. So, we can therefore say that a blockchain could forms the fundamental for any transaction that needs to be guaranteed.
A transaction example
Let’s take a simple example. Let’s say you want to transfer money from one bank to the other in a foreign country. In most cases, you will have an intermediary that will guarantee that the money sent is well received. This intermediary guarantees the transaction between the two banks who may not know each other. Therefore the transaction that will happen will be:
- Bank A informs the intermediary that Mr or Ms X transfers Y amount to Bank B to Mr or Ms Z.
- The intermediary checks that Mr or Ms Z exists at Bank B and proceeds to the transfer.
- Bank B informs the intermediary that the transfer has been well received and credited to the account of Mr or Ms Z.
- The intermediary informs Bank A that the transfer is complete.
In case Mr or Ms X, or Mr or Ms Z file a complaint, for instance that the money has not been transferred, then the intermediary will provide all the evidences. Now, if blockchain would have been used, the intermediary is useless. If the transactions were written into a blockchain, they would be guaranteed ACID and therefore bank A, B or the X and the Z could have checked it and prove its validity.
Why should you get interested in it?
Blockchain is providing the basis of undisputed transactions. Any business sells and buys goods or services, therefore perform transaction. They may require to prove those transactions are valid, either to a judge or simply to their customers. Let’s imagine you are selling fish and want to prove that your fish comes from reputable source. You could use a blockchain that tags the fish as soon as it is caught and gets updated at each step of the selling process until the end customer. A powerful way to ensure and guarantee the food chain.
If you take a look at your business, you will find many ways to include blockchain. It will not disrupt your business model, but will serve as a base to guarantee your goods and services. Blockchain is actually disrupting cloud technologies and the way providers sell their services. However, because each of the big cloud service providers has setup blockchain platforms, blockchain can be leverage fast at a minimal cost. This allows explosive growth with low investments.
Some Blockchain benefits
As many technologies along the last centuries, blockchain will have a profound effect on business operations. Among its various benefits on transactions we can find the following:
- Speed. Because we cut the intermediary, a transaction will be executed faster. Like in any peer-to-peer network, information circulates faster.
- Cost. Because we transact in direct, fees may lower. This, though may not prove entirely right at the beginning at least, due to the setup of the platform and the necessity to review internal processes.
- Security. Blockchains are inherently secured. Yes, there are some flaws, however, large platforms like bitcoin or ethereum add a level of strength due to their size. It’s not the too-big-to-fail syndrome, it’s the thousands if not millions of members that make them stronger than smaller platforms.
- Trust. Because a blockchain cannot be compromised and can be made public, a business that needs to provide proof of work will have a powerful way to do so.
Get on the bandwagon now!
Blockchain is not another big trend that will fall flat on its face. At almost 10, the technology is entering its maturity phase. There is not one day out of a big announcement of a company, a city or a state embracing blockchain technology. This could be your first cloud project as well, think about it! The questions for you are where to apply this, what benefits would it provide to your operations and how to start. The first step could be to use a consulting firm to help you answering those questions fast, at least before competition announces that they are blockchain ready and start stealing your business. Are you ready?