Last week we kicked of with the theme digital with its first blog about digital twins. This week we continue this theme and we discuss the tech trend Blockchain. In this blog you read that blockchain is more than “just” the technique behind the Bitcoin.
2017’s Tech trend 5: blockchain
Blockchain ensures safe and direct transactions between two parties without interference of an intermediary. The most well known application is the Bitcoin, a virtual coin. The core of the blockchain is a digital ledger, that keeps track of transactions, including date, time, owners, and balances. After each transaction this information will be updated automatically.
The Internet is a good place to share information. Whether you are sharing a photo, music file, or document with a friend, he or she will receive a digital copy of the original. Such a copy is not suitable for a value transfer (such as money). With blockchain this is possible. A blockchain is nothing less than a chain of computers, which jointly manage a copy of a ledger. Transactions can be encrypted and signed via this network. This happens before copies are spread over a cloud of computers, which means that every computer in the network will receive a copy. Before a transaction takes place these copies will be compared for inconsistencies. When the whole network has justified the transaction, it will be added to the database. If not, the transaction will be rejected.
This means that, after approval, a series of transactions will be added as a ‘block’ to a pre-existing ledger. Therefore, the ledger is, in a technical way, a chain of digital ‘blocks’ (a ‘block’-‘chain’). In order to read the newest version, one should open all these blocks after another and decrypt them. When, for example, a forger adjusts one copy or when a copy gets lost as a result of a computer malfunction, the system will continue functioning fully.
The Bitcoin, gains trust, without the contribution of a central bank. The blockchain technique behind it is, however, available for much more. Blockchain shows great promise across a wide range of business applications. For instance, financial institutions can settle securities way faster –minutes instead of days. In this way, a chain of computers, which are able to make sure that transactions are reliable and fast, will replace the central role of the government.
This makes the blockchain robust and very safe. Many call it therefore a ‘trust machine’. Another way to look at it is seeing blockchain as an ‘operating system’ on the Internet that ensures safe transactions over the Internet. In that way, fraud, counterfeiting, and piracy can be counteracted, payments could be done, and taxes can be levied with the help of blockchain.
In this way it is very difficult to commit fraud; there is no central database to break into. To commit fraud, one should forge every single copy of the certificate on every individual computer in the blockchain network.
The Dutch DJ Hardwell is a precursor in the field of blockchain. He uses it to manage his rights and payments. He hopes that it will speed up his royalty payments in combination with fewer errors. As a try-out the DJ released a single of which the purchases and rights were not managed by the central organisation Buma/Stemra. Hardwell criticises the lack of transparency in payments in the music business. But he is not the only one. Just replace Buma/Stemra with the words ‘bank’, ‘notary’, or ‘government’.
World changing technology
The World Economic Forum called blockchain one of the seven ‘most world changing’ technologies. But blockchain is not only helpful in the financial sector; it could be in many other sectors, as well. What did you think about the health sector? The food industry? Energy? Government? But also big organisations as IBM and Microsoft have been supplying the technique and platforms for building blockchain applications.
In February a Hackathon took place in Groningen where over 350 entrepreneurs, programmers, and hackers discussed and developed blockchain application ideas. Two examples are a digital ID and sharing green energy. They are described below.
1. Refugee E-dentity
Blockchain could help with the refugee problem both form a refugee and government perspective, by using a using a combination of a secure authentication passport based on local biometric data, and storing this data in a blockchain. In this way authorities are able to check who you are or who you claim to be. In this way refugees are able to create an identity based on biometric data and as much other details as possible from other parties, such as the Red Cross. The refugees will have control over their personal details and at the same time authorities can assume that they are reliable. The more parties participate, the more reliable it will become. But is could also serve as a passport for citizens of which they are in control. Then, they can manage which organisations or institutions will get accedes to it.
2. Green energy
The energy world is changing rapidly from a central coordinated market to a more distributed market with many stakeholders. Blockchain could improve the collaboration of these stakeholders and will get paid for their part. A product called “Power to share” was developed to increase trust in green energy certificates on the one hand, and to make green energy popular amongst prosumers, on the other. With this product is it possible for people who have a surplus of solar energy to sell this green energy directly to others. In this way, there is no interference of an energy provider but can we speak of peer-to-peer energy production.
Of course there were many other ideas created during the Hackathon, such as applications for a more efficient government and digital voting.
All we can do now is waiting for concrete applications outside the financial sector –besides DJ Hardwell of course. How long do you think that is going to take?