BLOCKCHAIN: A CUSS WORD WITH A BRIGHT FUTURE?
Last 16th to 19th of September 2018 was the Blockchain Conference (1) in Gangnam, a global event about this technology, for cryptocurrencies’ investors and pioneers. Headliners were Jimmy Wales, Wikipedia’s founder and Michael Hayden, former CIA and NSA executive. What could best describe this growing phenomenon than the attendance of two figures that have nothing to do with cryptocurrency?
As a key word who is riding high those past years, blockchain’s concept is still not mainstreamed mastered. It’s easy to get lost in the large amount of trendy disruptive Anglicism and to misunderstand the concept of blockchain with the breakthrough of artificial intelligence or even to hodgepodge it with cryptocurrency. Nevertheless, behind those words we found a genuine future technology’s paradigm.
Business definition of blockchain
Blockchain is a digital protocol of information exchange between different entities, whose avoid to centralize all information on a fixed point. Each entity, each « block of the chain » memories all the exchanges among stakeholders. Those blocks who look like “accounting books” are called ledgers and are encrypted (hashing function).
The genuineness of the information exchange between A and B blocks is notarized by all other blocks working together for this exchange authentication. When at least 51% of the blocks show the ownership of the same transaction copy, then it is recognized and validated.
This explanation simplifies on purpose the mechanism (2), but for non-technophile people the main concept to understand is there.
Following this idea, the first blockchain application was introduced in 2009: the crypto-currency with the bitcoin.
Let’s draw conclusions on what new this mechanism called blockchain has brought.
The first benefit of blockchain: exchanges’ devolution. Since each stakeholder has its own system of information recording and authentication, there is no need of an entity that centralizes and processes information whose stakeholders need to trust. Each person is a witness and warrant of past information exchanged.
The second benefit: it’s a very secure process. Before, it was required to go inside a centralized entity who gathered records and information about transactions in order to cripple the system. With the blockchain, since each entity « is » the mechanism, if someone tries to alter a transaction it is required to corrupt at least 51% of the blockchain, which represent thousands of spread wallets.
On those above grounds blockchain is very lucrative for several businesses beyond cryptocurrencies industries. This process allows to overcome the need for third parties (decentralization) so that it creates economies of scales, while keeping trust among individuals (security).
What future perspectives for blockchain beyond cryptocurrencies?
First clear applicant for blockchain technology: financial institutions. It’s a twist of fate since originally, blockchain was bound to overcome the financial system, considered at that time as a useless third party. Nevertheless, banks rapidly responded to it. Wall Street is currently investigating for its own blockchain system (3). Credit Suisse, HSBC, MUFG or Barclays all have join the Unity Settlement Coin (USC) in order to run this technology’s benefits.
Smart contracts are also directly concerned by this breakthrough, whatever the field of application (4). For example, in the insurance field, some refund policies are automated: a flight insurance can be activated the minute a flight has been cancelled. Once the cancellation has been declared, the smart contract directly processes a refund to the beneficiary, which take away the step of complaints. Public authorities are also likely to exploit this mechanism to deal with social services, for digital elections implementation or to hold securities.
Another goldmine for blockchain technology: smart cars. The concept of shared ledger offers strong solutions against complications that the supply chain in this industry can create. This allows to keep on track an efficient amount of data, to verify resellers’ identity and to ease conditional transactions. We omit the communication channel towards smart cars exchange information with other vehicles, or connected objects. Blockchain meet the needs of data, transportation, distribution and data storage that cars produce every minute (5).
Blockchain is also very useful in the health industry: to store and secure data about patients, surgeries history, hospital admissions, former diseases, etc. Furthermore, GAFAM (6) have invested in breaking the code of genetic data in order to offer automatic diagnosis without mistakes (7). In a close future where each individual will be considered as a massive code regarding its health, blockchain technology will have a key role.
Finally, blockchain technology is openly concerned in the Internet of Things (IoT) industry. Investments forecast more than six trillion of dollars in the next five years (8), with an increasing number of companies looking to stand up in this very competitive market. Rapidly forwarding data in a secured way via distribution wallets’ technology establish a real opportunity for those industries.
The blockchain method, in its present application, comes with drawbacks: extremely energy consuming (9), with complex technics to integrate, not enough mainstreamed, without any industrial standards or with very few regulations by the states and institutions (10), etc.
Nevertheless, one sure thing is: beyond its convenient embodiment, the blockchain technology will have a bright future.
South Korea has invested body and souls to become a major actor in the cryptocurrencies: it represents around 30% of worldwide cryptocurrencies’ transaction in 2017 (11), with more than 3 employees over 10 who already invested in cryptocurrencies (11). All the means are here to become the leading figure of the blockchain movement.
Author: Jason, IT-Concept GROUP Co. Kr
Translation by Myriam KONTE
- Details can be found at: https://www.blockseoul.com/
- Link to dig up: https://hackernoon.com/wtf-is-the-blockchain-1da89ba19348
- Google, Amazon, Facebook, Apple, Microsoft
- See for instance: https://www.selfdecode.com/
- According to a study led by Korean’s top job hunting website SaramIn (사람인): http://www.saraminhr.co.kr/open_content/pr/press_release.php?sno=0&group=basic&code=B2&category=&&abmode=view&no=502139&bsort=&bfsort=wdate&listno=3074