In only a few years, digital currency bitcoin has emerged from the shadows to become something debated by politicians and pondered by economists.
Now it is blockchain, the technology that makes bitcoin possible, that is having its moment in the sun.
What is the blockchain? In essence it is just a digital ledger – a means to record events that have taken place – but its design provides considerable advantages over other ways of recording transactions. The details of every transaction is stored cryptographically on the blockchain, a stream of linked data available online.
The entire blockchain is decentralised, with all those using it creating copies of the blockchain record. This one-version-but-many-copies approach removes the need for a centralised authority, such as a bank or legal body, which also provides protection from a single central point of failure. The blockchain is open and public, and practically impossible to alter a record once the block representing the transaction has been added. The advantage of decentralisation
This removal of central authorities is seen as a holy grail by some. Using bitcoin in global transactions provides security at low cost, and banks are among those investigating how blockchain or distributed ledgers might replace their monolithic and increasingly dated hardware and software systems. But there has been little implementation of blockchain outside its use in cryptocurrencies like bitcoin.
Some companies have proposed using distributed ledgers as part of their supply chain. Everledger is a firm that records the properties and ownership of diamonds to reduce criminal use or fraud. Provenance is another company doing the same for those wishing to prove the authenticity or fairtrade credentials of their products to customers.
Blockchain provides new technical solutions to situations where trust and authenticity are important. But as with any technology there are positives and negatives – for example, bitcoin’s […]
