What is the Blockchain?

Is this the digital world’s missing link? Nothing more complicated than a shared ledger, blockchain technology creates high-integrity databases whose contents are always up-to-date and cannot be tampered with without leaving evidence. The end result? They can be trusted by all that share it. It’s the technology behind crypto-currency BitCoin, but the blockchain is being positioned to revolutionise the banking sector, healthcare, social security payments, and even online identities.

As a way to store and share data with so much trust that some call it ‘trustlessness’, blockchain – termed a ‘distributed ledger’ technology – is hard to beat. Malicious attacks on it are fruitless; the interception of data gets audited and recorded in the data itself. Want to know who’s looked at your medical records in the past year? Easy. Credit score? Ditto. Anything that anyone does to data – accessing it in any way – gets baked into that data itself. Create blockchain-based identities for citizens, and all currently disparate information across government data silos, bank accounts, medical records and elsewhere, could be linked, cross-referenced, and accessed from anywhere.

No wonder, then, that blockchain technology is getting a lot of attention from big lumbering organisations with masses of unconnected data on huge numbers of people; governments. China announced last month that it will use blockchain for its social security system, while Australia has proposed using blockchain to introduce tamper-proof electronic voting systems. Even Hillary Clinton has publicly backed using blockchain for public services in the US.

It might be its most famous use, but blockchain is not only being used by BitCoin. Most recently, it’s been creating smart contracts on the Ethereum platform, the second-longest public blockchain after BitCoin, and the fastest-growing. Ethereum can write smart contracts into the blockchain that are automatically executed when specific conditions are met. For instance, if you promise to pay someone if a shipment of bananas arrives, the contract would be executed automatically the moment you electronically sign for it.  Supply chains could become automated. When people talk about the ‘programmable economy’ of the future, it’s blockchain technology that will make that happen.

Blockchain is also about online identity. At the moment, we have walled gardens where our identity is simple to determine via user profiles. Everything you do on Facebook, for instance, is tracked and traced, recorded and analysed. But only by Facebook. Ditto on Gmail, on Twitter, and even when you’re logged into a site like AirBnB. I’ve not mentioned that last one just for fun; it may be that AirBnB is attempting make a play for ownership of an internet-wide identity and micro-payments ecosystem. Why else would it have recently hired a team of BitCoin and blockchain experts? With blockchain technology at its core, AirBnB’s user profiles could be made universally readable. If it works, dozens of other internet brands will follow its lead. Cue an identity land-grab.

It’s capable of changing the world, but the emergence of services and platforms using blockchains are likely to be piecemeal, some public and some private. Although its skills with creating crypto-currency and smart, trusted and unbreakable contacts largely makes banks as institutions seem utterly irrelevant – not least because blockchains also make financial transactions quicker and cheaper – nothing is ever that cut and dry in reality. Will banks go bust? Of course not. In fact, they’ll quickly begin using blockchain technology internally and, if they can agree cross-industry standards, between themselves, too. Other developer-friendly platforms created using blockchain tech – like Ethereum and BitCoin themselves – will each have a slightly unique feature in an attempt to position it at the centre of a New World Order. Most will fail badly and be forgotten, but blockchain technology itself is here to stay.

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