Bitcoin and other virtual currencies are made possible by what’s known as blockchain technology. Blockchain technology is a digital ledger that consists of distributed, decentralized and often-times public data capable of automatically recording and verifying a high volume of digital transactions, regardless of location.
A blockchain is a type of database. Unlike a database that structures its data into tables, a blockchain, like its name implies, structures its data into chunks (blocks) that are chained together. Blocks have certain storage capacities and, when filled, are chained onto the previously filled block, forming a chain of data known as the “blockchain.” The chain grows continuously as miners discover new blocks that they append to the existing Blockchain. Miners would compete with each other to create such blocks. Once a winning block is appended to the Blockchain, a new copy of the block is broadcasted to the entire network, thus, creating a decentralized public ledger.
For Bitcoin, this blockchain is just a specific type of database that stores every Bitcoin transaction ever made. Bitcoin consists of thousands of computers, but each computer or group of computers that hold its blockchain is in a different geographic location and they are all operated by separate individuals or groups of people. These computers that make up Bitcoin’s network are called nodes. This system also inherently makes an irreversible timeline of data when implemented in a decentralized nature. Each block in the chain is given an exact timestamp when it is added to the chain.
Blockchain is, by nature, a distributed ledger since each node has a full record of the data that has been stored on the blockchain since its inception. For Bitcoin, the data is the entire history of all Bitcoin transactions. If one user tampers with Bitcoin’s record of transactions, all other nodes would cross-reference each other and easily pinpoint the node with the incorrect information. This system helps to establish an exact and transparent order of events. For Bitcoin, this information is a list of transactions, but it also is possible for a blockchain to hold a variety of information like legal contracts, state identifications, or a company’s product inventory.
Blockchain technology now touches virtually every sector — from safeguarding medical records and patient privacy, to tracking food safety and drug supply chain compliance, to verifying artwork authenticity, to validating oil and gas transactions and even land ownership globally. Organizations are now using blockchain to secure their data, reduce inefficiencies in the supply chain and logistics network, and in intellectual property management.
Blockchain is also predicted to enable Industry 4.0. This new form of manufacturing, called Industry 4.0 is a collection of technologies and concepts for defining and operating ‘Smart Factories’, where the machinery of manufacturing – machine tools, the sensors monitoring them and such like – can communicate with each other, with the systems overseeing the factory and the people who work in it to fine-tune the manufacturing process and enable such things as product customization, while increasing productivity and flexibility. These intelligent and connected machines don’t only work; they take decisions and optimize processes intelligently and semi-autonomously.
In order to build trustworthy and effective government operations through collaborative and transparent networks, different government organizations and units can use Blockchain technology. Blockchain technology with its salient features will help provide accountability, transparency and trust among stake holders such as citizens, leaders, government officials, and their different operations. Further, blockchain is being used by governments for digital identity management. A good example is Estonia, which is using blockchain-based for digital identity to digitize national identity records, secure citizen data to reduce identity fraud, and reduce inefficiencies of legacy digital ID management platforms such as high costs.
The deputy director of China’s Ministry of Industry and Information Technology (MIIT), Xin Guobin said, “[Blockchain] can make up for the deficienc[ies] of traditional credit system, prevent information tampering and forgery, and save [money for] society. [This would apply to] finance, e-commerce, smart medical care, social security, Internet of Things, energy and other fields, and will have an important impact.”
Blockchain has numerous current limitations before broad adoption and implementation. Scalability, regulatory challenges, security risks,
and energy consumption are major limitations. The rise of permissioned or private Blockchains for industrial applications also has critics. Permissioned blockchain is very different from public blockchain; its emergence has hidden blockchain platforms’ advantages. Blockchain undergoes several scalability issues such as communication malfunctions among users, data storage, and linear transaction record.
Blockchain technology enables financial services without having financial institutions such as a bank or other intermediary involved. It can be implemented to conduct services such as online payment, digital assets, and remittance.
Blockchain disrupts the commercial banking system by providing a peer-to-peer payment system with high security and low fees. No central authority exists, so you don’t have to pay one. For example, a cryptocurrency application called Abra provides peer-to-peer money transfers. With Abra, users can store, transfer, and receive digital money on their PCs, tablets or smartphones. A recipient can withdraw cash via an Abra teller. Users don’t need to have a bank account.
Banks are among the growing number of financial services giants investing in blockchain startups such as R3 CEV, which is working with an 80+ member consortium of banks, regulators, and technology partners to develop Corda, a blockchain platform designed to be the “new operating system” for financial markets. If fully adopted, it will enable banks to process payments more quickly and more accurately while reducing transaction processing costs and the requirement for exceptions. Swiss bank UBS and UK-based Barclays are both experimenting with blockchain as a way to expedite back office functions and settlement, which some in the banking industry say could cut up to $20B in middleman costs.
Within the global space industry, existing and new space innovators seek to capitalize on blockchain’s promise in the race to Low-Earth orbit (LEO), creating new opportunities for collaboration, new satellite-as-a-service business models, and new ways to manage the space supply chain and even how to build payloads.
The Bitcoin or Ethereum, which are based on blockchain consensus, have a delay of about 30 seconds, which includes sharing and processing of the information by almost the whole network. Unlike this, the satellite network will take much less time, as the information is not to be processed by all nodes and it can use broadcasting features over wireless network. Also, all the nodes in the network will not require the whole blockchain in their memory, which will reduce the complexity of the electronics required on the satellites.
Satellites can also be important sources of space data for updating blocks and verifying the integrity and origin of data. and will drive smart contracts and logistics applications while being very beneficial to insurance industry. For example, space provides the ideal environment for executing “smart contracts” without human intervention. In developing countries like in Africa it has led to more financial inclusion because of satellites’ ability to reach the unconnected.
JP Morgan has successfully tested a blockchain transaction in space using Danish space firm GomSpace’s satellites, reported in March 2021. It is the world’s first bank-led tokenised value transfer in space, executed via smart contracts on a blockchain network, established between satellites orbiting the earth, GomSpace said in a release.
Cyberattacks are the top threat to our digital world. Though blockchain’s ledger is public, its data communications are sent and verified using advanced cryptographic techniques — ensuring that data is coming from correct sources and that nothing is intercepted in the interim.
Because blockchain is a decentralized system, it’s ideal for environments where high security is involved. Here, all the information stored on a bitcoin or other blockchain network is verified and encrypted using a cryptographic algorithm – which leads to no SINGLE point of entry for a wide-scale attack. Also, you can easily identify malicious data attacks with blockchain due to peer-to-peer connections, where data cannot be altered or tampered. And, by eliminating a central authority, blockchain provides a secure and transparent way of recording transactions without disclosing private information to anyone. One example of a company successfully using cybersecurity this way is Guardtime.
Thus, if blockchain is more widely adopted, the probability of hacking could go down, as the cyberprotections of the technology are more robust than legacy systems.
The number of electronic devices getting connected to the Internet is rapidly increasing every year. With the massive number of devices interlinked to each other through the internet creates the Internet of Things (IoT). The IoT is expected to transform the way of lives where ideas like smart homes is feasible. While this new phenomenon is likely to make lives easier, having a massive number of heterogeneous devices connected to the Internet creates graves issues regarding cybersecurity and privacy.
Currently the security architecture of the IoT, follows an inherently distributed client-server model that uses a central authority to manage IoT devices, along with all the data generated across an IoT network. The current internet architecture has proven easy to hack, especially when it comes to IoT devices. As critical infrastructure like power plants and transportation all become equipped with connected sensors, the risks to civil society as we know it are great. In these attacks, IoT devices are unable to adapt their behaviour because they are not considered “smart” enough to make security decisions without the help of the central authority.
Blockchain removes this single point of decision-making that leads to failure, by enabling device networks to protect themselves in other ways, such as allowing devices to form group consensus about what is normal within a given network, and to quarantine any nodes that behave unusually.
The second aspect, he said, is to form trust in IoT data by enabling what he called the five digital security primitives: availability, auditability, accountability, integrity and confidentiality. In blockchain, data is automatically stored in many locations and is always accessible to users. For auditability and accountability, a private, permission-based blockchain is used – where all users are authorised to access the network – and because all data stored on the blockchain is signed, each device is accountable for its actions. For integrity, blockchain is, at its core, a public ledger of data entries – every deletion or correction of data is entered – and as the entries are confirmed by the network, a complete chain of events is created, said Pindar.
Blockchain is already being used in industries such as retail, where blockchain startup BitSE’s Vechain platform is being used to demonstrate the provenance of high-value goods, including premium wines and Louis Vuitton handbags, to Chinese consumers who have a particular need to understand the authenticity of goods.
Pindar also gave the example of San Francisco-based Chronicled, which has applied blockchain to pharmaceutical supply chains to ensure tailored gene therapy drugs are delivered to the right person.
“By utilising a secure IoT platform, they are also able to attest to the quality levels of the drugs and to ensure that these drugs do not fail during the supply process, which could impact the efficacy when taken by the patient,” he said. IBM and Samsung have announced a collaboration to build decentralized IoT solutions by leveraging the Blockchain technology.
Slock it has developed a smart lock technology called Slocks which enables real-world physical objects to be controlled by the Blockchain. The owners of a Slock who wants to rent their real-world physical objects (such as houses, cars or bikes) set a deposit amount and a price for using the objects. Users can find the Slocks using the mobile app and then make a payment in Ethers to rent the objects. After the transactions are validated on the Ethereum Blockchain network, the users get permission to open or close the Slocks with their smartphone. A smart contract is automatically enforced between the owner and the user. After the object is returned, the deposit minus the cost of the rental is returned to the user.
Trans Active Grid has developed a combination of software and hardware technologies that enable users to buy and sell solar energy from each other securely and automatically, using smart contracts and the Blockchain. Filament has built an open technology stack based on Blockchain technology, to enable devices to discover, communicate, and interact with each other in a fully autonomous and distributed manner.
One of the challenges hospitals face with regards to patient records is the lack of a secure platform to store and share data due to their use of outdated infrastructure and legacy systems. Blockchain technology can allow hospitals to safely store data like medical records and share it with authorized professionals or patients. By securing medical records securely, accurately, and safely, authorized professionals could quickly and easily access a patient’s medical history with little if any delay. Better data collaboration between providers could ultimately mean higher probability of accurate diagnoses, higher likelihood of effective treatments, and the overall increased ability of healthcare systems to deliver cost-effective care.
Also, errors, fraud, and lost records have long been a bain for the medical profession for some time. This has created a certain level of distrust between consumers and healthcare providers. Blockchain should also eliminate the potential for fraudulent activities in the healthcare industry.
One of the major potentials of blockchain technology is to preserve patient information. It can simplify the fast-tracking of drug trials and record and track all fundraising activities and donations transparently. So, outbreak tracking, user privacy protection, medical supply chain management, and donation tracking are the various areas in which blockchain technology can play a vital role in fighting against the COVID-19 crisis.
During this pandemic, this technology is instrumental in recording patient information with COVID-19 symptoms, locations, and history of health conditions with high privacy. Many platforms have recently been launched which use this technology to facilitate sharing the information and valuable data related to COVID-19.
Another healthcare concern revolves around counterfeit medication and blockchain technology can control this, too. The problem is that, often, counterfeit medications are difficult to distinguish from real ones. Blockchain technology solves this problem by using supply chain management protocols where the medicine provenance can be traced.
Supply chain logistics
In supply chain and trade finance, verification of documents takes several days for transactions to complete. This is due to manual documentations. There are high inefficiencies, fraud, and the process is also rated for the high cost.
Supply chains are basically a series of transaction nodes that link to move products from point A to the point-of-sale or final deployment. With blockchain, as products change hands across a supply chain from manufacture to sale, the transactions can be documented in a permanent decentralized record — reducing time delays, added costs, and human errors. Traceability and transparency are some of the most important foundations of logistics. Blockchain enables equal visibility of activities and reveals where an asset is at any point in time, who owns it and what condition it’s in.
Blockchain technology can trace all the steps of a supply chain, so that, let’s say, you placed an order for food, had the food delivered, and found the food disgusting. For example, he can go from the farmer to the producer, to the distributor, to the retailer, then to you, the purchaser. In other words, in supply chain management, blockchain provides permanent transparency and validation of transactions shared by multiple supply chain partners. All transactions are permanent and verifiable, making it easy for an owner or a customer to view each record.
Provenance, for one, is building a traceability system for materials and products, enabling businesses to engage consumers at the point of sale with information gathered collaboratively from suppliers all along the supply chain (and thus substantiate product claims with trustworthy, real-time data). Others include Hijro (formerly Fluent), which offers an alternative platform for lending into global supply chains, and Skuchain, which builds blockchain-based products for the business-to-business trade and supply chain finance market.
Blockchain technology can end voter fraud. In a traditional voting process, most voters stand in line to cast votes or send in mail votes. Then, the votes must be counted by a local authority. Online voting is possible in this scenario, too, but as with all other industries we’ve discussed, because a central authority is used, problems of fraud arise. Using blockchain technology thus becomes the wisest choice. Here, people can vote online easily without revealing their identities. Using blockchain, officials can count votes with absolute accuracy, knowing that each ID can be attributed to only one vote. Fraud cannot occur because it is next to impossible with blockchain technology. And, once a vote is added to a ledger, it cannot be changed or erased. One blockchain voting platform is MiVote, a token-based platform like a digital ballot box. Voters vote through a smartphone and their votes are registered into a blockchain ledger. Safe, secure, reliable.
Education could be another industry that will be disrupted by blockchain. It could be massively improved through a significant breakthrough in utilizing an emerging new form of internet that combines blockchain, cryptocurrency, and VR. Called “3DInternet”, this new iteration of the net could have immense potential to create global classrooms like never seen before. One company working on this, called Socratescoin, is confident it will be a game-changer. They hope to create a global community of faculty, students, campuses and curriculum. Blockchain will help provide a safe, secure, auditable ledger for all education-related data and transactions.
Blockchain Could Change Everything for Energy
With the application of blockchain, the energy our homes use may soon be much cleaner. And, we may soon have more control over how our homes consume energy to begin with. Tokenizing renewable energy allows wind, solar and hydro producers to seamlessly connect with investors, who are willing to pay upfront for the right to consume renewable energy. As a distributed system, the middleman is removed.
Transactive Grid uses Ethereum blockchain technology to enable customers to transact in “decentralized energy generation schemes,” effectively allowing people to generate, buy, and sell energy to their neighbors. LO3 Energy also has projects that include Brooklyn Microgrid and Project Exergy, the latter being a proof-of-concept for harnessing excess heat expelled by computers.
The global blockchain technology market size is expected to reach USD 394.60 billion by 2028, according to a new report by Grand View Research, Inc. It is projected to expand at a CAGR of 82.4% from 2021 to 2028.
The increasing need for simplifying the business processes and need for supply chain management applications integrated with blockchain technology will drive the overall blockchain market. The growth can be attributed to the increasing number of merchants accepting cryptocurrency. At the same time, the growing interest of financial institutes in blockchain technology is also driving market growth.
Retail stores are increasingly adopting blockchain technology for seamlessly handling business relations and supply chains. For instance, in October 2019, Walmart started piloting blockchain technology to track shrimp exports from Indian farmers to an overseas retailer. This shrimp supply chain, backed by blockchain technology helped in improving the quality of products for compliance purposes.
The private blockchain type is estimated to hold the largest market size. A private blockchain is a shared database or ledger that is secured by traditional security techniques, such as limited user rights. Generally, security is provided to a private blockchain using private keys that are known only to the related organization. A private blockchain is a category of blockchain technology, where write permissions are kept centralized to a single organization. Read permissions might also be restricted based on the organization’s usability. A private blockchain provides more opportunities to businesses in terms of leveraging blockchain technology for business-to-business use cases.
Blockchain technology in banking and financial services is expected to experience rapid growth worldwide, due to various factors, such as high compatibility with the financial services industry ecosystem, rising cryptocurrencies and Initial Coin Offerings (ICOs), rapid transactions, and reduced total cost of ownership. In the banking industry, blockchain applications are currently focused on clearance and settlement systems, trading platforms, fraud detection, e-KYC, smart contracts, and regulatory reporting & compliance; the clearance and settlement systems segment is the largest adopter of blockchain technology.
Major vendors in the global blockchain market include IBM (US), AWS (US), Microsoft (US), SAP (Germany), Intel (US), Oracle (US), Bitfury (Netherlands), Cegeka (Netherlands), Earthport (UK), Guardtime (US), Digital Asset Holdings (US), Chain (US), Huawei (China), BlockCypher (US), Symbiont (US), BigchainDB (Germany), Applied Blockchain (UK), RecordsKeeper (Gibraltar), BlockPoint (US), Auxesis Group (India), BTL Group (Canada), Blockchain Foundry (UK), AlphaPoint (US), NTT Data (Japan), Factom (US), SpinSys (US), ConsenSys (US), Infosys (India), iXLedger (UK), and Stratis (UK).
IBM’s service offerings include data security services, security intelligence and operations, consulting, secure engineering and application security, and security strategy risk and compliance. IBM provides its blockchain platform for various industry-specific applications, such as purchasing systems, supply chain, food prevention, asset records systems, fraud prevention and compliance, identity management, and automated smart contracts.
For instance, in April 2020, IBM partnered with Nestle to enable Nestle for using IBM Food Trust enterprise blockchain to trace its Zoégas coffee brand. Zoégas coffee would come with a QR code that can be scanned by consumers to trace coffee beans to their origin. The IBM Food Trust enterprise blockchain will record data about farmers, time of harvest, transaction certificate for specific shipments, as well as the roasting period. Moreover, IBM collaborated with leading organizations, including Dole, Driscoll’s, Golden State Foods, Kroger, McCormick & Company, McLane Company, Nestlé, Tyson Foods, Unilever, and Walmart, to offer its blockchain platform, a permissioned and immutable shared ledger, to meet the challenges in food supply chain systems.