If you listen to the experts online, Blockchain is the next great thing. It will do for financial transactions what the web did for information. It will reduce the cost of things. And it will mow your lawn, wash your car and pick your lotto numbers! (OK, those last few I made up.) But what is it really, and how will it impact us all?
What is Blockchain?
Throughout history, when two parties conducted any kind of business transaction, another organization (often a bank) ensured that both parties were able to exchange payment for the product or service. For example, you go to a coffee shop and you order. They swipe your credit card, the bank checks that you have enough credit on your account, and it approves the purchase. The barista gives you the coffee, the bank adds the charge to your account and deposits the same amount in the coffee shop’s bank account. Deal done. Of course, the bank doesn’t do this for free. It charges the coffee shop for acting as the middleman. Those fees vary, but they definitely affect the bottom line for the shop. And, they pass some of that on to you in the form of higher prices. Enter Blockchain!
Blockchain is a technology that enables information to be stored in a completely new way. Rather than your account information being stored and “owned” in a traditional database such as your bank, the information is stored across many computers using special software to ensure the integrity and security of your information. This software replaces the bank as the middleman. It is an electronic ledger that cannot be altered, only added to. Each new transaction is encrypted and time stamped, and the transaction is added and linked to the previous ones in the chain. Many duplicates of the entire blockchain are stored throughout the Internet, and the software makes sure each transaction is valid before the blockchain is updated. This technology makes every transaction much more efficient and reduces the cost. Originally created to ensure Bitcoin is only spent once by the person who owns it, this technology can easily be used without Bitcoin involved.
Where will it be used?
Financial transactions are the first place we are seeing blockchain used, but we will see it in other areas. In health care, we could see it securely transmitting your patient file from your primary care doctor to the new specialist she has referred you to. For supply chain, it could be used for payment, and also for delivery, warehousing or transportation instructions.
Who is investing in it?
Some of the world’s largest corporations are investing heavily in this technology. Tech giants like Microsoft and IBM, and financial companies like Visa and Chase are all involved. Initially they see it as a competitive advantage that will help control costs. But eventually, this technology will be required to do business at all.
So why should I care?
You’ve heard about blockchain technology being used for cryptocurrency such as Bitcoin, and you’re about to hear about many more uses. Part of the attraction of this new technology is that it gives people control of their own information. Rather than having your financial information “owned” by your bank, you will be able to control access to your information and grant access to your bank. Similarly, your personal health information will be “owned” by you and you will grant access to the healthcare provider you choose. It’s the beginning of a whole new version of the Internet where every person will own their personal information and has complete control of their online identity.