Blockchain technology

WHAT IT IS

WHY IT MATTERS

Blockchain can be applied to a number of different economic and public sector applications, and some analysts say the technology will change the world economy. The technology also has the potential to reduce or eliminate errors and speed up transaction times.

  • HOW IT WORKS

    • Data (typically a record of transactions) is gathered and ordered into “blocks” that are securely chained together and encrypted.
    • The “blocks” or data are time stamped and placed in chronological or sequential order, with all network users able to access the most updated version in real time.
    • Rather than each party in a transaction keeping their own records, blockchain creates a shared, tamper-proof ledger that makes it difficult to commit fraud. It’s designed in a way that makes it nearly impossible to alter or move data without being detected by other users.
  • APPLICATIONS & BENEFITS

    • Blockchain allows for transactions without centralized banks, credit card companies or governments, with verifications coming from a consensus of users instead.
    • Retailers have started to adopt blockchain technology to track food supplies, and expect it could help identify sources of contamination.
    • It combines the openness of the internet with the security of cryptography to give everyone a faster, safer way to verify key information and establish trust.
    • Financial trades happen quickly, but exchanging assets can take time and the involvement of a number of parties, which leads to errors, delays and additional costs.

WHERE WE ARE NOW

  • The technology is still in its infancy, but it provides the secure, paperless exchange of money and information.
  • Companies are embracing the technology, but some analysts believe others may hesitate to adopt it due to the costs and risks associated with such a radical change.
  • Software companies are working to make the technology faster to compete with traditional systems, which can handle transactions with far greater speed.

THINGS TO THINK ABOUT

  • Governments and lawmakers likely need time to understand and adopt legislation to resolve liability and legal issues.
  • For further reading on Blockchain, check out IBM’s Blockchain information.