George Hancock, Adam Sculthorpe, Jasmine Lopez-Valido, Chris Ferguson
Vodafone Consulting & Innovation
With the power to revolutionise and disrupt industries, Blockchain is already transforming how many organisations do business.
If you haven’t done so already, now is the time to familiarise yourself with the world of Blockchain.
What is Blockchain?
Blockchain is essentially a distributed database that maintains a list of records. These records, or pieces of information, are joined together as blocks. Each block contains a history of the blocks before it, complete with their own timestamps. The blocks are hashed together (or encrypted) to form a chain of blocks, or a Blockchain.
The main purpose of the Blockchain is to act as a peer-to-peer network that enables information to be stored across a digital ledger. Through the Blockchain, everyone who has access to the system has a record of each transaction. The main benefit of this decentralised approach is that it’s practically impossible to corrupt the information within the network. Blockchain was originally designed to resolve transparency issues within the financial industry, but as the technology has evolved it has seen many further applications.
Is the chain strong enough?
Security and trust are the two main strengths of Blockchain, which combine to provide a service that cannot be matched by other systems. The network achieves this in two ways:
- Using data encryption. This means it is essentially impossible to alter the information stored on a ledger.
- Applying a consensus mechanism. This means that in order for a transaction on the network to be valid, the majority of the nodes in the network have to agree on it. Once confirmed, the system will add the transaction to the recognised chain of blocks. Ultimately, the bigger the network and more decentralised the nodes, the more secure.
Yes, Blockchain is a revolutionary system, but large-scale implementation of the technology is still restricted by its biggest weakness: complexity.
As the technology is still young, it is naturally very difficult for the average person to use and understand it. From hashing encryption, to address keys, Blockchain has not yet been refined for use by the ordinary user. Once simple user interfaces for the technology have been developed, then mass adoption will soon follow.
Blockchain is currently being explored across multiple industries and sectors, and one of the most exciting and innovative applications of the technology is from British consumer co-operative, “The Co-op”.
The Co-op, alongside Blockchain software developer “Provenance”, has developed a service that allows customers to track their purchases along the supply chain, from ‘source to shelf’.
At a time when consumers have become increasingly cautious of goods that claim to be organic or authentic, The Co-op is illustrating to customers the complete journey of its products. Provenance has created a system that collects data from a product level about origin and owner, and also details environmental impact – another huge consumer concern. This data can be accessed by branches, consumers and suppliers in real-time, and is designed so that any anomalies are easily identified and addressed.
By providing unquestionable information on a product’s journey, The Co-op is able to maintain the trust of their customers, and their reputation as a reliable retailer.
The future of Blockchain
Originally developed for the Financial Services sector, we are already seeing many institutions within the sector testing and using the technology to optimise transactions and explore new ways to support business growth through collaboration with start-ups and innovative forums.
But, as evidenced by The Co-op’s application, the coming years will see an increased use of Blockchain outside Financial Services. Within the utilities sector, for example, the technology is being applied to illustrate usage and payment transactions, and additionally there are many people who want to see Blockchain used to secure IoT (Internet of Things) services in homes. There is a fear that the increased adoption of smart technology in homes will see cybercriminals hacking smart fridge-freezers, or turning on and off appliances to cause electrical surges, for example. Blockchain can be applied to prevent this, and, further still, its ability to provide clarity in governmental and legal dealings could be revolutionary
But while we are seeing Blockchain transform how businesses operate, the emergence and growth of the technology is also providing the foundations for Blockchain-based businesses to develop. And there will undoubtedly be more and more instances of services such as these coming into existence, as the platform and applications grow from infancy, and Blockchain becomes more widely understood.
Regardless of opinion, it is clear that Blockchain will become more embedded in everyday life as time goes on. It’s therefore important to understand and track the progress and benefits Blockchain can bring to business. Familiarity now, can help establish opportunities and challenges for tomorrow.