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Blockchain – is it the future?

Is blockchain technology the heir apparent to the internet? Some say it is... perhaps more accurately it’s the logical next step in the way we share information – it’s certainly causing a stir globally. The basic idea behind blockchain is that it is a shared database. Information held in the blockchain is duplicated across a network and continually updated. There’s no single, hackable, central location in which the information is stored; blockchain data is accessible. It’s almost like the difference between waiting for someone to read “track changes” on a Microsoft Word document and ending up with multiple versions of the same thing, and simultaneously editing the same article in Google Docs.

The idea of a “block” is that it is a record of new transactions – for example, newly “mined” cryptocurrencies such as Bitcoin. When a block is complete, it joins the chain. Blockchain is strongly linked to Bitcoin, and the blockchain that manages Bitcoin transactions has been operating for almost a decade. Transactions are recorded using a connected system, reducing the potential for single machine error or human failings. The blockchain network is created by adding individual computers using a client that relays and validates transactions – in the case of Bitcoin, each participant is competing to “mine” Bitcoins. The idea of “mining” is slightly misleading – it’s about solving complex problems in order to be rewarded with cryptocurrencies. “Owning” cryptocurrency means having a private key to its address in the blockchain, which lets you spend it. To receive currency, a public key is used. 

Removing the centralised hub from financial transactions in this way opens the door to a whole new way of working. Bitcoin doesn’t need a central bank behind it; it’s managed by the network. The rise of collaborative, decentralised networks could also boost security by replacing passwords and usernames with individual encryption. What’s more, a new economic model could emerge. We already understand the idea of AirBnB and Uber replacing traditional concepts of finding accommodation and transport, but blockchain tech could take this a stage further and allow us to pay vendors directly without the need for an intermediary and its associated transaction fees. Blockchain’s transparency may mean traditional supply chains evolve – currently, cryptocurrencies are traded but in future other assets may be converted to tradeable, manageable crypto-assets.

Blockchain’s transparency puts it at the forefront of the transformation of parts of the market: if blockchain removes the middleman or third-party arbitrator, this could mean a future where smart contracts take the place of bureaucracy. Any business looking to remain successful in the future will need to assess how they can work with blockchain, and IT professionals will need to make sure they are up to speed in order to find a role in this new economic world.

Read our related blogHow can digital transformation enhance the retail customer experience?
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