Beginners Guide to Blockchain Technology 2019
Blockchain is a buzzword that immediately catches one’s attention today. Interestingly, the technology is popular because of bitcoin. Therefore, anything that puts the cryptocurrency in the limelight illuminates the technology too.
This article endeavors to point beginners to important developments regarding this emerging technology in the coming year. As such, it is only fair that we begin by first understanding what blockchain technology is and what it has done so far.
Ledgers and book-keepers
Blockchain technology builds on the well-known accounting tool called the ledger. This technology uses a public ledger to distribute databases or blocks of information across the globe via an expansive network of computers.
Particularly, blocks of information originate from one entity’s endeavor to solve a mathematical problem. Since this platform behaves like a public ledger, anyone who tries to add information to the network by solving the mathematical problem is simply a book-keeper.
Once the book-keeper, a blockchain miner, solves the problem, all the other book-keepers (miners) on the network will verify its veracity. This is now proof-of-work. If a consensus emerges regarding the information that it is correct, the network records the information in a separate block. Therefore, as many more miners add the blocks, the result is a chain of blocks hence blockchain.
The first use case for the new technology was bitcoin, a digital currency. Therefore, blockchain was synonymous with the new form of “internet money” until other uses began to emerge.
However, blockchain as a technology separate from underlying bitcoin began to emerge early this year. The year began with a major selloff of bitcoin and other cryptocurrencies. Interestingly, the crash is still happening, with bitcoin shaving off 80% of its peak value in late 2017.
The pace at which use cases developed for the better part of this year is exhilarating. Interestingly, the potential of blockchain as a separate entity from bitcoin and other cryptocurrencies is reminiscent of the early internet.
Dedicated enthusiasts are using the fundamental properties of the technology to disrupt almost every industry.
Disruption of the financial industry
Interestingly, the financial sector is the biggest casualty of the technology. A blockchain network stores information in blocks which can exist for eternity. Further, no one can change the information once registered on the platform.
Perhaps the most exhilarating property is that users can interact directly without an intermediary. By virtue of its decentralized nature, a blockchain network maintains utmost trust in interparty transactions.
Various projects are already utilizing the technology to facilitate transfer of value between people. Huge companies like American Express have confidence in the ability of blockchain to speed up international payments.
Peer-to-peer interaction ensures that there is no burden of a middle-party like a bank in financial transactions. As such transactions are cheap and fast.
Smart contracts that are self-executing ensure that the transactions observe the highest standards of transparency. As such, there is no need for a central authority (bank) to record and execute transactions.
Although 2018 saw some activity in this direction, next year will experience a lot of interest in the payments aspect of blockchain.
The supply chain
There is no industry as synonymous with complexity as the supply chain industry. The interdependency in the world today means entities source goods and services from diverse regions. With this comes the challenge of counterfeits and reneged contracts.
Already, blockchain is promising to rein in the malice in the industry. The fundamental properties of the blockchain allow parties along a supply chain to operate with the utmost level of integrity.
For instance, Walmart is using IBM’s blockchain network to track its food. Particularly, the technology will help the giant retailer to follow its lettuce from the farm to the store. Essentially, the aim is to maintain the highest level of quality while preventing cases of E. coli affecting food.
Apart from IBM, there are several other startups that are leveraging blockchain to provide supply chain solutions.
Interestingly, a startup like Infor has already generated $3 billion this year alone for offering inventory tracking solutions. The firm integrates Internet of Things and blockchain into one solution that is able to cater to many aspects of the supply chain.
Combating fake drugs
The problem of counterfeit is so huge that the World Health Organisation is calling for concerted effort to eradicate it. Surprisingly, most of the fake drugs come out of India, a country that is at the forefront of the pharmaceutical industry.
Previous efforts are seemingly unsuccessful and therefore, the country is looking to blockchain. According to India’s National Institution for Transforming India (NITI), blockchain will help to trace drugs along the supply chain.
Particularly, the government policy factory wants hospitals to transfer their operations onto a blockchain network. As such, the hospitals will be able to view the status of drugs at every point of the supply chain in real time.
Further, migrating all operations onto the blockchain platform will provide an opportunity for the institutions to store patient data digitally. The immutability of data on a blockchain network will ensure that other parties can view it without making changes.
As such, medical institutions will be able to share patient data securely and hence improve the quality of services rendered.
Blockchain is revolutionary. One can safely say that 2018 has seen only a taste of what the technology has to offer. Already, there are companies setting up businesses in that line.
Large corporations and startups alike are finding interesting use cases for the technology. Going by the number of blockchain-related patents filed this year, 2019 is likely to witness a patent ‘arms race.’
Further, the increased activity regarding use of the technology increases the likelihood of mass adoption. It will be interesting to see blockchain adopted massively for the other uses other than powering bitcoin.
However, the industry faces the challenge of an uncertain legal framework that is spilling into 2019. It is safe to say that the uncertainty is the greatest force clipping the technology’s wings. If the issue were to change in the coming year, blockchain will have its moment in the sun.