Blockchain is not equal to bitcoin!
In the recent weekend of tweetchat (#CIOChat, hosted by Instratica's business strategist Myles Suer), blockchain is a topic of discussion. One of the main lines of chat is focused on the challenges posed by blockchain/bitcoin relationships. Ryan Fay, CIO of ACI Specialty Benefits, said: "I can't wait to start a conversation about the blockchain, instead of spending an hour talking about bitcoin." This reflects the views of many people in the chat.
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It is understandable to associate bitcoin with blockchain. If you search for blockchains on Google, the top results will inevitably combine the words "blockchain" and "bitcoin". Blockchain technology originated from the establishment of Bitcoin, which enables digital currency such as Bitcoin to function as a currency.
My colleague Zach Slayton (VP of Digital Solutions, Collaborative Consulting) gave an analogy of fish and water. A fish (bitcoin) needs water (blockchain) to survive, but water (blockchain) does not require fish (bitcoin). So while Bitcoin requires the role of a blockchain, blockchain does not require bitcoin to provide value.
What is a blockchain?
In short, the blockchain is a digital bill. You can think of it as a spreadsheet. The blockchain bill includes a growing list of transactions called "blocks", all of which are connected in order. Each block in the list has a link to the previous block.
Once a block is placed in the chain, it cannot be deleted, so it will become part of a permanent database containing all the transactions that have occurred since it was created.
A more interesting feature of blockchain technology is that the bill has no central authority and a single source. This means that the bill exists on every node associated with it. Yes, each node has a complete copy of its own blockchain. As new blocks are added, they are also received by each node participating. Distributed consensus and trust ensure the integrity of the system.
Think about value, not bitcoin
If the blockchain is studied by bitcoin (or, in general, cryptocurrency), the perspective provided by the blockchain is very limited in terms of its commercial value and utility. And if we link the blockchain to various assets, we will see a near-infinite potential.
In her book "Blockchain: A New Economic Blueprint," author Melanie Swan describes three types of blockchains:
Blockchain 1.0 – Currency. This includes currency exchange, remittances and digital payment systems. This is an area that most of us are familiar with because of the existence of Bitcoin and other cryptocurrencies.
Blockchain 2.0 – Contract. This extends the blockchain to financial and market applications. Assets include bonds, stocks, loans, titles, and anything that implicitly contains agreements or contracts.
Blockchain 3.0 – Organize activities. This shifts the blockchain from the financial sector to education, government, health and the arts. In these areas, asset types may be physical, digital or artificial.
In the latter two categories, blockchain has more potential than bitcoin. And these applications have begun to attract a lot of attention in various industries.
Blockchain 2.0 – Contract
The potential benefits (and damage) that blockchain brings to the financial services industry have not been overlooked. As I mentioned at the beginning, JPMorgan Chase has invested heavily in exploring the blockchain. And many in the financial services industry are beginning to seriously study blockchain technology and its potential impact.
UBS Chief Information Officer Oliver Bussmann said blockchain technology can "reduce transaction processing time from days to minutes."
Visa, Citigroup and NASDAQ have invested $30 million in blockchain startup chain.com.
DTCC (Depository Trust & Clearhouse Corp.) recently held a blockchain seminar called "Hug Innovation." (DTCC acts as a trusted third-party clearinghouse for most securities transactions in the US. In the securities sector, blockchain can have a devastating impact on its business model.)
In a recent article in Fortune magazine, Commodity Futures Trading Commission member Christopher Giancarlo said the blockchain could have helped save Lehman Brothers. He said: "If all the exact [blockchain] records of Lehman Brothers transactions are available in 2008, Lehman's review regulators may have used data mining tools, smart contracts and other analytical procedures to identify anomalies. It can cope with the deterioration of Lehman’s reputation as soon as possible."
It is worth noting that Bitcoin has no place in these discussions. This is entirely to take advantage of the technical advantages that the blockchain may provide to solve real business problems in the financial services industry.
Blockchain 3.0 – Organized Events
Outside the financial realm, blockchain technology can be used where it may not be considered at the outset. As mentioned earlier, using the blockchain for online voting during Utah's recent GOP primaries is just one example.
This application of blockchain technology clearly illustrates the concept of distributed ownership. When I create my own "voting assets" and place them on the blockchain, I don't own the blockchain, but I have my own assets, which is my vote – also a block on the blockchain. So each voter has a piece on the chain. These blocks become permanent records of each individual's assets and are consistently verified by consensus on the chain.
When this concept is in the head, the potential of the blockchain in the government, education, and medical industries is really exciting. Here are a few examples.
In Estonia, the government is using blockchain technology to ensure the safety of more than 1 million electronic medical records (EHR). It is important to remember that patients have their own EHR assets, and their safety and integrity remain in the blockchain. As a result, patients can transfer records themselves through the blockchain rather than calling and relying on record transfer providers.
The UK's Chief Scientific Adviser recently published a report entitled “Distributed Billing Technology – Beyond the Blockchain”. In his report, he pointed out that the technology "can revolutionize the services of government departments and the private sector."
Earlier on the weekend #CIOChat tweetchat, the blockchain's topic of potentially devastating effects on education has generated a long discussion that lasts longer than the weekend. Digital Strategy Consultant Stephen DiFilipo, (Digital Strategy Consultant) Peter Salvitti (CEO of Boston College) and Joanna Young (CIO of Michigan State University) all proposed subversion and impact, including:
Prove learning and achievement
Student achievement verification
Micro-learning and micro-authentication concepts
In the world of Internet of Things (IoT), IBM and Samsung jointly developed a proof of concept that demonstrates a decentralized IoT telemetry system powered by blockchain technology.
The revolution has not been successful
The huge potential of the blockchain goes far beyond its role as a platform for successful operation of Bitcoin and other cryptocurrencies. However, for some applications being developed, there is a need to address technical challenges including performance and scalability.
As with any technology, blockchain is a tool, not a goal. Ultimately, as a technician, our job is to help companies achieve their goals by leveraging tools that deliver business value.
I think it is right to use blockchain technology as a tool for us. Because as I said above, it is more than just bitcoin. And I believe that as we progress, this connection will gradually disappear. (The internet)