The term “blockchain” – like cloud computing and IoT before it – keeps cropping up in new and different settings, yet few people still truly understand its operations or allure. Blockchain, most often linked to the digital currencies Bitcoin and Ethereum, serves as the foundation for many less publicized, but no less potentially valuable applications.
First the technology: In plain English, blockchain is based on distributed ledgers. Transactions, which once had to be carefully tracked and audited in paper files, are now recorded on digital ledgers and distributed simultaneously to members of a network. This allows participants in a peer-to-peer network to view and add updates to the ledgers in real time in “blocks.” Users submit their block to a sequential chain, while other users verify its authenticity. Each block is assigned a cryptographic hash function – in other words, a unique data value that makes it nearly impossible to replicate. Essentially, all pieces of information on the blockchain network are created, verified, and transmitted by the users themselves, rendering a third-party moot.
Secure and private transactions within a decentralized network are the cause for the buzz around blockchain. But understanding how and why blockchain works is key to grasping its endless possibilities.
Next the opportunity: A new primer by Software.org: the BSA Foundation explains how the technology works and showcases a range of blockchain uses. As it turns out, applying blockchain technology across new industries has made way for unexpected opportunities. Here are a few examples:
- In 2016, the University of Texas partnered with Salesforce to create a learning platform called Total Education Experience (TEx 2.0). The platform incorporates ChainScript, an online system built on blockchain that allows students to manage, distribute, and verify their academic credentials, including their transcripts.
- IBM partnered with 10 major food retailers and producers to use blockchain for increased food safety. By using IBM Blockchain, the partners can pinpoint sources of contamination without having to halt production. This not only saves time and money, it also streamlines a tedious and delicate process.
- Microsoft and Accenture have teamed up to create a digital ID network built on blockchain technology. The system will provide the security, privacy, and immutability necessary for sensitive personal information. The platform will work to empower individuals without proper documentation.
Enabling smart contracts, tracking and authenticating of luxury goods, and optimizing land registration are some of the other areas that are also reaping the benefits of blockchain.
The primer by Software.org is the first in a series that will highlight the benefits brought on by blockchain. The papers aim to educate stakeholders, including policymakers, on the underpinnings of the technology and the opportunities it presents.
It will be crucial to identify and address challenges that could hinder the development of this emerging technology from the outset. Doing so will require a collaborative environment and appropriate policy approaches. Software.org is available to answer any questions regarding the technology – please reach out with ideas and input you would like us to address.