Around about late 2017, the term blockchain entered the common lexicon and quickly become a popular element of the fintech industry. It has since been widely touted as a game-changing development in the nascent world of digital banking. But what actually is it and what benefits can we derive from it?
The basic concept behind blockchain has been around for almost a decade yet few people truly understand how it works and what its purpose is. Being the unlying technology that birthed Bitcoin and a host of other cryptocurrencies, it is often dismissed as nothing more than a tool for “magic internet money”. However, blockchain offers so much more than simply a means of digitally transferring value.
Trustless, Permissionless, Secure
What is undoubtedly the number one driving factor behind the popularity of blockchain is the ability to securely conduct a transaction online without the need for third-party mediation. This means that two strangers on opposite ends of the Earth can safely complete a digital transaction without risk of fraud from either end.
This transaction can be anything from a simple payment to a legally-binding, contractual agreement. Unlike a paper contract that could be changed or tampered with, a blockchain contract can, in theory, remain immune to alteration. Transparency is another key factor that allows public blockchains to easily provide customers with accurate and reliable information in real-time.
Of course, the technology is still in its infancy and it may be many years before we realize its true potential. However, this has not stopped global tech and industry giants from testing and implementing it in several day-to-day business activities.
Real-life Applications of Blockchain
There are already many companies around the world using blockchain to solve common, every-day problems. These range from online payments and international remittance to supply-chain management and document storage.
In the United States, the digital banking network Ripple uses blockchain technology to provide cheap, instant cash transfers anywhere in the world. By utilizing a blockchain-based cryptocurrency for liquidity, it can safely honor a financial transfer to anywhere in the world within minutes
In New Zealand, online casinos and gambling operators have seen the potential in blockchain to provide trust to their customers. Since all data on the blockchain is transparent and immutable, no customer can complain about unfair practices or digital trickery.
Casino slot games, or online pokies as they are called in New Zealand, often use blockchain-based algorithms to provide randomized numbers that the operator can't manipulate to their advantage. The method provides a live running ledger of each and every randomized number so all parties involved are certain of fair and indisputable practices.
The international shipping giant Maersk has begun testing an IBM-powered blockchain network to track its 580 cargo vessels around the world. The system, dubbed TradeLens, enables the company to share information in real-time and collaborate securely with other shipping companies. The system is designed in a way that makes it work more effectively with increased contributions from other companies, which helps to drive partnerships and build international relations.
From data security to financial freedom, blockchain promises a wealth of possibilities, many of which may take years to fully develop. However, initial implementations are already proving to be highly successful and there is everything to suggest that this burgeoning piece of tech is here to stay.