To start with, blockchain is often misused as a generic term for DLT or Distributed Ledger Technology. Blockchain is to DLT as a carrot is to vegetable – it’s part of the DLT family, but by no means the only member. Therefore, to understand why the world is focused on DLT and its power is to better understand the whole family of potential technologies such as blockchain.
What is blockchain replacing?
From our earliest civilisations, much of the way we live and work has been organised around centrally verified structures, from kings and courts to governments, banks and corporations. These ‘official entities’ have allowed human beings to reach out past the close circle of people they trust to do business with people they've never even met. These entities do this by acting as a guarantor, or middleman, to facilitate, police and enforce agreements on both sides.
A tool called a ledger is used in order to keep track of all the transactions and parties they are representing, which is essentially a verified record of transactions and data – a ‘database'. While these are mostly now digital in the developed world, they are essentially the same structure that has existed on stone, tablet and paper for centuries. One single copy of our interactions with each other that acts as the only indisputable truth for conflict resolution, controlled by a ‘verified’ and therefore trusted authority.
Blockchain is not just pioneering technology, but a fundamental shift in the way we think about transacting as a global economy no longer reliant on trusted middlemen.
This method of human interaction and trade has served us well for thousands of years, but it also has major faults. From the inefficiencies of middlemen, to the possibilities for human error and fraud, our rapidly more connected world with its attached volume of transactions is in need of a better solution. DLT is technology's answer to these problems, spreading the responsibility for that stamp of trust amongst many.
It achieves this by feeding a piece of information through a trusted network of computers, where each ‘node' or computer on that network rapidly and securely verifies and validates the information. Each computer carries a copy, to give a general consensus that simulates the trusted authority of a bank or government body. This makes the data both transparent and resistant to censorship, as well as less at risk to the potential error of a single source copy. This type of distributed ledger can exist in the public sphere with many contributors and owners in the way that a cryptocurrency does, or it can exist as a private database, for example inside a bank or library.
What differentiates blockchain from other DLTs is the specific way in which it organises its data. It packages up each transaction, or piece of data, into a specifically sized ‘block’ that is verified and validated, and then chained to the next block. Each time a new block is added, the block behind it is locked into the chain for all time by the block on either side, meaning that the information is ‘immutable’ or impossible to hack, change or interfere with. Each of these blocks is encrypted or ‘hashed’ with a unique cryptography, making it uniquely secure as well as accurate.
From decentralisation and transparency to immutability and security, each unique aspect of blockchain represents another improvement for all types of data storage and transactions in the world today. With the exponential rise in digital transactions in both our corporate and consumer lives, it couldn't have come at a better time.
Who’s making it work for me?
Financial transactions form the base of human trade and economies, and have therefore seen the first and most advanced applications of blockchain, but its success in this core industry has seen it embraced by sectors as diverse as fine art and healthcare. The open source accessibility of this technology has fuelled its rapid evolution into multiple use cases that benefit the consumer directly.
It's already improving your journey as a traveller, for example in loyalty programs such as Singapore Airlines KrisFlyer membership. By utilising blockchain, your miles can be tokenised, making them accessible and usable across multiple retailers even more quickly and easily than a monetary transaction, and without the exchange fees. This provides real value to the consumer by unlocking the value of their KrisFlyer miles for everyday purchases relevant to their daily lives, right from the convenience of their mobile phones. With KrisPay, you can even use your miles to get your eyebrows done at Browhaus, relax over a sumptuous afternoon tea at TWG, or even pay for your petrol at Esso service stations.
Unlike traditional airline loyalty programs whose points have limited utility, KrisPay is able to offer its members choice, immediacy and value. This is only the start of how airlines that embrace blockchain can improve travel in the future – from better luggage tracking to faster immigration processing, the possibilities are endless.
Blockchain is also being utilised to modernise some of our most traditional industries. Have you ever thought about who owns your medical data, where it is stored, or how the people who might save your life in an emergency will get access to it when they need it? The current state of affairs is that they probably won't, or if they do it will most likely be transmitted to the hospital via fax, a technology many millennials would need another article to explain.
While most of us will have some electronic health care records with our names on it, they are created across fragmented systems that are unable to share information. With many of us changing medical providers many times throughout our lives, or even just requiring many specialists to collaborate to solve a problem, this could result in us ending up in critical situations without the relevant and potentially life-saving data.
We wouldn’t accept this state of affairs with our financial records, and blockchain could provide the solution to enable healthcare providers to offer the same standard of security, accessibility and accuracy we expect from our banking systems. A blockchain-based approach would also allow patients to control and take ownership of their records, and share them with any healthcare provider safely, securely and accurately.
While many blockchain use cases are still in their infancy, there are success stories across a wide range of industries. From multinational retailer Walmart partnering with IBM to track food from its source to the supermarket shelf, to legal teams all over the world utilising blockchain to secure their contracts, there is endless proof that blockchain is here to stay.
The rapid adoption of blockchain is causing everyone to stand up and take note. Where it was first only embraced by cutting-edge innovators, it's now being heavily invested into by those centralised institutions it mimics, such as governments and banks.
Dubai, dubbed the ‘city of the future’, is aiming to become the world’s first blockchain-powered government by streamlining its bureaucracy. It plans on converting over 100 million documents to blockchain by 2020. Their newly appointed artificial intelligence minister calls this ‘Smart Dubai’. Their goal is to be able to serve citizens better, faster and more securely. A perfect example of this is secure property transactions, one of the bedrocks of Dubai’s economy. The process of verifying claims on titles is currently manually checked through a central ledger, at risk of fraud, error and delays. A decentralised ledger system allows this process to become streamlined, reducing the need for time-consuming and often expensive intermediaries. The Dubai government estimates that this transition to DLT will save the kingdom $1.5 billion a year, serving as a testbed for governments across the world.
A leader in this field is the Monetary Authority of Singapore, which has invested heavily in its development and use in the region. While Singapore is known for its exploration into frontier technologies, it also stands out in Asia for its strict monetary policies and policing, so it's support of this technology is a strong endorsement of its growing reputability. Crucially, MAS is supporting the use of DLT through creating legislative ‘sandboxes’ providing the testbed for people to safely innovate and experiment with blockchain, but within a well-defined space and duration, and with appropriate safeguards to contain the consequences of failure for the overall financial system.
There are, however, limitations to blockchain, such as its energy consumption, scalability and speed of transacting in large volumes. While this means it’s not a complete solution to our data problems as yet, the endorsement of these trusted authorities and the resulting support for experimentation will only facilitate more and more innovation and adoption in the space.
Blockchain is already underpinning industries that serve almost every aspect of our daily lives. The only question left is, where won’t it go next?
KrisPay the world’s first blockchain-based airline loyalty digital wallet that turns your KrisFlyer miles into instant purchases – right from your mobile phone, starting from as little as 15 miles. You can now use KrisPay for everyday spend such as your petrol purchases at selected Esso service stations, TWG, Challenger and many more participating partners. Bringing you greater convenience with access to a range of personalised features at your fingertips, it’s seamless travel made easy.
Original article here