If I had to pick the hottest tech trend this year, it would undoubtedly be Blockchain. The promise of Blockchain technology is huge.
There’s a lot of hype at the moment around Blockchain, but does the average techie even really understand what it is and how it’s used? Personally, I don’t think many do. Misunderstandings about this hot technology are very common. Just as the cloud hype panned out almost a decade ago (public, private, hybrid, PaaS, SaaS etc.), subsets of this technology with terms such as Hyperledger, The Ledger of Things and many more phrases are emerging. This raises a valid point – “is the hype overtaking the actual understanding of Blockchain use cases?” Maybe, but to understand what Blockchain actually is, you need to understand how it works.
What is Blockchain?
It was created as a way of storing records, transactions, a ledger if you will that is composed of digital information that’s distributed, shared amongst a varied amount of users and can only be updated by a consensus of the actual users of the system. Once these details have been entered, they do not get erased.
What is a Ledger? = A ledger is the principal book or computer file for recording and totaling economic transactions measured in terms of a monetary unit of account by account type, with debits and credits in separate columns and a beginning monetary balance and ending monetary balance for each account. A distributed ledger (also called shared ledger) is a consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, and/or institutions. Source : Wikipedia, the free encyclopedia
In simple terms, a Blockchain is a distributed set of information that is edited/updated by a collection of users that access the information. The information is spread across multiple locations, a distributed ledger (database) that stores information/data, a block if you will, that has a unique ID that links to a block of data. Each block references the previous block of data creating a chain of blocks. Hence the term “Blockchain” to denote a chain of blocks.
So to sum it up, think of Blockchain in its rawest form as lots of spreadsheets with links/identifiers in succession to the data stored within it.
Discussing Blockchain with Author Alex Tapscott
Recently, I had the opportunity to discuss Blockchain in a bit more detail with the co-author of the book, “ Blockchain Revolution,” Alex Tapscott. It’s hard to think of a more enthusiastic evangelist for the benefits of Blockchain than Mr. Tapscott. “For the first time in history two parties need neither know nor trust each other to transact business,” says Alex Tapscott.
I caught up with Alex recently and asked some probing questions. Read my exclusive interview and discussion with Alex Tapscott, to understand more about Blockchain.
Q1: So Alex, tell us a bit about your background & what led to your interest in Blockchain?
Alex: “Well Blockchain technology first came across my radar in 2013. At the time, it was all about bitcoin. The idea of cash for the Internet, which didn’t require the use of a third party intermediary intrigued me and I began to spend more time looking into it. Back then I was working in investment banking, focused on the technology sectors. As it happens, at the same time Don Tapscott (my co-author) was running a multi-million dollar research project investigating new ways of solving global problems using technology and one of the things he wanted to understand more was bitcoin as digital currency was full of intrigue. Over a steak dinner (and a bottle of wine) we agreed to collaborate on a new research project that led to our first published work on the topic “A Bitcoin Governance Network.“ We pursued more topics as well, including the impact of Blockchain within financial services, IT, corporations, new business models, government etc. The more we did, the more convinced we were that this technology represented nothing short of the second generation of the Internet. That research became the basis for the book!”
Q2: Do you think people are still fearful about Blockchain technology, especially considering recent hacks of the cryptocurrencies?
Alex: “The cryptocurrencies themselves were not hacked. That is a common misconception. In fact, cryptocurrencies, and Bitcoin in particular, have proven very resilient to hacks. To hack the bitcoin Blockchain would require an attacker to take over the whole network and rewrite the history of commerce in that Blockchain in a very short window across many computers – a very challenging task. However, companies dealing in crypto currencies have been hacked (mt gox, bitfinex, etc) and that has made many firms wary to operate within them. There are also other limits to Bitcoin that are unresolved - namely scalability. Furthermore I think there are lots of Blockchain use cases that do not require a full distributed permissionless network like Bitcoin and would be better served with something more “enterprise grade”
Mary: As someone who has tried to utilize a bitcoin transaction to buy goods other than online purchases, it’s not easy– try walking to your local store and ask if they accept Bitcoin and gauge their response while they stare at you blankly.
Q3: So Alex, if you had a crystal ball, when do you see Blockchain becoming mainstream?
Alex: “The best technologies are invisible. Already we are seeing large scale commercial implementation in banking, supply chain, insurance, healthcare, even public sector. It’s very likely this technology will have a profound impact on all of us, perhaps without us even knowing as it is embedded into the Internet, IT and the enterprise.”
Q4. Can you tell us a little bit about the private meeting you and your father recently held in Canada (I think it was?) Was this an effort to get consensus on the need for Blockchain standards?
Alex: “The Muskoka Group as we called it was convened to bring together leading stakeholders from different parts of this ecosystem- everything from government to banking to technology. In order for this technology to reach its potential and not get sidetracked or derailed, it needs multi stakeholder governance. Right now the governance network for Blockchain technology is nascent. Standards are one of 10 issues that we discussed but we also discussed policy, advocacy, knowledge and other components of governance. We came up with 10 proposals to advance a healthy ecosystem, available at muskokagroup.org.”
Q5. What do you think about security and the Blockchain? Are there ways to ensure security?
Alex: “Security happens when nodes are distributed and where there is a lot of computing power being marshaled to support the network. Centralization creates vulnerability - and we are seeing some over concentration on the Bitcoin network - an issue that must be resolved. Big powerful computers all working independent from one another but in a sense cooperating to validate transactions would create security.”
Mary: To create such a decentralized community of compute power capable of operating independently but also cooperating and validating transactions quickly requires some amazing tech. For example, encryption at the hardware level can help ensure security.
Q6. OK, so what are some of the current best uses cases for Blockchain?
Alex: “Where to start? Virtually every aspect of the financial services industry - from retail payments, to insurance, accounting, even central banking, will be transformed. But this is not just about financial services. The energy grid needs a reboot - Blockchain enables massive scaleable peer-to-peer power grids. And how about the Internet of things? It turns out that the “Internet of Everything” needs a “Ledger of Everything” to secure and validate what will be billions of devices with trillions of device to device transactions per day. The possibilities are endless!”
Q7. One last question Alex, can we expect any more Blockchain books from the Tapscotts? : ) Is there a Blockchain sequel coming up?
Alex: Nothing planned, but you will be the first to know!
Use Case: Everledger and Blockchain
To learn more about Blockchain, watch a real use case from Everledger, explained by their CEO Leanne Kemp, in the video “Everledger & Diamonds: Building a Secure Blockchain.”