What could blockchain do for your business?

Blockchain has been around long enough now for most businesses to have started considering whether they should be using it and how.

As with all new technology, when something is spoken about as much as blockchain is, it creates a feeling of paranoia among those who aren’t yet at the party. It’s important, however, to remember that this technology is a tool for getting a certain type of job done – and if you don’t need that type of job done, you don’t need the tool.

In this article, we give an overview of the types of jobs that blockchain is being used for. The idea is that you draw your own conclusions about whether or not it could be useful for you. First, though, let’s try to clarify what blockchain is and how it works.

Blockchain explained – the short version

Blockchain is a virtually tamper-proof method of storing and sharing information. It is, as the name suggests, a chain of digital blocks, each one containing a piece of data, a unique code and a copy of the unique code belonging to the block before it in the chain. If somebody tampers with the data in one block, it changes its unique code, which creates a disagreement with the code stored in the next block and raises a red flag.

With the traditional method for keeping records in a central location, such as a Government office, it might be the responsibility of one or two people to pick up any red flags and investigate. With blockchain, validation is decentralised, spread around an online peer-to-peer network of devices (known as nodes), which all get notified of any changes in the chain and must verify it before it can pass.

New blocks are created by ‘miners’, who are paid for each new block they create. To create a new block (mining), a miner is presented with a mathematical problem (hash) that is hugely complex to solve, yet very simple to validate. Solving the problem requires vast computing power, which makes it effectively unprofitable to try to hack the system. The solution to the hash becomes the unique code (has output) for the new block. Nodes quickly validate the hash output and give consensus, enabling the new block to join the chain.

Because of blockchain’s decentralised structure, there can be no single point of failure, nor can a blockchain be censored. It is a neutral, borderless, secure technology that mitigates against human error and cuts through a lot of red tape, thus speeding up processes and reducing costs.

How is blockchain useful?

Some of the more obvious applications of blockchain include the transfer of cryptocurrency across borders, streamlining record-keeping, protecting intellectual property and securing personal information. It’s easy to see how applications like this benefit from the added security, efficiency and accessibility of being decentralised and automated. They are proving particularly useful in sectors like Financial Services, Logistics, Media, Medical and Government, which have all seen innovative adoption of the technology.

Governments, for example, can combat vote rigging and empower higher turn-outs at elections by storing voter details on a blockchain and using it to enable secure voting from personal devices. Logistics companies can streamline their supply chain by placing all transit records on a blockchain to identify patterns and avoid duplications and anomalies in the system.

Protecting businesses with Smart contracts

Putting contracts on a blockchain turns them from a piece of paper into a set of rules that are enforced in real-time. Rather than having to dig out the piece of paper and hire a lawyer when agreements break down, smart contracts keep all parties accountable and compliant all the time, avoiding contractual disputes and saving time and money.

Smart contracts are proving useful across multiple sectors, from the sharing of patient medical information to real estate title registrations to the tracing and collecting of artist royalties. The smart contract is one application of blockchain that looks likely to be adopted across the board as a business norm in the not-too-distant future.

Adding trust to Big Data

The billions of connected devices in our homes and work places, known as the Internet of Things (IoT), are all data points, feeding vast volumes of data into centralised artificial intelligence (AI) systems, which then analyse the data and trigger actions. A simple example is your Amazon Alexa device, which collects a record of the songs you’ve asked it to play and uses this to suggest other songs that you may want to listen to.

This is what we love about AI: its ability to take the initiative and enhance our lives with new information that would have taken us a lot of time and effort to research. But there is an innate suspicion of AI too. Who told the algorithm that because I like the Clash I’ll probably like Iggy Pop too? What if it was Iggy’s record company?

Now apply this thinking to healthcare. As Telehealth becomes more and more prevalent and doctors use algorithms to source remedies for our ailments, how do we know that the algorithm hasn’t been ‘trained’ by a certain pharmaceutical company with a vested interested in peddling a certain drug? As long as AI remains centralised, with the data owned by individual companies, there will be a problem establishing trust.

Blockchain can deliver the trust that AI and the IoT currently lack in two ways: firstly, by giving individuals the ability to control which of their data can be shared and which cannot; secondly, by tracking the provenance of every decision served up by AI.

There is already a legal requirement written into the European Union’s GDPR for any decision made by a machine to be explainable, with massive fines for non-compliance. Given the complexity of the decisions that AI is making and will increasingly make in future, blockchain could be the only way to keep up with such explanations.

Giving power back to the people

In the context of the data gold rush that is happening now, the idea of giving power back to individuals may seem counterintuitive. But every business knows the importance of trust in building the customer relationship and there is already a growing suspicion among consumers that Big Data is out of control.

Some companies have made billions of dollars from the exploitation of customer data and others will do so in the coming years, but as with every gold rush, the pioneers are soon followed by the regulators and the protection of the individual becomes paramount. Blockchain will enable individuals to reclaim their privacy – and facilitating that freedom could well be big business.