Blockchain Tech: An Emerging Industry?

In a special feature this week, SSTI will examine a developing technology advancement that has been increasingly drawing public attention. This is the first of a two-part series examining blockchain and its implications for business and industry, with today’s story focusing on the technology, while next week will focus on its applications and challenges.

Blockchain, a newly emerging technology that stands as the web-based database platform behind bitcoin, is receiving more attention for the economic benefits it promises. While bitcoin has gobbled up headlines, blockchain has slowly developed a strong group of proponents that include leaders from Wall Street, big banks and investment firms that view the technology as a possible transformative advancement within finance and other tech-influenced industries such as government, supply chain, crowdfunding, telecommunications, gig economy and higher education. Blockchain is the technology that provides the possible secure, efficient pathway for billions of devices to transact and share information across diverse platforms.

Proponents contend that if its potential is actualized, a blockchain-based tech sector will need a dynamic system of startups to develop blockchain-based technologies and workers with the skills to develop those technologies.

At the most basic level, think of the blockchain technology platform as a highly secure, giant online database that allows a group (in this case anyone who has access to a specific web address) to see all the transactions made by other group members while still protecting the privacy of those involved in the transactions. In addition to protecting all users, each set of blockchain transaction (or ‘blocks’) is unable to be edited and therefore permanently creates a digital trail that is difficult to be manipulated by hackers or others. Unlike the current system of private databases, everything is “open” and distributed to all members. Since it is a digital ledger, any type of transaction can be made including money, goods and property. Below is a graphic from the Financial Times on how a basic blockchain transaction works:

(Source: Financial Times)

While the complex platform is considered to be a coding breakthrough, blockchain at the most basic level is a web-based, public ledger that consists of constantly growing, ‘blocks’ of data (e.g., financial transactions and other interactions) to facilitate peer-to-peer (p2p) collaboration and track transactions/interactions across a network of computers by both individual users and organizations.

Since there is no central authority, the blockchain database makes it nearly impossible for an individual or organization to tamper with an individual transaction or a block of transactions. While all the blocks and corresponding accounts exist in an open source environment, blockchain uses state-of-the-art cryptography – protective measures against hacking – to protect each user’s identity and sensitive information from others, according to McKinsey & Company.

Next week, we’ll explore other applications of blockchain to fintech, gig economy, and other industries as well as government/nonprofit efforts to support technology development around the blockchain platforms.

Blockchain Resources:

All you need to know about blockchain, explained simply –video from the World Economic Forum website

How blockchains could change the world – McKinsey & Company

Technology: Banks seek the key to blockchain – Financial Times