In the wake of any industrial revolution, there is a fundamental change in how we live, work, and relate. Now that we are in the fourth industrial revolution, human development is fueled by extraordinary technological advancements that commensurate with those in the first, second and third industrial revolutions. Also, the fourth industrial revolution presents the opportunity to help leaders, policymakers and people of all income groups to build an inclusive and human-centred future.
Technologies such as blockchain have become a pillar of the fourth industrial revolution due to their power to disrupt existing economic and business models, particularly in emerging markets. It is compared with technologies such as the steam engine and the internet that triggered previous industrial revolutions. Therefore, to put a light on the complexity of blockchain technology, this article is going to dive into the basics and elaborate on what it means, its benefits and talk about a use-case of the technology in practice.
What is Blockchain?
Blockchain technology offers a new form of storage, use, maintenance and control of records. Simply put, it is a distributed database that is operated on a peer-to-peer network and can be used to record transactions, ownership, and securely store any type of information in blocks. Blockchains are designed to serve as an irreversible and incorruptible repository of information, such that the platform on which it is being used is able to store and verify the entire history of transactions between users on the network. Although initially designed for the Bitcoin network, blockchains can be used for any function that requires record-keeping.
A/Professor Co-Pierre Georg
Cryptocurrencies are a very popular use case of blockchain technology, even far more so than the technology itself. The first thing that comes to most people's minds when the word "Cryptocurrency" is mentioned is Bitcoin.
Bitcoin has gained its popularity mostly from its increase in value over the last ten years from about 0.08$ in 2010 to around 35,000$ at the time of this writing in 2021. But what is missed a lot from the Bitcoin story is its true meaning of why it was created as a cryptocurrency, which is to create a new way for people to transact in an entirely trust-less environment, without the need for banks to facilitate payments and verification of account balances.
Another popular cryptocurrency is called Ethereum, which is second to bitcoin by market cap. Ethereum goes beyond a digital currency to enable developers to build blockchain applications called decentralized Applications (dApps) that can be fully deployed without any downtime, fraud, control or interference.
Benefits of Blockchain
In today's era, companies spend a lot of money on cybersecurity solutions to keep sensitive data safe from outsiders, but rarely if not at all, fight the internal cybersecurity battle to ensure that the data has not been manipulated, replaced or falsified by company employees. Therefore, one of the key benefits of blockchain is its immutability nature, where it brings an unprecedented level of trust to the data that can not be tampered with.
Decentralisation is the transfer of control and decision making of a system from a single central entity to a distributed network. In the decentralized blockchain network, each member has a copy of the same data in the form of a distributed ledger. Thus, in a situation where a company exchanges information with different partners, there is trust in the network because all parties have access to a real-time, shared view of the data. Therefore, the decentralization benefit of a blockchain provides a trustless environment and improves data reconciliation of the different parties in the network.
Blockchain can prove things that people say/claim such as important documents, delivery time-stamps, transaction details or account statements. Therefore, it brings trust to the parties involved and a means of verification of the information provided by a party. Therefore from the decentralisation nature of the blockchain, it brings transparency to network participants and promotes trust in the information since the data is immutable.
Non-financial use cases for blockchain
The value-add of blockchain technology has led to the explorations of various use-cases outside of Finance. Thus, there has been ongoing research and pilots that look to leverage the benefits of blockchain in multiple industries. The supply chain and logistics industry is one industry experiencing a paradigm shift as blockchain technology keeps growing in relevance.
In the age of globalization, managing supply chains has become a complex task which results in inefficiencies, as vendors and suppliers face challenges in determining who needs what and when, and how best to get the goods to the customer. Also, the lack of transparency in the supply chain makes it difficult for customers to know the true value of the products and can't verify any suspicion of illegal or unethical practices.
A good example of a blockchain-powered supply chain solution is TradeLens. TradeLens is an open and neutral supply chain industry platform solution that is developed by Maersk and IBM. It has an interconnected eco-system of supply chain partners such as - cargo owners, ocean and in-land carriers, freight forwarders and logistic providers, ports and terminals, customs authorities and more. Hence to achieve an incredible achievement of logistics, coordination and communication, TradeLens provides unprecedented transparency, collaboration and efficiency in global shipping supply chains.
When or when not to use a blockchain?
Blockchain has the potential to fundamentally change industries and many organizations can benefit from blockchain but it can not be used as a solution to every problem. However, it is a very useful technology where trust is important and some form of transaction takes place. Therefore, before advancing to use blockchain technology as a solution to a problem, it is best to consult with a blockchain expert to find the relevance of the problem and solution using the following questions:
Do you need a database?
Do multiple agents need to write access to a database?
Do you know and trust all agents that write access to the database?
Is speed important?
Do you require your transactions to be private?
Do you need to change or cancel your transactions?
Do you need to store large amounts of data?
Do the benefits of using the blockchain outweigh the costs?
Do you have access to the necessary resources?