In our earlier post around Bitcoins, we briefly introduced the concept of Blockchain. Analogous to the traditional way of accounting and book-keeping, a blockchain is a publicly available ledger that records all bitcoin transactions. A decentralized network of miners (equivalent of accountants in the book-keeping process) verify the transactions, before the same is registered on the blockchain.
Detailing this example could help understand the concept better. Let’s say you (and the term used in blockchain parlance would be node) maintain a file of transactions on your computer (this file is the ledger). Ten different accountants (and these are the miners) who service your company maintain this same file on their computers (and thus the ledger is said to be distributed). Now, say you undertake a new transaction involving a transfer of AED 10000 to a business associate. Your computer sends an e-mail to each of these accountants informing them of this. Each accountant then attempts to check and verify this transaction. In doing so, they aim to judge the legitimacy of this deal - Can you actually undertake this transfer? Is it in line with your previous balance? The accountant who verifies the same first earns an incentive (currently they are paid in the form of a cryptocurrency of the nature of Bitcoins). Post this validation, the transaction is recorded within the blockchain (ledger).
Now, blockchain obviously goes beyond just trading of cryptocurrencies. It can cover contracts, records and other such information. This potential is the main reason for this technology attracting attention world over. Here are 3 general areas you could see blockchain playing a crucial role in easing your life:
- Banking and finances: One of the direct benefits of the adoption of blockchain within banking would be a reduction in transaction costs and a higher degree of security.
- Education: In an announcement made in September 2017, the government of Malta declared a pilot project exploring the possibility of issuing educational certificates on the blockchain. The project, run by Learning Machine, is expected to see diplomas, training certificates, and equivalence statements, accreditation, issued on blockchain providing both ease of access, safety and validation.
- Healthcare: The necessity of such a technology cannot be underplayed when it comes to healthcare. Blockchain technology could streamline sharing of medical records, protect sensitive data, offer patients more control over their information. It could play a major role in bridging the Healthcare-Insurance gap, making it smoother and a lot more efficient.
These are just a few industries, blockchain technology is either being adopted or envisaged within. The technology is seeing unprecedented prowess in overhauling traditional ways of working with a superior, faster and more secure alternative.
Content exclusive to Citi by Wealth Monitor. The views expressed here are those of the authors and do not necessarily represent or reflect the views of Citibank UAE.