Sure, you have heard about Blockchain, but what exactly is it and how does it work? Why would I even want to use Blockchain anyway? What does it do for me?
Every second of every day, businesses exchange value with suppliers, partners, customers and others. By value, we mean goods, services, money, data and more.
Each exchange of value is a transaction. Successful transactions need to be fast, precise and easily agreed on by parties participating in the transaction.
Blockchain for business provides a way to execute many more of these transactions — a much better way.
What is Blockchain?
You’ve probably encountered a definition like this: “blockchain is a distributed, decentralized, public ledger.” It’s easier to understand than it sounds!
Blockchain is literally just a chain of blocks. When we say the words “block” and “chain” in this context, we are actually talking about digital information (the “block”) stored in a public database (the “chain”).
“Blocks” on the blockchain are made up of digital pieces of information. Specifically, they have three parts:
Blocks store information about transactions, say the date, time, and dollar amount of your most recent transaction with IBM.
Blocks store information about who is participating in transactions. A block for your IT purchase from IBM would record your name along with IBM.com. Instead of using your actual name, your purchase is recorded without any identifying information using a unique “digital signature,” sort of like a username.
Blocks store information that distinguishes them from other blocks. Much like you and I have names to distinguish us from one another, each block stores a unique code called a “hash” that allows us to tell it apart from every other block. Let’s say you made your IT purchase on IBM.com, but while it’s in transit, you decide you just can’t resist and need a second one. Even though the details of your new transaction would look nearly identical to your earlier purchase, we can still tell the blocks apart because of their unique codes.
While the block in the example above is being used to store a single purchase, for IBM, the reality is a little different. A single block on the blockchain can actually store up to 1 MB of data. Depending on the size of the transactions, that means a single block can house a few thousand transactions in one datagram.
What makes blockchain for business better for business?
It’s distributed – Blockchain creates a shared system of record among business network members, eliminating the need to reconcile disparate ledgers.
It’s permissioned – Each member of the network must have access privileges. Information is shared only on a need-to-know basis.
It’s immutable – Consensus is required from all members and all validated transactions are permanently recorded. Even a system administrator can’t delete a transaction.
How can blockchain help you?
Create new business value
Organizations must continually improve business processes and explore new opportunities.
Blockchain helps build more efficient, enterprise business models.
Facilitating transactions with suppliers, partners, and customers helps streamline business processes and transactions.
With blockchain, your business process network creates transactions using a distributed, permissioned, immutable ledger.
By storing blocks of information that are identical across its network, the blockchain cannot:
Be controlled by any single entity.
Has no single point of failure.
The blockchain is an undeniably ingenious invention – the brainchild of a person or group of people known by the pseudonym, Satoshi Nakamoto. But since then, it has evolved into something greater, and the main question every single person is asking is: What is Blockchain? So, now you know.
By allowing digital information to be distributed but not copied, blockchain technology created the backbone of a new type of internet.
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
Don & Alex Tapscott, authors Blockchain Revolution (2016)
By design, the blockchain is a decentralized technology.
Anything that happens on it is a function of the network as a whole. Some important implications stem from this. By creating a new way to verify transactions aspects of traditional commerce could become unnecessary. Stock market trades become almost simultaneous on the blockchain, for instance — or it could make types of record keeping, like a land registry, fully public. And decentralization is already a reality.
So, now you know. Blockchain is actually rather simple to understand, but its impact and business value is significant and it will have a major impact on the integrity of business transactions in the future.
Michael Martin has more than 35 years of experience in systems design for broadband networks, optical fibre, wireless and digital communications technologies.
He is a Senior Executive with IBM Canada’s GTS Network Services Group. Over the past 13 years with IBM, he has worked in the GBS Global Center of Competency for Energy and Utilities and the GTS Global Center of Excellence for Energy and Utilities. He was previously a founding partner and President of MICAN Communications and before that was President of Comlink Systems Limited and Ensat Broadcast Services, Inc., both divisions of Cygnal Technologies Corporation (CYN: TSX).
Martin currently serves on the Board of Directors for TeraGo Inc (TGO: TSX) and previously served on the Board of Directors for Avante Logixx Inc. (XX: TSX.V).
He serves as a Member, SCC ISO-IEC JTC 1/SC-41 – Internet of Things and related technologies, ISO – International Organization for Standardization, and as a member of the NIST SP 500-325 Fog Computing Conceptual Model, National Institute of Standards and Technology.
He served on the Board of Governors of the University of Ontario Institute of Technology (UOIT) and on the Board of Advisers of five different Colleges in Ontario. For 16 years he served on the Board of the Society of Motion Picture and Television Engineers (SMPTE), Toronto Section.
He holds three master’s degrees, in business (MBA), communication (MA), and education (MEd). As well, he has diplomas and certifications in business, computer programming, internetworking, project management, media, photography, and communication technology.