This is all you need to know about blockchain
January 8, 2018
By Diana Hart
When you hear the word blockchain, do your eyes glaze over?
Maybe you've heard that this technology is likely to touch everyone, but it all seems so complicated and technical.
What do you really need to know about it?
Less than you might imagine.
What exactly is it?
Blockchain is a distributed ledger recording a history of transactions across a network of computers. What makes blockchain so special is that records can be distributed to participants securely and can’t be manipulated. No one entity controls the network and transactions can be executed with less reliance on a central party.
Do I need to know how it works?
If you work in programming, or if you're looking at how your company could use it, then absolutely get to know the mechanics of blockchain.
If you aren't – don't sweat the details.
“Everyone thinks that it's really important to understand the actual technology," says Dubie Cunningham, Vice President of Enterprise Innovation Digital Banking at Scotiabank.
But it's not.
It's like understanding how your phone works, she says. “None of us are sitting around, staring at our phones, thinking, 'How exactly does this thing work? What's in here?' I think the same thing applies here."
Case study: personal information made easier and safer
A lot of the conversation about blockchain turns on its association with bitcoin or other cryptocurrencies. However, the technology's ability to transfer secure data has many potential applications. One of those is to make it easier to give out personal information in a controlled environment.
Consumers are constantly asked to fill in a series of boxes and prove their identities: to government agencies, to financial institutions, to subscribe to a streaming service or a newsletter, etc. Blockchain could simplify that, says Greg Wolfond, CEO of SecureKey (who spoke alongside Cunningham on a blockchain panel hosted in November by the Economic Club of Canada).
SecureKey is a Canadian company that develops authentication and identity solutions. Canada’s leading banks, including Scotiabank, are partners of the company. With IBM, SecureKey is working to launch a secure digital identity network using blockchain in 2018. Using the service, which is available through iOS- or Android-enabled phones, consumers will be able to instantly prove who they are online, in person and on the phone, using credentials from trusted sources like their bank, wireless provider or other partner.
“Consumers shouldn't see that it's blockchain underneath," says Wolfond, “What consumers see is, 'I want to show up and rent an apartment.' The landlord wants to know, 'Are you a real person? Do you have past bankruptcies? Give me a background check to know who you are.' I think if you can get that in a few seconds instead of paying a real estate agent one month's rent to get that done, there is huge power in that."
Case study: shipping made easier
One industry taking a close look at blockchain is shipping, with companies like UPS recently joining the Blockchain in Trucking Alliance. Communications around shipping goods internationally can be incredibly complicated. According to a study by shipping carrier Maersk, moving a container from Kenya to the Netherlands takes about 200 messages involving 30 different parties. Blockchain could help make the process simpler and more transparent.
Not if, but when
The question isn't will we use blockchain, but when.
“I think it's a fool's errand to think that this technology isn't going to mature very, very quickly to be completely commercially viable," says Scotiabank's Cunningham. "I think what is more important are the conversations about business models and how they will take advantage of blockchain."
One way Scotiabank is tackling blockchain is through the R3 consortium, which has more than 70 of the world's largest banks working on research and development.
Cunningham adds, “Blockchain's going to be very transformative and it already is, in terms of financial services and the opportunity to take out costs and friction, which will inevitably mean better services for customers."