Twelve months ago, the terms Bitcoin, cryptocurrency and blockchain were vague concepts to most people. Now, they dominate news with Bitcoin especially being a popular conversation topic in offices, pubs and dinner tables around the world.
Bitcoin’s rise to prominence in 2017 has been well documented. The market capitalisation of the token grew from $US15 billion to $US233 billion in the space of a year. ‘Bitcoin’ became the second most searched news topic globally.¹
It’s fashionable, sure, but by contrast little interest is shown for blockchain, the very technology that underpins Bitcoin and the entire cryptocurrency market. This concerning lack of dialogue is missing the truly revolutionary applications of blockchain that are aimed at solving real-world problems on a global scale.
One of the key characteristics of blockchain networks that make them so appealing is their approach to data integrity and security.
As society grows more dependent upon technology and the use of networks, the threat posed by cyber criminals (demonstrated in the recent spate of ransomware attacks among others) is more prevalent than ever. A conservative estimate by the federal government in 2017 put the cost of cyber crime to the Australian economy at $1 billion a year. At the same time it pledged $630 million to boost security measures.²
By utilising thousands³ of independent computer systems to uphold a network, the integrity and security of the data stored on that network is vastly improved. All participating computers must agree on the data being stored; similarly they must all be jeopardised for an attacker to fraudulently store or change data. This presents a far greater challenge to hackers than networks hosted from a central system.
Mark Zuckerberg, co-founder and CEO of Facebook, recently announced that one of his personal challenges in 2018 is to grow his understanding and awareness of blockchain technology. He believes the purpose of technology is to “…be a decentralising force that puts more power in people’s hands.” However, he claims that there are currently “…a small number of big tech companies – and governments using technology to watch their citizens”. Blockchain addresses this by operating without a central body.4
Similarly, connectedness, power and speed of the network are improved as the number of hosts grows. Many blockchain networks also experience reduced maintenance costs as participating computer systems share the load that is otherwise borne entirely by a single central entity.
The Australian Securities Exchange’s recent decision to scrap their CHESS transaction system for Distributed Ledger Technology (DLT) is just one of many examples of centralised networks being replaced in favour of a decentralised blockchain approach. However, blockchain networks, and by extension cryptocurrencies, find application in industries extending far beyond the scope of financial services.
Healthcare is an example of where blockchain is helping to create efficiencies by storing encrypted patient information that is shared across healthcare providers, removing the need for form filling.
Blockchain is transforming the real estate industry by creating a seamless, decentralised transaction process that reduces the need for intermediaries and therefore lowers costs.
The electoral process is also a beneficiary of blockchain technology, which can add a level of security that current, manual processes don’t allow.
Blockchain is also being tested in management of supply chains, insurance, peer to peer lending, energy sharing systems, gaming and streaming systems, to name a few.
Blockchain technology and cryptocurrencies are more than just a highly volatile and speculative financial market. They represent the medium to develop innovations that are capable of addressing some of society’s most glaring inefficiencies; cutting costs, reducing delays and upholding the integrity of data in countless important areas.
The technology offers much more than just Bitcoin, with a great deal of blockchain initiatives relating to industries outside of financial services. It’s clear that the implications of blockchain technology are significant to society and solving real-world problems. The limit of its application is up to us.
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