You’ve heard it in the headlines, around the office and maybe even at the neighborhood pub. Blockchain is no longer just a buzzword, it’s disrupting several industries and capturing the attention of business leaders worldwide. According to a report by Transparency Market Research, the global blockchain technology market is expected to reach $20 billon by the end of 2024. But what is blockchain and why are so many industries linking up with blockchain technologies?
In the simplest terms, a blockchain is a permanent, unalterable and transparent ledger of transactions that is updated in real time and distributed across a peer-to-peer network consisting of multiple computers, known as nodes. Each new transaction creates a secure and anonymous block that is linked to the one before it only after all the nodes in the network agree that the information contained is correct. Because these nodes are in agreement, there is no need for an intermediary (such as a bank) to approve or facilitate the transaction.
A Simple Example of Blockchain at Work
- Joe wants to give Susan his car, so he executes a transaction that transfers the title to her.
- The transaction creates a block.
- The block is broadcast to every node in the network.
- The nodes approve the transaction block and validate it.
- This block is encrypted and added to the chain.
- Susan now has irrefutable proof that she owns the car.
This transaction has now been instantly and permanently recorded on the blockchain and cannot be altered without the consensus of every node in the network. And because the blockchain is transparent, anyone authorized to connect to the network can see the details of the transaction.
A transaction can be anything that can be recorded, such as the exchange of money, goods and services, the existence of intellectual property like creative works or inventions or even the identity of a person or thing.
Benefits of Blockchain
Blockchain carries with it several benefits that are a byproduct of the features of the technology. For example:
Enhanced security: As noted above, all nodes in the network must approve a transaction before a block can be added to the chain. And since the data on the blockchain is distributed across the network, it is very difficult for hackers or unauthorized users to gain access to the data. This is especially useful with financial transactions, medical records, identity management and authentication of devices.
Elimination of downtime or loss of data: The distributed nature of the network means the data is duplicated across multiple computers. This redundancy virtually eliminates the possibility of data loss or downtime since there is no single point of failure. This also makes it more secure and less expensive.
Increased speed and reduced costs: The distributed network means each node has an identical ledger which eliminates the need for a trusted third party to validate a transaction. This significantly reduces processing time, which can also reduce administrative and overhead costs.
Improved traceability: Since all activity is permanently recorded and transparent, it allows the data to be tracked and analyzed by authorized users. This means you can see where goods originated from and when, where and with whom any transfer of ownership occurred. This is a useful way to monitor the transfer of goods, especially in supply chains. It is also helpful in finding the source of an attempted security breach.
There are several more benefits that can be gained from the use of blockchain technology, depending on the industry it is applied to and the list of use cases continues to grow.
Blockchain at Work
Blockchain is now fueling innovations in several industries, including incumbents like financial services, supply chain and healthcare. Less obvious — but just as impactful — use cases are popping up in energy, education, real estate, travel, law enforcement, voting and many more, including communications.
Not surprisingly, industries rooted in technology now have a keen interest in using blockchain, too. In fact, leaders in finance, banking, Internet of Things (IoT), supply chains, manufacturing and technology have teamed up to form Hyperledger. Hyperledger is self-described as an open source collaborative effort created to advance cross-industry blockchain technologies. Its members include heavy-hitters IBM, Cisco and Intel, who are looking for ways to “vastly reduce the cost and complexity of getting things done in the real world.”
Communications services providers (CSPs) are getting in on the act, too, researching ways to mitigate fraudulent activity, manage subscriber identities, provide new cloud storage capabilities and authenticate devices. In fact, an article from No Jitter discussed how blockchain technology could be deployed to improve security and tighten authentication protocols for voice-over-internet-protocol (VoIP) communication. Regarding the adoption of blockchain technology, a recent IBM Institute for Business Value study revealed 36% of CSP executives said they are already considering or actively engaged with blockchains. Why? 76% said to address security concerns and 46% see it as an opportunity to develop new business models, which could create more value for partners and consumers. Needless to say, blockchain is already impacting how business leaders approach and invest in communication technology and infrastructure. Time will tell how dramatic that impact is.
As blockchain continues to evolve and more CSPs begin to build blockchain into their ecosystems, you can rest assured that Select Communications will continue to stay abreast of the latest technologies and offer the trusted advice your business relies on. We’re committed to providing you with the knowledgeable, objective information you need now and in the future.
For more insight into another influential communication trend (the cloud), check out this story of how one small business leveraged cloud technologies and services into 100% growth in revenue.