Wondering what all the fuss about blockchain is about? Here’s why it could be transformative.
Blockchain, the technology behind the popular Bitcoin cryptocurrency, has been around for over a decade. But what exactly does it do? And how can it change our day-to-day lives? We’ve pulled together some of the ways blockchain might make a difference.
What is blockchain?
Without getting bogged down in technicalities, blockchain is an extremely sophisticated database. It is difficult to hack because it’s not stored in a single location. That decentralization also cuts out the middleman. It’s transparent, which builds trust and empowers consumers. And every change is recorded, which means nobody can slip in and edit entries to suit their own ends.
So how does that help us? Tamper-proof accounting systems would reduce fraud. Transactions without intermediaries will be cheaper and faster. And decentralization could increase trust and security.
How can blockchain impact our everyday lives?
Some compare blockchain to the arrival of the internet in the early 1990s. That comparison is also one reason people are concerned the current cryptocurrency mania is a bubble.
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Bubble or not, like the internet, blockchain has the potential to disrupt the way we do a lot of things. It’s not going to solve everything, but it could improve any interaction that involves a contract or a transaction. Here are some examples:
Medical records get lost. One healthcare computer system won’t talk to another. And healthcare fraud means patients get billed for items or services they didn’t receive or pay for treatments they didn’t need.
Imagine a system that protected each patient’s confidentiality and — because it’s tamper proof — ensured no record could possibly disappear. Your whole medical history could be stored securely and easily accessed — with your permission — wherever it was needed. And medical fraud is a lot harder when there’s a traceable paper trail.
Blockchain is a life preserver we can throw to any industry that is drowning in paperwork, especially those with confidentiality obligations.
2. Financial services
Blockchain technology has the potential to streamline everything in our financial lives, from taxes to investment records and insurance claims.
Take credit cards, for example. At the moment, if you use your credit card to pay for something, the payment has to go through four different stages. And the merchant will have to pay a processing fee of up to 3.5%. Thanks to blockchain technology, digital currencies like Bitcoin can simplify this and make the process almost free.
Bitcoin launched in 2009, but it was really in the last year that it has become more mainstream. It’s now being accepted by more major retailers, and big institutions like Visa are evolving and finding ways to make digital currency as acceptable as physical cash.
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But that’s just the tip of the iceberg. Since its inception, many more cryptocurrencies have hit the market, and more people are looking to cryptocurrency. If you’re thinking about buying Bitcoin or any other cryptocurrency, check out our list of top cryptocurrency exchanges.
3. Supply chains
Do you buy fair trade coffee? How sure are you that the workers producing your coffee were paid a fair wage every step of the way?
Farmers in Ethiopia are using blockchain to track coffee beans as they move from grower to roaster to trader. Ethical consumers can sip their morning coffee safe in the knowledge that nobody was exploited to produce it. Not only that, but producers can also use that understanding of the supply chain to cut out inefficiencies.
In a similar vein, blockchain could eradicate the trade in blood diamonds. If each step, from mining to cutting to retailing, was tracked in an immutable ledger, consumers could be more confident their gems were conflict-free.
How about avoiding an outbreak of salmonella? Blockchain would let authorities track an outbreak to its source and get contaminated products off the shelves — ideally before anybody had consumed them.
4. Home ownership
When you buy a house, one of the many costs you have to pay at closing is title insurance. Title insurance covers you in case your title search doesn’t uncover everything. That way, you’ll be insured if, a couple of years down the line, you discover the documents were forged or a long-lost relative turns up with proof that they actually own your home.
What if there was a blockchain land title registry? You wouldn’t need title insurance because the ledger would show exactly when and how the land had passed hands. The process may not be this simple because the new system would likely have its own complications. But if we could do away with some of the paperwork involved in home buying, it would reduce cost and hassle all around.
Another way blockchain could simplify things? There’d be no more mysteries over lost wills or inheritance — if you put your will into a blockchain, it would be near impossible for someone to confuse or tamper with your wishes. It could even distribute your assets automatically.
Blockchain still has problems to overcome. There are big environmental questions about the amount of energy it takes to maintain the chain, and it’s not yet clear how well it will scale. But if it even realizes a small part of its potential, blockchain will have a big impact on our lives in the coming years.