Tech
Blockchain: The Revolution That Hasn’t Happened Yet
- By Chris Baraniuk
- Business Technology Journalist
February 11, 2020
Image source: Getty Images
Image Caption: Blockchain could provide backup for payment systems
Imagine you are out shopping and you get to the checkout, but your card doesn’t work. It turns out your bank has had a computer crash and none of its customers, including you, can pay anything.
But what if the cashier had access to a ledger, or ledger, of your credit and debit card balances, updated every time you purchased something?
Even if the bank’s systems were down, your card would still work at the supermarket, because the cashier itself would know your balance.
This is just one of the possibilities offered by a distributed ledger, also known as blockchain. The technology has been around for more than a decade and has been widely publicized.
It looks pretty convenient, but in practice it is rarely used. So what happened?
Image source: Getty Images
Image Caption: The cryptocurrency Bitcoin is perhaps the most well-known use of blockchain
Blockchain has struggled to find a purpose beyond powering cryptocurrencies like Bitcoin.
In this scenario, the blockchain serves as a universal ledger of every Bitcoin transaction ever made. The blockchain is a record, or log, of those transactions, and users of the network work together to verify new transactions as they occur. They are financially rewarded for this effort, an endeavor known as “Bitcoin mining.”
But the basic idea, of a registry of information distributed among many different users rather than stored centrally, has attracted a lot of interest.
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Video Caption: Bitcoin Explained: How Do Cryptocurrencies Work?
Proponents have long argued that it could represent a better alternative to traditional databases.
But how transformative would blockchain-style alternatives really be? The example of store checkouts was suggested by Dave Birch, an author and consultant on digital financial services, who has criticized some proposed blockchain schemes in the past.
“I’m willing to believe in it,” he says of the cash register idea. “I think it has some value.”
There are other ideas floating around. Prof. Gilbert Fridgen, a financial services expert at Luxembourg University, suggests a distributed ledger system that tracks certificates and degrees awarded by universities.
No one organisation would be responsible for this. Rather, copies of the register would be held by multiple parties and individuals would be able to check that their qualifications records are accurate.
It would certainly be useful. In 2018, a BBC investigation showed that thousands of fake degrees were circulating, so a decentralized system that tracks qualifications could be attractive to employers.
That said, Prof. Fridgen notes that nothing about a blockchain in itself can prevent some corrupt individuals from trying to add fraudulent information to it. More controls are needed.
If these trust issues could be resolved, blockchains could bring real benefits.
Recently, reports have emerged of members of the Windrush generation of Commonwealth migrants whose legal status has been called into question because records of their leave to remain in the 1970s were not kept. In the future, such mistakes could be avoided by keeping information like this on a distributed ledger rather than relying on the government to maintain it.
Some large companies have started integrating technology into their operations.
Image source: Getty Images
Image caption: Maersk tracks cargo documentation using blockchain technology
Take shipping giant Maersk. It uses blockchain technology in TradeLens, a new system for tracking customs documentation on goods shipped internationally. The idea is that any party involved in the process, from a port to a customs authority, can quickly look up details about a shipment.
Maersk says 10 million shipping events are recorded in the system each week.
Unlike Bitcoin, TradeLens uses a permissioned blockchain, which is a non-public ledger to which access is controlled.
But a similar system could be built with other technologies, such as cloud-based accounting databases that encrypt data and control who can access what information.
Another interesting project is the real estate system being tested by the Swedish land registry, Lantmäteriet. A blockchain was designed to track documents during the sale of a property. The buyer and seller, brokers, and banks involved could all participate and track the sale digitally.
Image source: Getty Images
Image caption: Swedish Land Registry has experimented with blockchain
Although the trial has shown that such a scheme is possible, a change in legislation would be necessary before the system could be extended in the future, explains Mats Snäll, head of innovation at the Swedish Land Registry.
“It was never integrated into the land registry production system,” he told the BBC.
In Thailand, cryptocurrency firm Zcoin developed a blockchain-based system so that members of the Democratic Party of Thailand could cast digital votes for their new leader in late 2018. Instead of having to rely on a central authority to count the votes, they were collected on the Zcoin blockchain.
Voting was done at polling stations or via a mobile app, where voters had to submit a photo of themselves when casting their ballot.
These digital votes have also been verified by the electoral committee, a Zcoin spokesperson told the BBC. Zcoin says it plans to announce a larger project, involving “millions” of voters, in the near future.
These are exciting initiatives, although it remains open to debate whether blockchain is really necessary for each of them.
Some say that blockchain-style systems will ultimately prove to be the most efficient option for organizing data at scale. Entrepreneur Helen Disney is one of them.
“In many cases, there are cost savings once you get over the initial hurdle – it’s obvious that introducing a new system is expensive,” he says.
While the blockchain hype is sure to continue, even skeptics like Mr Birch think there are some targeted applications that could prove useful. So far, blockchain may not have changed the world, but it has made a lot of people think.