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Blockchain and Its Effect to the World

Once information is updated on the blockchain, no one can attempt to alter or forge the records.

Blockchain is a disruption that will have the greatest impact to the financial industry. Big banks and some governments are already using the blockchain to revolutionize the way data is stored and transactions are processed. Representing the second generation of the Internet, it holds a huge potential to transform the industry and the world extremely. Whether we like it or not, we simply have to embrace the technology.

As a distributed ledger, the blockchain aims to increase security, lower costs, and eliminate errors and failures. It enables a reconciliation of digital records in real time. Unlike the first generation of Internet, it will transform:

  • insurance
  • risk management
  • funding and investing
  • moving value
  • authenticating identity
  • reputation
  • lending and borrowing
  • exchanging value
  • storing value

The technology does not only store and move information securely, but also money, titles, equities and other values.

It is already known that the blockchain keeps a permanent record of all transactions over the network. It can be used to verify transactions and cryptographic keys. It does not only allow us to store information but also gives us complete control over it. It also helps us verify the timestamp, validity and status of entries on the register. Furthermore, it makes it impossible for anyone to make changes to any information in the blockchain without explicit permission from the entry or the creator.

Through the blockchain, trust is established with clever code and mass collaboration. It is a platform of transparency with regards to structured recorded information.  It is an open source code, which everyone can download for free and develop new tools to manage transactions online. In a word, it holds the potential to unleash numerous new applications and unrealized capabilities to transform many things.

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Blockchain 101: What You Need to Know

Companies need to know what goes on beyond the four walls of their businesses in order to gain greater insight to their full supply chain. They need technology that will enable them to understand the total process that runs their supply chains. Thus, Blockchain becomes a very interesting idea for organizations. It promotes trust among companies by bringing transparency into the supply chains, therefore making it “trustless”.

What is a Blockchain?
First, let us define what a Blockchain is. It is a transaction database that contains a continuously growing list of data shared by all nodes participating in the system. Every block contains a hash of previous blocks, creating a chain of blocks. Each block is guaranteed to come chronologically after the previous block and is computationally impossible to modify as every block after it would have to be regenerated.

Blockchain is the main innovation and technology behind Bitcoin. It is most widely used in the currency’s public ledger of cryptocurrencies. Based on a Bitcoin protocol, it contains every transaction executed in the currency. It contains all information about the addresses and their balances. That is because every computer connected to the Bitcoin system gets a copy of the blockchain. It is automatically downloaded upon signing up to the network.      

Decentralization
A block chain is open but secure. It is auditable and runs without a centralized operator. It is the only place that Bitcoins can exist in the form of unspent outputs of transaction. Unlike traditional payment systems like PayPal, it does not require a centralized database.  Since transactions are made by software applications, the nodes validate the transactions, add them to their copy of the ledger and broadcast them to other nodes.

The blockchain provides transparency a traditional centralized approach cannot. It can allow companies to make informed purchases by increasing visibility. It makes the authenticity and transparency of products and services less difficult by ensuring safe and verifiable transfer of digital property across expansive networks. In a word, blockchains may very well change the game of the complex global supply chains.

Time will tell.  Organizations are conservative, but we are already seeing adoption of the technology across the financial sectors worldwide.   Supply chain professionals should start considering the value of an open public ledger when considering new b2b commerce networks.

Blockchain: Changing the Way We Do Business

Blockchain, the technology behind bitcoin, promises to improve efficiency in numerous processes and create new business opportunities. It is a backend database with a distributed ledger and an exchange network for transferring value between trading partners. It doesn’t require a middleman to validate transactions. While it is still on the early stages, it could affect customers and the society by creating openness and providing a new level of freedom and empowerment.

In terms of thinking and activity, financial services is the most popular industry that the blockchain threatens to disrupt because it impacts everything that a bank does – money, contracts and movement of assets. Other industries that the technology is set to change include:

  • Healthcare
    Its application to healthcare would be on medical records. The blockchain could verify if a specific procedure has taken place, share data and ensure encryption, and authorize others to access parts or your whole medical records.
  • Government
    The blockchain has an embedded trust component so you don’t have to go somewhere to prove your identity. For instance, you need to make a transaction with the land registry, motor vehicle registration or property ownership. You don’t have to be somewhere to make that transaction.
  • Real Estate
    Blockchain gives a good historical record of anything, including time stamps, service or ownership. With the technology, you don’t have to erase the previous state to make room for the new one. You just add a line below like a ledger. The blockchain can store the history of who owned a particular house since the time it was built, and that record cannot be tampered with.

How will it change the way we do business? In this era of Big Data and Internet of Things, assigning a digital signature to each data can be useful. Recording and verifying each stage of the business process help improve the reliability and quality of products and services. It will affect not just your bottom line but also the top line – creating new revenues, growth and services. By allowing customers to check everything on the blockchain, they will have a new level of freedom, too.

The blockchain is about trust, transparency and the truth. It enables greater visibility by allowing you to know what has happened, when it happened and how true it is. In the future, services and applications will use the technology and we will use it to verify records and authenticity.

 

Blockchain Disrupts Business Models

Most companies wait for a certain technology to mature before investing on it. That’s why fin-tech companies have their eyes on the blockchain. They are investing huge amounts of time and money on its development. The technology is believed to disrupt business models by making financial services more efficient. Soon, companies will be able to execute financial transactions in entirely new – and secure – ways.

What is exactly a blockchain? It is a geeky term for a digital ledger or bank vault that participants can access and make changes with. It is popularly known as the technology that underpins the Bitcoin, providing indelible record of its transactions with high levels of cryptographic security. It has many features that fin-tech companies find compelling:

  • It’s decentralized. It doesn’t have a single point of failure.
  • It’s secure. It utilizes cryptography to validate all transactions.
  • It’s has an immutable history. It has a write-once, spend-only attribute.
  • It’s efficient. You can exchange information fast and easy.
  • It’s transparent. Everything is documented in the blockchain.

The blockchain technology has the potential to streamline and accelerate business processes. It can also reduce or eliminate the roles of intermediaries, and increase cybersecurity as well. While it has some challenges, it will be extremely powerful and will change how businesses operate. Instead of relying on a third-part clearing house, financial companies can use the technology to execute and verify transactions safely and discretely among themselves.

However, financial companies face a number of challenges in using the blockchain:

  • The main roadblock is that the industry is heavily regulated. This means that many of its transactions have to be regulated by a third-party and must be transparent.
  • There is also the question of privacy. It can be difficult to satisfy participants who want to conduct safe transactions without an intermediary, but do not trust one another.
  • Lastly, there is the issue of Due to high volumes of financial transactions, the system can slow down or stop – even for just a second. This limits adoption in cases where speed and volume are important.

Despite these limitations, the blockchain is becoming a significant part of the financial services industry. Today, it is being used by banks to streamline and automate their back-office operations. It is also spreading to other industries, such as the healthcare, IoT, real estate, insurance, cloud storage and supply chain management. Hopefully, it will transform the inefficient ways of conducting transactions. A lot will depend on which consensus mechanisms will be adopted. Some transactions may find this technology beneficial. Others may not. It is up to companies which works best for them.

Blockchain Revolution: Can It Solve Security Problems?

There has been a great discussion about the potential of the blockchain as a distributed ledger and as a secure solution for small and large business transactions. Some visionaries see the technology as revolutionary as the Internet itself, but others are restrained by its legal and compliance frameworks.

The blockchain has a potential to become an important tool in building stable, secure and well-connected enterprise systems. At this point, however, it is yet to be tested in terms of regulatory and compliance requirements. For instance, many hospitals are not ready or unwilling to sign some documents digitally because of HIPAA mandates that may need to be corrected manually.

Blockchain Weaknesses
Although often suggested as the answer to the security problems of the financial industry, recent news point that blockchain is vulnerable to security problems too. Two separate hacks happened in a span of 3 months this year.

  1. Ethereum and DAO
    $55.4 million worth of Ether cryptocurrency were stolen through a smart contract in June. The smart contracts were created by DAO (Decentralized Anonymous Organization), which uses Ether as its primary payment currency. In immediate response to the attack, Ethereum published a public plea to suspend ETH and DAO deposits and withdrawals.
  2. Bitfinex
    $72 million worth of Bitcoins were hacked at the Hong Kong cryptocurrency exchange in August. The bitcoin was stolen from users’ accounts. The company reported the theft immediately and cooperated with top blockchain analytics to track what was stolen.

There is still validity to the idea that the blockchain can solve security problems. The technology itself is very secure. Since there is no central authority in its system, participants exchange transactions over a peer-to-peer network. This means that they keep copies of the file and only agree on changes by consensus. The latest transactions are wrapped in a new block of data to be added to the chain. Alongside that data is a block that contains a cryptographic signature of the previous block and itself, creating an immutable record.

Blockchain for Food Supply Chain
A significant percentage of the global population still has no secure access to plenty amounts of food. Despite this context, recent studies still show that approximately half of the US and about 30% of the world waste food. Thus, many companies have begun to exploit the opportunities offered by the blockchain to tackle complex systemic challenges in the food supply chain.

Retailers demand for perfect products, leading to food waste. They also seek lower prices, resulting to the industrialization of food production processes. Because of the increased cases of foodborne illnesses, many consumers have less trust on food. These challenges created the demand for more information on food production processes. When paired with sensors, the blockchain could make food data more transparent throughout the supply chain and reduce the amount of food wasted.

 Blockchain records information and holds data through a secure and immutable distributed ledger. The distributed nature of the network makes the ledgers resilient, and transparent to all users. Of course, it also has its limits. There are challenges that comes with blending a digital representation and a physical product. But, there is still reason to believe that it could secure an effective food supply chain in the future.

 

 

 

What No One Tells You about the Blockchain

Many consider the Internet as the most important invention in the last two decades, but the Blockchain steals the spotlight today. What makes it so interesting is it provides us with a completely new way to carry out transactions that are too complex and that involves multiple parties. It eliminates the need for middlemen. One day, it will power our money transfers and subsidy schemes. But, let us not get too excited about the technology.

Initial Disadvantages of the Blockchain

  • Throughput capacity
  • Scalability
  • Permissioning
  • Storage limits
  • Challenges of integration

As the blockchain is further developed, many of these initial disadvantages are closing. The fast developing ecosystem is addressing them to drive further deployment and adoption. But, there are still some serious limiting factors that can mess up the technology’s potential to change the world:

  • It is not environment-friendly. The Bitcoin might be the most carbon-polluting technology invented in the last three decades. While it has great potential in its use outside the cryptocurrency world, it also has a negative effect on the environment. It is estimated that a single bitcoin transaction uses the same amount of electricity as 1 and ½ households over 24 hours. In other uses, the blockchain could burn more fuels in other countries.
  • It lacks transparency. The modern trend is greater openness and tracking in communication and commerce. But, the blockchain is a closed shop by design. Generally, it is an efficient system for data exchange, but data is only visible to somebody who chooses to mine it. This means some of the data is hidden and the rest are massively distributed, which defeat the purpose of migrating to businesses that offer transparency.

The blockchain has entered a hype cycle. But when we get past that hype, you will realize that there is something fantastic going on in the technology. It is a revolution in the making. Its potential as a technology makes it so exciting in so many ways. In fact, it is being considered to be adopted to the Internet of Things – to take it to the next level. There is no denying that the blockchain will change our lives in the future. While it has some serious limiting factors, the overwhelmingly positive ones are what we are rooting for. 

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Why Every Start-Up Company Should Consider the Blockchain

The blockchain has created a buzz around the business industry for over a year now, but nobody seems to truly understand it. In laymen’s term, it is a digital platform for recording and verifying transactions. It allows transactions to be anonymous and secure at the same time. It distributes trust through mass collaboration. Its underlying framework can virtually record everything, making it a true medium for value. 

Four main things drive the excitement about the blockchain in an enterprise:

  • Proof of Authenticity
  • Data Notarization
  • Data Aggregation
  • Asset Settlement

These four provide exciting opportunities around reorganization of the backend processes between and within enterprises.

How can the blokchain help start-up enterprises? As a digital ledger, it timestamps transactions by logging into an uninterrupted chain of records and providing proof of all transactions. It is unbreakable and un-hackable. Most of all, it is crowd-sourced. The technology streamlines costly and complex processes such as trade processing, clearing and settlement. Since it cannot be tampered and exploited in any way, it is the perfect solution for transparency issues.

Many start-up companies contract on the open market and create corporations due to high transaction costs. While the Internet reduced cost of search, communication and coordination, the blockchain makes it cheaper for companies to organize capability inside their boundaries. It is a global peer-to-peer platform of transactions, reputation, identity and trust, which promote innovation and shared value creation.

Start-ups should be immensely hopeful about the blockchain. The technology has opened a world of possibilities that enables economic empowerment. It allows them to own their identities and personal data, do transactions, and create and exchange value without intermediaries. It lets them protect their own identity and monetize their own information. It is a dream come true for the entire business industry, addressing transparency issues in one gracefully designed package.       

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How can the Blockchain Change the Financial Industry?

The technology most likely to change the next 10 years of business is not the cloud, Big Data, Artificial Intelligence, social media or even robotics. It is the blockchain. 

The blockhchain technology is complex, but the idea is simple. It is a vast, distributed ledger that runs on millions of devices and caters to everyone. It moves and secures information, money, titles and anything of value. It establishes trust through mass collaboration and clever code. In a word, it ensures integrity and trust between customers, partners, suppliers and even strangers. Thus, with the technology, it is difficult to cheat.    

Today, the financial industry is the most centralized institution. It is also the last to adopt technological revolution. Many financial services are monopolized and are elusive of disruptive innovation. The industry runs on outmoded technology and follows regulations imposed since the 19th century. It is fraught with problems, which make it insecure, and nontransparent to stakeholders. The financial industry makes our global economy buzz; thus, it needs to break free from contradictions and uneven developments.      

The blockchain can fundamentally change the financial industry in many ways:

  • Reducing costs
  • Making complex financial transactions easier
  • Making a viable new market from the world’s unbanked
  • Improving regulation
  • Promoting transparency

Indeed, the blockchain is already making a big impact to the financial sector. The increased security it provides will make it a popular store of money.

The technology holds great promise to revolutionize the financial industry – for good. It can liberate many financial services from the confines of old institution. It will foster both competition and innovation. With the blockchain, people can become more connected. They can participate in financial activities and get a chance to a prosperous life. When everyone shares the same distributed ledger, settlements occur instantly. Billions will benefit, empowering entrepreneurs all around the world.

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Blockchain across Multiple Industries

The blockchain is undeniably a revolutionary technology. As an incontrovertible public record of data protected by a network of peer to peer contributors, entries made in the blockchain cannot be removed or edited. A very popular application on this platform is the cryptocurrency Bitcoin. Other applications are in banking and financial tech. But as it turns out, more industries can harness the technology. Here are different applications that made the headlines recently.

  • Education Certificates
    Sony Global Education developed a blockchain-based application that stores educational data, which has a potential to become a universal educational identification. Due to the blockchain’s immutable nature, educational institutions have also realized its potential to eliminate forgery in the certificates they issue. In fact, two schools have already issued blockchain-based certificates to their students – Holberton School and MIT Media Lab.
  • Distributed Cloud Storage
    Blockchain offers a way to store data on a peer-to-peer network. Unlike Dropbox, Amazon and Google Drive, the data is secured by multiple parties. It will be hashed and stored in multiple locations to secure it. Two startups have started exploring the idea already. Storj.io and Maidsafe released a beta version of a cloud platform.

  • Time-stamping and Decentralized Notary
    Digital time-stamping of documents are in trend now, but a trusted authority is still necessary. With the blockchain, data can be validated at a specific time and is provable in the court of law. How does it work? For instance, you have an original written piece of work. Simply have it in digital form, compress it in a hash and relay it as a transaction on the blockchain. The network will validate it and a timestamp will confirm you had it first.
  • Marketplace
    With a decentralized currency, decentralized markets aren’t far behind. They will directly connect buyers and sellers, omitting the need for a middle man. They do not involve government intervention, high commission and fees, and tight regulations on sellers. The interaction will be through a software and, of course, payment of trades will be in Bitcoin. The first OpenBazaar went live on April 3, 2016.

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Blockchain Technology: What does it do? Is it good for business?

This year, 2016, will be the biggest year for blockchain technology. The excitement surrounding it has created a seemingly new industry – the blockchain industry. It is not only for developers anymore, but for business people as well. Multinationals from banking, technology and other industries have slowly caught on the trend. In fact, when you go to a blockchain conference, you see more banking and technology professionals instead of the prominent figures of the Bitcoin world. The business people are now getting involved, and they are changing the blockchain industry and its culture. They are not worried about how the technology works, but what it does. They care more about what can be achieved with the blockchain with regards to business-to-business processes and modern business models. The technology is a means to achieve a goal, and business incumbents are curious about what they might do with it. Mainstream financial institutions are discussing blockchain projects. They want to exploit the technology and the opportunities within it. While there are many concerns about the adoption of distributed ledger technology, the blockchain could still ensure economic peace and stability. It could transform the business processes at the back office. This means that the technology is not only intended to be a currency but an efficient way to record transactions as well. 70% of financial institutions believe that the blockchain technology will be good for their businesses, and 19% are fully prepared for the impact it could have on their businesses. In order to take advantage of the positive effects of the technology to business, we need to forget how the blockchain works and focus on what it does. While we may love the technology behind it, we need to focus on the use cases for the masses if we want to attract them. Sign up for our weekly blog summary and newsletter!