Blockchain has been around for a decade but it is only now – with greater evolution of digital technologies – that it is becoming more prominent.
It is hard to ignore Blockchain technology which is synonymous with cryptocurrency and the likes of Bitcoin.
But the technology behind blockchain has the ability to radically transform the world in which we live and deliver significant benefits to governments, industries and individuals.
A report published this summer by Freer, which is housed within the Institute of Economic Affairs (IEA), explores the potential of Blockchain and the steps the UK government to assist in unleashing this via funding and action.
This is already ongoing right here at Sci-Tech Daresbury. The Hartree Centre, which is part of the Science and Technology Facilities Council (STFC), is amongst the leading facilities in the UK that is exploring and developing Blockchain technology.
The Hartree Centre is immersed in delivering solutions in a range of digital areas including Big Data, cognitive computing, high-performance computing and artificial intelligence, which will integrate in the shaping of future blockchain technology.
In the thick of it is Tom Kirkham, who is responsible for business development at STFC. He provided an insight into blockchain technology.
What is blockchain?
Blockchain is an entirely new business model of managing data and carrying out transactions online.
The term Blockchain was coined in 2008, but the technology has been around for a lot longer than that. Blockchain has become possible as computer technology has developed and the advent of the internet. When computer technology relied on servers and mainframes in the 1970s and 80s, this technology could not have existed as data was stored in server and computers needed to be connected to the mainframe to access it and store data.
The advent and growth of the internet means data does not have to be stored in one set place and can be accessible to all. Blockchain works on this premise – however, the entire system depends on trust.
A pre-blockchain example is the now-defunct, music-sharing service Napster. It was a peer-to-peer platform for the uploading of files – in this case music – to be shared by the group. Anyone could upload and access was freely given as everyone within the group trusted each other.
Fast-forward today and most commonly known examples revolved around cryptocurrency and Bitcoin, which uses blockchain technology to store data and enable transactions. The difference here to Napster is the lack of trust amongst the peers due to the critical nature of the data being finance, so this blockchain has significant checks and balances to ensure it doesn’t collapse into chaos.
How does it work?
Blockchain uses distributed ledger technologies (DLTs) which builds from the first block. If you think of a physical ledger there is one master book of data. Now, only one person at a time can have access to that data. To add to it, it may have to go to someone else and so on. In a paper system, say a receipt, it might get lost, or written incorrectly, or is open to being changed. Now say two people need the master ledger – that also isn’t possible.
If you use current digital data storage systems, again information is on servers and access is limited. Take health services for example. The notes a GP has on a patient can’t be accessed by a hospital if the same individual uses both. This can be repeated for local authority, government, financial institutions – the list is endless.
Blockchain overcomes all of that. Firstly, the data is accessible to all (members of the network) and as the chain builds, it can’t be tampered or altered with as the entire chain structure and the technologies consensus mechanism doesn’t allow for that. Blockchain can manage the provenance of large amounts of data – not just one ledger – and so this data has greater use. In combination with the likes of Artificial Intelligence, it can spot patterns and learn from the information that can have potential uses in society, business and government.
How can Blockchain be used?
Blockchain technology is already being used in the likes of the food industry, so it can trace the provenance of fresh goods or meat. The ledger is in the chain and enable to show it from source, through the wholesaler, to restaurant or shop. A simple scan enables data to be accessed and this can potentially assist in batch and product recalls – as it is easier to identify via the data on the chain.
It is being used in the diamond industry to follow diamonds from the mine and through to sale.
Everledger’s CEO Leanne Kemp explained how it uses blockchain technology. She said it provides a ‘digital vault to track a diamond from the source of the mine to the market. Establishes ownership chain of the diamond’ as well as ‘transparency to supply chains’. The advantages again ensure provenance but has had significant impact in reducing fraud, theft and identifying fake diamonds.
But blockchain is being explored for use in the health, energy, finance, high value manufacturing sectors as well as governments across the world.
What are the benefits?
The Freer Report summarises the positive impact of Blockchain technology.
The primary benefits of blockchain are general accepted to be security—in terms of transparency, immutability, and decentralisation—and efficiency, particularly regarding the elimination of the need for trusted third parties.
Blockchain provides traceability and clear provenance. By allowing data to be held on a distributed platform, and by allowing participants to see if transactions have been amended— Blockchain cannot be easily manipulated. This makes fraud almost impossible, data loss unlikely, and offers an unparalleled rise in trustworthiness.
Blockchain cuts out the ‘middle man’ which means that connections are made directly, peer-to-peer and this has immense potential to increase trust.
It is also seen that there are other benefits to Blockchain, particularly with costs and use of data.
In the financial sector, blockchain is seen as presenting a significant opportunity for investment banks to reduce their cumbersome infrastructure costs.
In Sweden, the use of blockchain technologies in land registries is predicted to save over $100 million per year, through reduced paperwork and fraud elimination.
The reduction in paperwork and administration is one of the biggest cost efficiencies, which is relevant to many sectors but particularly government institutions.
What is the next stage for Blockchain technology and adoption?
Blockchain is very much part of the future and Hartree Centre is exploring how to make the technology viable across sectors, with energy one of its first areas. Tom Kirkham said: “Blockchain and associated technologies offer an unrivalled opportunity to begin to review and redesign the UK’s data systems.”
It is also a priority of the UK government. In April, at the London Blockchain Conference, the then Secretary of State for Culture, Media and Sport, Matt Hancock, emphasised that ‘blockchain technology holds real potential to make Government services more efficient’.