The rise, fall and rise of Bitcoin is one of the defining examples of how the economy is driven by technology. It’s perhaps matched only by the advent of the internet and the personal computer. While Bitcoin is in some ways a mainstream currency today and millions of individuals and companies trade in and follow the ups and downs of bitcoin and NFTs, little is known about the distributed ledger technology (DLT) on which transactions and balances are recorded.
That public distributed ledger is blockchain. Along with bitcoin, blockchain first appeared in a 2008 whitepaper authored by the anonymous individual or group known as Satoshi Nakamoto. A decade and a half later, the potential blockchain applications beyond cryptocurrency are becoming clearer. Industries from retail and finances to education to healthcare and government are examining blockchain, intrigued by its promise of security and efficiency.
The question that governments, businesses and public institutions are asking is whether blockchain is useful enough to enable multiple industries to change the way business is done? That question can only be answered by looking at some practical blockchain applications. But first, it’s imperative to have a basic understanding of the technology itself.
What is blockchain technology and how does it work?
Blockchain is a way of recording information that makes it extremely challenging or impossible to change or delete. This way, it eliminates the risk of malicious actors cheating the system.
A blockchain is a digital ledger of transactions that is duplicated and distributed across a network of computer systems. Each block in the chain contains a set number of encoded transactions. Every block consists of a cryptographic hash of the previous block (forming a chain, like a linked list) along with a timestamp. Consequently, once a transaction is recorded, it becomes immutable and irreversible – data in any block can’t be altered without altering subsequent blocks. These blocks are then replicated to all computer systems across the peer-to-peer network.
Non-repudiation is one of blockchain’s primary benefits. The ledger is essentially unchangeable – records can’t be faked, modified or erased.
Research by IDC found that companies spent $6.6 billion on blockchain companies in 2021. Further, they estimated that this spend will grow at a CAGR of 48% up to 2024.
“This is an important time in the blockchain market as enterprises across markets and industries continue to increase their investment in the technology,” said James Wester, former Research Director, Worldwide Blockchain Strategies at IDC.
“The pandemic highlighted the need for more resilient, more transparent supply chains, healthcare delivery, financial services, and so much more, and enterprises around the world have been investing in blockchain to provide that resiliency and transparency.”