While the increasing number of conferences are evidence of the growing number of use cases for blockchain technology, the key is understanding whether or not the innovation can actually help your company run more efficiently.
One must first understand how a blockchain operates, and then they can learn how this innovative technology can be applied to their business. Can blockchain help the company run more efficiently and does it work better than the previous methodologies? What type of blockchain (public or private) will best suit your company? It is essential for every user, corporate or private, to understand the different ways these differences can be and are currently being utilized across the globe. The companies that innovate last will be the ones that find themselves left behind with the dust.
Picturing the Blockchain
The best way the best overall understanding of how the blockchain works is by picturing the process. Close your eyes, and imagine that there are one hundred individuals in a classroom. Now, picture everyone sitting in his or her desk with an empty notebook full of blank pages. Anytime a classmate does some important achievement, such as turning in a project, they announce it to everyone in the class.
From there, each classmate makes a note of each important achievement in their individual notebooks until their notebook is full. Once full, all classmates have to seal the contents of their notebook by solving a riddle. By solving this riddle, a classmate has adequately verified that each classmates page has the same contents, and ensured that they could never be manipulated.
Whichever classmate solves the riddle and seals their notebook first, gets rewarded by the rest of the class. When a notebook is sealed, it is added to the backpack for safekeeping (never to be lost) and a new notebook is brought out to continue the on-going process. This is the basic framework of public blockchains. Let’s look at some of the everyday applications that most businesses could use from blockchain technology.
Applications of Blockchain that Every Business Should Know
Contracts in 2017 were handwritten or electronic documented agreements put together by pages of terms and the conditions of engagement. Problems such as breach of contract can only be enforced by law, which usually is a lengthy and expensive process. In many situations, going to court over a breach of contract issue is simply not worth the time, costs, or risks of losing the case. Blockchain can revolutionize the way contracts are going to be executed in 2018 and make both parties feel more secure about their agreement.
Through blockchain technology, many businesses utilizing these older traditional contracts will be shifting to using smart contracts instead. Unlike conventional contracts, smart contracts are constructed with software code executed by the blockchain network. What makes these contracts so much more secure than traditional agreements?
To start off, smart contracts cannot be modified after the contract has been entered into, which ensures that both parties in an agreement cannot walk away without fulfilling their side of the bargain. Not only that, but each party is held accountable for their promises as they cannot lie about what their duties entailed as the smart contract is saved on the blockchain.
To better understand how a company will utilize smart contracts, let’s picture it. Imagine that you are a singer and you want to sell your music to the world. When someone asks to purchase your music, do you send them your audio files before they pay you or do you require payment from the other party first? On the one hand, how can you trust the buyer will pay for it after receiving your amazing tunes? And on the other hand, the buyer worries that you will refuse to send the audio file if they make the payment first (a quick steal).
A smart contract solves this issue by ensuring that once the buyer has transferred the money, the audio file will immediately be sent to the buyer. Once enacted, no one can stop the contract from being executed. This allows both parties to have a sense of relief as they can trust the code. The code gets the job done safely and securely, giving both parties what they want.
Payment and Record Keeping
One of the most straightforward use cases of blockchain technology to understand is its utility to provide a platform where businesses can send payments between countries quickly, with low transaction fees. One of the rumors that blockchain enthusiasts love to promote is that cryptocurrencies will eventually replace the physical money we use today. Such a radical shift in financial infrastructure will take years, but many experts point out that it is inevitable.
With decentralized platforms in place, instead of the traditional banking system, cash can be transferred directly between peers, without any third parties. Cheaper payments lead to a more efficient business.
One of the most difficult and necessary tasks that continues to be a struggle for companies all over the world is finding the right employees for your company when a position opens. Failures in employment recruitment can lead to many internal problems. Blockchain can help employers recruit the proper employees, similar to how E-Harmony or Match.com find romantic partners through the Internet. While people can change their profile on such sites, the blockchain cannot be manipulated, and employment histories can be kept and maintained.
Each person could have a public resume that would contain a trail of employment and feedback from previous jobs. This data would be accumulated and recorded on the blockchain throughout a person’s careers by their past employers. This would allow employers looking to hire, the ability to quickly review, and decide whether a person would be the right match for the job.
Some jobs require a face-to-face interview; these days that could easily mean a video interview over the Internet. However, sometimes there is not enough time to meet and greet to find a good employee, and through the use of blockchain technology, employers can trust that they are making good hiring decisions.
While employment records are indeed an advantage for employers trying to find the best match for their specific open position, but not all employees feel safe with this style of record keeping. What if an employer had some wrongful grudge and decides to leave horrible feedback that will now tarnish that employee’s resume forever? To make sure this doesn’t happen, the feedback system would be a two-way street and allow employees to similarly rate and leave feedback about their employers as well.
Blockchain technology can help with employment recruitment by enabling both the employer and the employee the same security. Each party could see the other’s history to ensure that the prospective employee is the right fit for the open position at the company and that the company hiring is one the employee would want to work for. Time is money, and there is no reason to waste time recruiting the wrong employees.
Most business these days use some type of cloud as storage for the company’s data. A recent report by cloud services provider Build Meaningful Customer Relationships (BCSG) showed that many small to medium-sized corporations are in the process of switching to cloud computing from their old methodologies. To this day, the average number of small businesses that are using up to three cloud storage places is more than 64 percent, and this number is only expected to increase to 72 percent over the next few years.
What is going on with cloud storage anyway? The process is simple: when a file is uploaded, it is then separated into many tiny pieces, and finally, each of these pieces are stored on devices across the network.
Decentralized storage differs from the centralized cloud storage which uses backups to store files, and the decentralized storage will store the data on an even larger number of devices, therefore, increasing reliability and credibility. Not only that, but centralized systems depend on how secure the one company’s servers are. That is a lot of trust place in one place. On a decentralized network, files are stored on many devices across the network, making it practically impossible for hackers to obtain the data. Thus, secure business data equals a more secure business.
We have pictured the blockchain to understand how it works (a secure network where everything is stored on devices across the network). We followed with a review of some general applications of blockchain technology that may make any business run more efficiently. Now, let’s look at what the differences are between public and private blockchain to better understand which could be applied to your business.
Public vs. Private Blockchains
A public blockchain network is entirely open, and anyone can join and participate in the network. These public networks typically have an incentivizing mechanism to encourage more participants to join the network (mining rewards, master-node rewards, and more). Bitcoin is a great example and is one of the most extensive public blockchain networks today.
On the Bitcoin network, any user can utilize bitcoin’s cryptographic keys, or be a node and join the network. Also, any person can become a miner, service the network, and seek a reward without having to be a trader of any sorts. On the Bitcoin network (similar to most public blockchains) any users can read the chain as well as create a new block into the chain (as long as they follow the applicable rules and guidelines correctly). Bitcoin is designed to be a decentralized platform.
Running a Bitcoin node enables you to have the strongest security model for your wallet. Running a Lightning node allows you to collect routing fees if you commit capital to it and route funds for others. https://t.co/jFfeqFf7fv
— Jameson Lopp (@lopp) February 11, 2018
While being completely open to the public is certainly an advantage to public blockchains, they also have some negatives characteristics. The significant amount of computational power that is necessary to maintain a distributed ledger at large scales remains to be a huge issue on public blockchains. To get a bit more detailed, to achieve consensus, each node in a network must solve a complex, resource-intensive cryptographic riddle called a proof-of-work (PoW) to ensure all are working together in sync.
Another disadvantage to the openness of public blockchains is that there is little to no privacy for transactions. Both of these are important considerations for the corporate use cases of blockchain technology. For this reason, there is another option available, private blockchains.
Private blockchains have many societal applications, and it can be implemented in almost every corporation to help a business run more efficiently and securely. A private blockchain differs most from a public blockchain in that the private network requires that an invitation be sent and then validated by either the network creator or by the guidelines made by the network creator. Businesses such as healthcare, large databases, insurance agencies, accountants, and extremely sensitive data companies will likely use a private blockchain network, also known as a “permissioned” network.
Private blockchains have restrictions on who can access the network. Participants need to obtain an official invitation or permission to join the network, instead of being open to everyone as seen in public blockchains. Once a party has been invited and has joined the network, it will play a role in maintaining the blockchain in a decentralized manner.
Real Life Example of Private Blockchain in the Healthcare Industry
One industry that is leading the way in adopting and implementing blockchain technology is the healthcare industry. There are many reasons one might want to give a doctor or healthcare provider access to his or her medical records or even have personal access for themselves. Maybe someone just moved to a new city and wants to give a new doctor access to their old medical reports, or possibly need to nominate a healthcare proxy in case of emergency, and even have your prescription sent to your pharmacy. While many countries have systems like this in place that gets the job done, this is sensitive data that is extremely vulnerable to hackers with the infrastructure set in place today.
For example, the United States healthcare system derives from private companies, which means the patient’s medical histories are extremely fragmented as they are saved at different doctors’ offices during appointments. There is currently no large file that holds all the notes from every doctor visit you have had in the past, and that is a problem that is about to change.
John Halamka (Chief Information Officer at Beth Israel Deaconess Medical Center in Boston, Massachusetts) told MIT Technology Review last year that there are currently more than twenty-six different operating electronic medical records systems in his home city. That’s just his home city, now picture how that applies to the world.
Halamka teamed up with a group of scientists at MIT to try to find a solution to the problem using blockchain technology. Halamka published their whitepaper in August 2016, laying out their proposal for a system called MedRec. This system will use Ethereum software to leverage and execute smart contracts.
On the MedRec network, each patient creates a smart contract on the blockchain that only the patient can cryptographically sign. What this allows is that the different healthcare providers that the patient has permitted can access their medical record, and the patient can view their records at any time as well.
While many people remain skeptical about having their entire medical record in one place, one serious flaw in the current healthcare system is the misplacement of medical records themselves. Reliability and security are two significant benefits that private blockchains provide healthcare systems. The blockchain network makes the system more secure because there is not one single point of weakness to attack.
With medical records securely stored across private blockchains, individuals can better take care of their health and more easily share their medical history with prospective doctors. There will be revolutionizing changes in the healthcare industry through its implementation of private blockchains.
As blockchain dives headfirst into the healthcare industry, it is truly being accepted with open arms. The current platforms in which patients’ records are kept are digital and are vulnerable to hackers. Due to blockchain technology, both healthcare providers and individuals can more easily record, store, and share medical records. More importantly, patient records are merely the tip of the iceberg, and it will be exciting to see how blockchain technology and the healthcare system continue to evolve together.