No doubt you’ve heard about blockchain. It’s the a distributed digital ledger technology that lets participants add and view blocks of transaction records, but not delete or change them without being detected.
Most of us know blockchain as the foundation of Bitcoin and other digital currencies. But blockchain is starting to enter the business mainstream as the trusted ledger for farm-to-table vegetable tracking, real estate transfers, digital identity management, financial transactions and all manner of contracts. Blockchain can be used for public transactions as well as for private business, inside a company or within an industry group.
What makes the technology so powerful is that there’s no central repository for this ever-growing sequential chain of transaction records, clumped together into blocks. Because that repository is replicated in each participant’s blockchain node, there is no single source of failure, and no insider threat within a single organization can impact its integrity.
“Blockchain lets you conduct transactions securely without requiring an intermediary, and records are secure and immutable,” says Mark Rakhmilevich, product management director at Oracle. “It also can eliminate offline reconciliations that can take hours, days or even weeks.”
And while the chain itself should be open for validation by any participant, some chains can be implemented with some form of access control to limit viewing of specific data fields. That way, participants can be permitted to view relevant data, but not everything in the chain.
A customer, for instance, might be able to verify that a contractor has a valid business license. The customer might also see the firm’s registered address and list of complaints—but not see the names of other customers. The state licensing board, on the other hand, may be allowed to access the customer list or see which jobs are currently in progress.
Business models and use cases
Blockchain is well-suited for managing transactions between companies or organizations that may not know each other well and where there’s no implicit or explicit trust. Rakhmilevich explains, “Blockchain works because it’s peer-to-peer…and it provides an easy-to-track history, which can serve as an audit trail,” he says.
What’s more, blockchain smart contracts are ideal for automating manual or semi-automated processes prone to errors or fraud. “Blockchain can help when there might be challenges in proving that the data has not been tampered with or when verifying the source of a particular update or transaction is important,” Rakhmilevich says.
Blockchain has uses in many industries, including banking, securities, government, retail, healthcare, manufacturing and transportation. Take healthcare: Blockchain can provide immutable records on clinical trials. Think about all the data being collected and flowing to the pharmaceutical companies and regulators, all available instantly and from verified participants.
Read more about blockchain in my article for the Wall Street Journal, “Blockchain: It’s All About Business—and Trust.”