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Blockchain: the most disruptive tech in decades

Blockchain: the most disruptive tech in decadesBlockchain is poised to change IT in much the same way open-source software did a quarter of a century ago. And in the same way that Linux took more than a decade to become a cornerstone in modern application development, Blockchain will take years to become a lower cost, more efficient way to share information between open and private networks.

But the hype around this seemingly new, secure electronic ledger is real. In essence, blockchain represents a new paradigm for the way information is shared and tech vendors and companies are rushing to figure out how they can use the distributed ledger technology to save time and admin costs. Numerous companies this year have been rolling out pilot programs and real-world projects across a variety of industries - everything from financial services to healthcare to mobile payments.

It's unlikely to be a wholly disruptive technology that attacks traditional business models with a lower-cost solution that overtakes other networking technology quickly, according to Karim Lakhani, a professor of business administration at the Harvard Business School. Instead, Blockchain is a foundational technology, with the potential to create new foundations for economic and social systems, Lakhani said in The Truth About Blockchain, which he co-authored.

Blockchain adoption is expected be slow and steady, as the changes it brings gain momentum, according Lakhani, a principal investigator of the Crowd Innovation Lab and NASA Tournament Lab at the Harvard Institute for Quantitative Social Science. "Conceptionally, this is TCP/IP applied to the world of business and transactions," Lakhani said in an interview. "In the '70s and '80s, TCP/IP was not imaginable to be as robust and scalable as it was. Now, we know that TCP/IP allows us all this modern functionality that we take for granted on the web.

"Blockchain has the same potential."

What is blockchain?

First and foremost, Blockchain is a public electronic ledger - similar to a relational database - that can be openly shared among disparate users and that creates an unchangeable record of their transactions, each one time-stamped and linked to the previous one. Each digital record or transaction in the thread is called a block (hence the name), and it allows either an open or controlled set of users to participate in the electronic ledger. Each block is linked to a specific participant.

Blockchain can only be updated by consensus between participants in the system, and when new data is entered, it can never be erased. The blockchain contains a true and verifiable record of each and every transaction ever made in the system.

The Linux Foundation has created tools for building out blockchain collaboration networks. And in July, the open-source developer unveiled Hyperledger Fabric 1.0, a collaboration tool for building blockchain distributed ledger business networks, such as smart contracts.

Why is blockchain now getting so much buzz? In a word, Bitcoin. Bitcoin is the wildly hyped cryptocurrency, a method of transacting payments over an open network using digital bits and encryption. It was the first ever decentralized one when it was created in 2009. Other forms of cryptocurrency or virtual money, such as Ether (based on the Ethereum blockchain application platform), have also sprung up and have opened new venues for cross-border monetary exchanges.

The term bitcoin was first... well, coined in 2008 when Satoshi Nakamoto (likely a pseudonym for one or more developers) wrote a paper about a "peer-to-peer version of electronic cash that would allow online payments to be sent directly from one party to another without going through a financial institution."



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