Over the last few years, virtual currency Bitcoin has been in the headlines for one reason or another. I have a difficult time understanding why anyone would want to use this virtual currency—other than those with less than savory intentions—but it nevertheless manages to wheeze on. I even see a few retail stores and other business displaying signs or window decals stating that they accept Bitcoin.
However, the currency’s legacy won’t be the fact that it offers a viable alternative to cash and credit. It will be about the underlying technology structure blockchain. This distributed and cryptographically protected ledger system allows parties involved in a transaction to track and trace the movement of an item with a timestamp.
Simply put, each block includes the hash of the prior block in the blockchain. This makes it extraordinarily difficult to tamper with.
The end result is a system that can track complicated and multifaceted transactions—whether they involve money or goods. Honesty and integrity are baked into the process at every step.
This, in turn, delivers a secure framework for more sophisticated contracts, invoices and automated supply chain activities. It can help boost trust and confidence that transactions are authentic and valid.
Gartner reports that blockchain will take hold on a widespread basis within a 5- to 10-year time span. Yet, a growing number of businesses—from major banks and automobile manufacturers to firms that track valuable gems and the government—are already testing or using the technology for one reason or another. In addition, IBM has introduced Open Blockchain, which operates within its LinuxOne platform.
All of this is happening none too soon. We clearly need better and more secure transaction systems. According to The World Economic Forum (WEF): “In an increasingly borderless and digital world, privacy and security cannot be ensured through the construction of walls around sensitive information. Identity is the new frontier of privacy and security, where the very nature of entities is what allows them to complete some transactions but be denied from completing others.”
Hype notwithstanding, blockchain technology clearly represents a glimmer of hope for future transactions. As cyber-crime spirals even more out of control and current validation systems are woefully inadequate, we’re going to have to find a better way to make things work.
Today, blockchain technology is in its infancy and will require time to mature, but it is certainly a step forward.